Last month I launched the Houston Investment Grade Rentals Chart – an effort to bring you more up to date and relevant information on the rental market for investment grade rentals.
The March data for the market’s performance has been compiled and analyzed and what follows is the essential summary of facts you should know.
The rental market typically goes through a seasonal mild decrease in units leased during February, March and April right before it revs up for the summer and fall back to school rush. It followed the same pattern this year with 467 units leased during March – a 4.5% decrease over March 2012.
The good news is that average lease prices came in at $1526/mo – that’s a 6.29% increase year over year. In addition, average days on market for leased properties were 29.13 – a 24% decrease year over year.
As promised we also started tracking the available inventory for lease at the beginning of each month so we can keep an eye on the supply side of things. At the end of March there were 507 properties available for lease that meet our investment grade criteria. To put things in perspective, during the last 12 months, an average of 497 properties per month get leased out so that means there’s about 30 days of inventory on the market.
In summary, the March story for Houston’s investment grade rentals market was that fewer units leased quicker at higher prices while inventory is at healthy levels.
Have you had to adjust your target cash on cash ROI and cap rate goals when looking for properties because of the tighter market?
Glenn
So far, we have not. We’re still pushing for a minimum 12% return cash on cash with 20% down on a 30 year fixed.
We may be forced into it later if the tightness continues for a prolonged time but for now we are staying put.
Certainly, higher rents help offset some the effects of rising acquisition prices.