Clear Capital launched its Rental Market Report to determine the appropriate rental rates and potential rental income for properties in a specific market.
To determine the rental potential for a community, the report uses an analysis of rental comparables in the local area, evaluates property characteristics and investigates rental market trends for the area including the number of rentals-on-market, days-on-market for rental listings, and if rates are increasing, decreasing, or stable. It concludes with “as-is” and “as-repaired” estimates of the rental rate for the specific property.
According to the Truckee, Calif.-based valuation provider, this report is as an extension of its broker price opinion. The report is completed by a broker or agent during a physical inspection of the property. While at the property, the broker or agent obtains information such as property condition, construction quality, fixtures, location, access to public transportation, and all other aspects of the property that would affect rental rates.
Kevin Marshall, president and co-founder of Clear Capital, said the report helps investors find the “needles in the haystacks,” or which properties have the best rental prospects from within a broad portfolio. He added that the report helps them make decisions about the return on investments on specific repairs prior to rental and reduce the risk and improve the outcomes with “leaseback” and REO-to-rental programs.
Clear Capital decided to launch this report after the REO-to-rental initiative was announced by the Federal Housing Finance Agency in February looking to dispose more than 220,000 bank-owned properties in the portfolios of HUD and the government-sponsored enterprises combined through the third quarter of 2011. FHFA decided that the best strategy is to sell these assets to qualified investors in bulk who would then be responsible to convert these properties into rental units for prospective buyers.
In February, Fannie Mae put up for auction the first package of 2,500 REO single-family units, primarily located in Atlanta, Arizona, Los Angeles and different parts of Florida. At the beginning of June, FHFA was still evaluating applications from investors who placed bids on this package.
The REO-to-rental initiative has gained positive momementum this year as many industry executives think this will help the housing market recover, but one important factor investors need to know is where they should buy these bank-owned properties.
“With investment opportunities in rental properties heating up, investors and organizations are looking for much higher degrees of insight into the rental potential of their properties. This level of insight is only possible from a feet on the ground analysis” Marshall said. “Our Rental Market Report was designed specifically to give them the intelligence they need to reduce risk and ensure better returns on their investments in rental properties.”
