Zillow recently published a study showing where in the country it made more financial sense to rent and where to buy, which could be a great indicator for property managers of where would be best to own rental property.
The study was conducted around the concept of a "breakeven horizon" – the idea that for every city, there comes a certain time when the financial benefits of owning a home outweigh those of renting a property.
For example, Zillow reports that the breakeven horizon in Manhattan is 5.1 years – meaning that if a consumer was going to live in Manhattan for more than 5.1 years, they might as well buy a property, because renting would likely be more expensive in the long-run.
For landlords and rental property managers, this could be a great way to find out where in the country would be best to buy and manage a rental property. Owning a rental in an area with a low breakeven horizon most likely means that tenants will be more likely to buy than rent. On the other hand, owning a rental property in Gibson Island, Maryland, where the breakeven horizon is 25.8 years, might lead to lower vacancy rates.
Property managers looking to attract long-term tenants in areas with low breakeven horizons should be sure to ask prospective tenants on the rental application and in a personal interview when they see themselves buying a home, or if they are planning to live in the area.