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Landlords provide housing to the country's huge population while boosting the economy through their rental properties and related agreements with tenants.
More and more people are looking for a rental property where they can live for a few months or years. Recently, rental occupancy rates have been close to 100%, with leases accepting good offers and signing contracts in only hours.
Also, as rent increases, property owners are reporting record profits. Do you want to get into this business, or are you a would-be investor? Before making any move, check out these insightful landlord statistics!
Key Facts
- Landlords earn over $35,000 more than the median household each year.
- They typically earn an average of $10,000 or more annually per rental property.
- Almost 50% of landlords manage their own units,
- Most landlords spend less than 40 hours per month managing their properties, including 20% who spend less than 4 hours.
- Only 30% of landlords earn less than $90,000 a year.
- Not all landlords handle repair costs.
Average Rental Income
Data collected by the Internal Revenue Service (IRS) showed that around 10.6 million Americans had declared rental income when filing taxes. In other words, around 7.1% of tax filers could be landlords.
The IRS's latest report also showed that 17.1 million properties generated income for their owners. Moreover, according to the latest US Census, landlords' income is typically solid, earning up to $97,000 annually. It's $35,000 more than the actual median household income.
Who Owns Rental Properties
Recent surveys have also shown that the average landlord has at least three properties registered under their name.
According to a report by JP Morgan Chase, there are 50 million residential rental units in the United States, but 41% of them belong to mom-and-pop landlords or "individual investment landlords."
In other words, mom-and-pop landlords oversee around 20.5 million rental properties in the US.
What About Businesses or Partnerships?
Another census conducted by the US government showed that 25.8 rental units don't belong to individuals or families but to businesses or associations.
Of the total owned by business entities, most properties are multi-family units, including apartment buildings.
Additionally, Statista's data says that the country's largest real estate investment trusts (REITs) own hundreds of thousands of rental units. Generally, REITs both own and manage these properties.
In some cases, the trust oversees hundreds or even thousands of units, becoming a mega-landlord. Florida-based REIT Starwood Capital, the country's largest REIT, owned 115,000 units under its name as of last year.
Property Value
However, even though landlords have more than one unit on average, their prices are not unreasonably high. Surveys found that 40% have properties valued at less than $200,000.
Additionally, 30% of landlords own properties valued between $200,000 and $400,000, while another 30% own units valued at $400,000 or more.
Only 7% of the country's property owners have properties worth $1 million or more.
Who Manages Rental Properties?
Some rental housing reports showed that almost half (45%) of property owners manage their own units. Only 44% of landlords hire a third party or outsourcing property management company to manage them.
The remaining 11% includes all landlords who manage properties but don't own them. Furthermore, among those landlords who own units and single-family rentals, 50% oversee them, while the other 50% hire a third party to do so.
Nearly 21 million rental properties owned by mom-and-pop landlords are self-managed, according to JP Morgan Chase.
Rental Housing Tren
After the devastating Covid-19 pandemic, which affected almost all countries' economies, investors began looking for opportunities to make a profit and bought vacant properties at a record rate.
What's the Number of Properties Available?
At the end of 2021, 18.4% of available properties in inventory were purchased. It means around 80,000 units valued at $50 billion were bought.
In 2022, economical uncertainty impacted the real estate and housing market. As inflation hit the country, the Federal Reserve raised interest rates, experts predicted relentless inflation, and home purchases slowed.
According to the latest reports, home purchases by investments based on year-on-year data fell 30.2% in the third quarter. Only 65,000 properties were bought during that period.
What About Rental Prices?
Additionally, rental prices have increased dramatically since the pandemic-induced health crisis. Between 2021 and 2022, the cost to rent a one- and two-bedroom apartment increased by over 24%.
Based on the latest leasing statistics, property managers have increased rent rates by at least 31% since 2010.
In simple terms, a property that a landlord used to rent out for $2,000 a month in 2010 could cost $2,620 now, representing an increase of over $7,000 per year.
A survey conducted by Foremost Insurance Group also showed that 50% of those who own single-unit rental properties didn't purchase that unit as an investment property but rather as their primary residence.
Landlord-Tenant Relationship
Although landlords and tenants often sign a contract that dictates the date the rental unit must be vacated, 48.7% of landlords ask tenants to break the agreement and leave early.
When tenants fail to comply with any condition that may affect landlords or their property, they could be evicted. These cases include lessees who don't pay rent on time or violate the law.
If a tenant doesn't pay rent on time, for example, landlords can start eviction proceedings to make them vacate the property earlier than expected.
However, evicting a tenant can be expensive, as property owners may have to pay anywhere from $3,500 to $10,000 for eviction proceedings and fillings.
Debt and Rent Increase
Over the past decade, rents have increased at a rate that has outpaced the average annual wage inflation.
The figure is shocking. Rent increases have outpaced the country's average annual wage inflation by 270%. In addition, rent inflation has exceeded wage inflation by at least 40.7%.
Additionally, according to National Equity Atlas, landlords were unable to evict tenants who were behind on rent payments during the pandemic due to eviction moratoriums. They were issued by the federal government to combat the financial challenges brought on by the health crisis.
Consequently, rent debt totals began to rise. National Equity Atla's report showed that only 19% of households had late payments, which account for 5,843,000 properties.
With almost 6,000,000 households not up to date with their rent payments, the combined accumulated debt increased to $15.130 million.
How Much Should Landlords Invest?
A survey conducted by Fortune in 2018 found that individual landlords made around $34,217 that year. Most said they had spent about $23,679 in deductible expenses.
Excluding depreciation, property owners make around $10,530 in annual income, for a margin of %30.8.
Another key factor for most individual landlords is how much they have to pay for the properties. According to Arbor, single-family investment properties are below the average for owner-occupied units.
Moreover, in 2022, the average rental value was $365,313 for rentals and $413,988 for owner-occupied single-family properties.
Is Renting a Property Difficult?
The figures related to vacant units vary every year. However, statistics from FRED St. Louis Fed showed that approximately 6% of rental properties were vacant last year's third quarter.
The number is far from the last peak, 11.1%, reached in 2009's third quarter, and close to the 5% minimum reported in the late 1970s.
According to the FRED St. Louis Fed, the vacancy rate can vary depending on a number of factors, such as how strong the housing market is and existing economic conditions.
Additionally, while most landlords don't rent out a property to the first prospective tenant they screen, the average property owner interviews only two applicants when they must fill a vacant unit.
Expenses That Landlords Often Cover
Statistics also show the expenses that owners and managers must cover after they rent out the property. Many people want to become landlords or rent out their vacant units but worry about repair and maintenance costs.
However, not all landlords are in charge of making repairs or handling cleaning and maintenance. About 11% don't do that.
In other words, there is still a high percentage of tenants who must maintain the rental property and cover damage repair costs.
Additionally, recent surveys showed that property owners only get six repair calls a year from tenants. The figures include calls for repairs of any kind, such as plumbing gear problems, structural issues, or major appliance failures. moreover, a survey also found that only 13% of landlords change light bulbs.
On average, the cost to manage a rental unit is $383 to $450 in different expenses per month. Individual landlords owning properties with four units or more must pay around $4,500-5,400 annually per unit.
How Much Do Landlords Charge To Rent Out A Property?
Most landlords research the local market before defining a price to rent out their properties. However, those with 2 to 50 units often provide affordable rental housing, according to JP Morgan Chase.
With that in mind, based on Brookings' latest report, only 30% of individual investor landlords make less than $90,000 each year.
How Much Time Is Spent Managing?
Statistics have also shown that 0.2% of landlords manage their properties full-time, completing 160 hours a month in this job.
Meanwhile, around 76% of landlords spend 40 hours or less looking after their properties, while 42% spend less than four hours a month managing their rental units.
Final Thoughts
From individual investors to those who have purchased properties for residence and are now offering rental housing, all novice and expert landlords can greatly benefit from renting out a vacant unit.
Also, property management is not mandatory. Nearly half of the country's landlords hire third-party companies to handle all leasing aspects. Moreover, as rental housing statistics show, not all of them handle repairs.
Are you a landlord, or do you plan to become one and need help? Find useful free rental forms and calculators for rental income tax, return on investment, and more at Doorloop!
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