Single-Family Rent Growth Expected to Continue in 2022: Here's How to Invest

The soaring home prices over the past 18 months have caused a spike in demand for rentals, resulting in double-digit rental price growth throughout the United States in 2021.

According to Zumper’s 2021 Annual Rent Report, rent for two-bedroom units was up 13.6% year-over-year as of December 2021. Moving into 2022, Realtor.com is expecting to see further rent growth of 7.1% over the next 12 months.

Passive Rental Property Investments

The most traditional method of investing in rental properties has been to purchase a home, find a tenant and bear the responsibilities of being a landlord. This isn’t only an expensive way to get into real estate investing, it’s also far from being a passive investment.

Fortunately, retail investors now have better options available to benefit from climbing rental prices. These options include buying shares in real estate investment trusts (REITs) and buying shares directly in rental properties through a platform like Arrived Homes.

REITs: There are two well-known residential REITs that focus on generating income from single-family homes. American Homes 4 Rent AMH develops and manages single-family rental communities throughout the country. The company’s stock price has increased 102% over the past three years and currently pays a dividend yield of 0.95%.

Another single-family residential REIT is Invitation Homes Inc INVH. The company has a portfolio of 80,000 homes with a focus on the Western United States, the Southeast, Texas and Florida. The REIT’s share price is up over 112% over the past three years and the company currently has a 1.56% dividend yield.

Buying Shares of Rental Properties: Arrived Homes is a real estate investment platform that acquires rental properties in high-growth markets and sells shares to retail investors on its platform with a minimum investment of only $100.

Investors can browse available properties on the platform and purchase shares in whichever ones they choose. Arrived Homes handles placing tenants in the homes as well as all of the property management responsibilities.

The company pays out a quarterly dividend while the property increases in value over time. When the time is right, Arrived Homes sells the property and distributes the realized gains to investors.

Arrived Homes paid out cash dividends for the 3rd quarter of 2021 at an annualized rate between 5.95% and 7.54%.

View Properties on Arrived Homes

Photo: Courtesy of Arrived Homes