Dear Investor-
Year-over-year rent growth has been robust coming out of the pandemic. In many ways, it was just catching up to normal rent growth that had paused during Covid. You're likely seeing in the mainstream media that rents are too high and unaffordable. In certain areas this can be true, nationally, it's not.
Let's look at the actual numbers.
To really look at rent affordability you have to factor in the cost of the unit in relation to the median income of the renter. This is where the 30% Rule comes into play. Financial experts typically advise a person not to spend more than 30% to 33% of their gross income on housing.
Earlier this year, RealPage Analytics studied this subject. They looked at seven million individual leases and matched them with the lessee's income. They found that the median share of income going toward rent was 23.2% in 2022 for market-rate rental apartments.
This is well below the maximum rent ratio considered to be affordable. When you combine that with the fact that renting is considerably more affordable than owning in the vast majority of American cities, you understand just how affordable and sustainable renting is in the current market.
By way of disclosure, we have an advertising relationship with 37th Parallel, meaning we get paid for making this introduction and sharing this content. As always with these types of deals, consider this an introduction and not a recommendation. Every deal is unique and the responsibility to vet any and every deal you invest in still lies with you.
Ultimately, rent growth, while moderating, still has plenty of room for sustainable growth.
Multifamily has been and continues to be a compelling investment asset. Our friends over at 37th Parallel Properties do it as well as anybody. Their fund vehicles allow you to invest in diversified collections of well-positioned Class A/B multifamily properties in some of the best markets in the country.
With over $1 Billion in transaction volume and a 100% profitable track record since inception in 2008, they know what works. Fund II is open for investment and we highly recommend you check it out and see if it's right for you.
Learn More About 37th Parallel Today!
Have a great day!
Jim and Brett
James M. Dahle, MD, FACEP
Founder, The White Coat Investor
Brett Stevens, MBA
COO, The White Coat Investor
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