I just rented out one of my SFRs today for $2,150. Last August, I rented it out for $1,875. This time around, I rented it in 6 days. Last year it took 20 days and two price cuts.
According to Zillow, the current full market rent is about $2,500, which is up from $2,000 last June.
The rent I just charged this new tenant is about $250 below what I consider to be full market rent of $2,400. She feels like she got a great deal and I got a great tenant. I am looking for her to stay 2-3 years and will increase the rent annually about 2.5%.
Okay, so what does this mean to me as an investor? Let’s take a quick look at the numbers.
First, what is the capitalization rate based on my purchase price?
6/2024 purchase price: $337,000
Current rent: $2,150
Current rental income (less taxes and insurance): $1,900/mo
My cap rate: 6.77%
Determining fair market value
So, let’s determine fair market value. I ask, what would other potential investors pay for this property? Given the rising rents, what would a potential homeowner pay rather than to continue renting somewhere else?
Historic cap rate of property: 5.8%
Full market rent: $2,400
Full market rental income: $2,150
Full market value based on historic cap rate: $445,000
That’s a lot of appreciation, and it was all made possible, because of rising rents. As an SFR investor, I would be willing to pay as much as $400k for the house, depending on its condition.
By the way, the current market value is $390k and climbing fast. Full market value at the time I bought was about $350k. The house price will eventually merge with the rent potential. I peg the price at $430k. It may take another selling season to reach that level, but it will.
The full market value based on my analysis is up about $80,000 since last June. The price in the marketplace will shortly meet my conclusion. That 23% increase in market value is all due to rents.
I have another similar SFR situation next month. Similar numbers and similar appreciation.
As I get older, my investment objectives change
For me, I prefer buying properties in Class B to A- areas. When I started out 25 years ago, I was willing to go down to Class C- to C properties to capture extra cash flow.
The rental properties that interest me are always in demand. They are usually situated on at least a quarter acre lot and provide owners with an excellent store of value along with more predictable price appreciation due to limited supply and high demand from prospective tenants. As I get older, I prefer better quality properties. I am willing to trade off some rental income in return for superior appreciation potential.
Each investor needs to figure out his or her niche and particular set of circumstances. As my levels of equity have grown over the years, my choices available have also increased. Investors who are starting out will have less options and will be more reliant on developing higher levels of cash flow versus the underlying market values of the properties. In other words, newer investors should seek properties with higher capitalization rates.
Deutsche Bank Warns Dollar at Risk of Broad ‘Confidence Crisis’
(Bloomberg) — The dollar is at risk of a confidence crisis if President Donald Trump’s trade war leads investors to dump US assets accumulated over the past decade, according to Deutsche Bank AG.
“We are in the midst of dramatic regime change in markets,” George Saravelos, the bank’s global head of FX strategy, wrote in a note to clients. “Given the dramatic nature of the moves, we are becoming increasingly concerned that the dollar is at risk of a broader confidence crisis.”
Saravelos’s comments follow a plunge in the greenback in the wake of US President Donald Trump’s trade tariffs unveiled Wednesday. Fears that heightened global trade tensions will hit an already wobbly US economy have boosted bets on further interest-rate cuts from the Federal Reserve and put the Bloomberg US dollar index on track for its worst day since 2022.
Deutsche Bank says further dollar declines combined with a drop in US equities and a rise in term premium in US Treasuries would be the “strongest market signal” that a process of US disinvestment is accelerating. While the latter has yet to emerge, “it would be a very negative signal if it did,” he added.
The bank issued a similar warning last month, when it said the greenback may lose its traditional safe-haven status as global markets adjust to a new geopolitical order.
“Our overall message is that there is a risk that major shifts in capital flow allocations take over from currency fundamentals and that FX moves become disorderly,” Saravelos wrote.
He also added the dollar rout increases the chance that the European Central Bank will cut interest rates in April, a probability priced by broader markets at about 90%, based on overnight interest-rate swaps. That compares to about 70% on Wednesday.
“The last thing the ECB wants is an externally imposed disinflationary shock from a loss in dollar confidence and a sharp appreciation in the euro on top of tariffs. Expect pushback,” Saravelos wrote. The euro rose more than 2% on Thursday, and was set for its best day since 2015.
©2025 Bloomberg L.P.
Market pain
For a brief moment, it looked like Wall Street’s worst fears about President Donald Trump’s tariff plans were misplaced — and a relief rally started rippling through markets.
Then, as he stood in the White House Rose Garden Wednesday soon after 4 p.m., pointing to an oversized placard with the levies he’s slapping on imports from the US’s trading partners, the reality set in: He was significantly ratcheting up his trade war, just as he said he would.
The market impact was rapid — and painful. US equity futures sank as investors braced for the impact on corporate earnings. European stocks slid, following Asian equities lower.
A gauge of the dollar tumbled to a five-month low as analysts warned about the hit to the US economy, with the greenback losing more than 1% versus both the euro and yen. Treasury yields fell toward the closely-watched 4% level, their lowest since October, with European peers following as traders plowed cash into havens.
“Let’s not beat around the bush, the situation is really not good,” said Nicolas Forest, the Brussels-based chief investment officer at Candriam. “Until the last minute, investors were living in the hope that the trade policy would end up to be reasonable and pro-business and that it would avoid the risk of a recession. Investors thought Trump would back down.”
It’s worth noting that, as always, markets began pricing in the event long before it happened. Trump campaigned last year on a promise of tariffs, and he had been teasing yesterday’s specific announcement for two weeks. The S&P 500 is already down 7.7% from its Feb. 19 record.
So, some investors are already wondering when stocks will turn higher. Steve Chiavarone, head of the multi-asset group at Federated Hermes, says that if yesterday’s announcement represents the most draconian levels of tariffs, and countries now negotiate reductions to these rates, that could be good for markets.
“This may create enough of a sell-off over the next day or so that it creates a buying opportunity,’’ he said yesterday after the announcement. “Worst-case scenario today would’ve been at a low rate with threats of escalation. I’d rather, at this point, have higher rates with the potential to deescalate.”
Gold futures touched 3201 after the Trump tariff announcement. Quickly fell back.
Congrats! You called it!
Gold futures rejected at 3200. 3200 is the next level of resistance. I look to see another test. Traders were focusing on 3200 as well.
Stone, what is your analysis of Trumps tariff plans? It seems this could cause a rapid reordering of the world order.
It could. Unfortunately, for the sake of the US, the country can’t continue running these massive trade deficits anymore. This should have been done back 30 years ago.
Q3 2027
The reason why Trump is reordering the system is probably that the USA trade deficits and budget deficits are no longer sustainable and those up top know it. That was the reason for DOGE too. The USA is broke.
The force majeure cometh. Anytime after Q3 2027.
Trump’s form of nationalism will eventually be the catalyst for World War 3. In the wake of the horror of war, the talmudic world will realize that a one-world economy and one-world government are the answers to peace.
After a brief, but horrible, nuclear conflict, a peace agreement will be signed and the 10 kings of the world will enter into a binding contract. We could consider these Kings to be the leaders of the G-10 nations. A charismatic point man will emerge with the answers and the people around the world will marvel at his skill set and diplomatic prowess.
Since the universal church has brainwashed its followers into erroneously believing that the Book of Revelation is an allegory and took place in 71 AD, the 1.3 billion Catholics won’t know the difference anyway.
It will be a fantastic turn of events and the people will make merry and send gifts to one another.
The whole time, the pre-millennialists will be contemplating the timing of the rapture and will be patting themselves on the back the entire time during the tribulation period about how they will avoid the tribulation period, since there will be no pre-trib.
Absolutely correct! Just a couple years to go!
Rumors has it that Musk is quitting DOGE. So much for draining the swamp. I guess deficit spending will be up, up and away like a rocket straight into space.
https://www.cnbc.com/2025/04/02/tesla-shares-rise-on-unconfirmed-report-elon-musk-could-be-leaving-doge-post-soon.html
It is obvious that Musk is thinking dollars and sense for himself as it is costing him much more to head up DOGE than he is gaining. His company is tanking meanwhile. DOGE is also costing Trump political goodwill so I would not be surprised that Trump is pulling away from this. Face it guys, the swamp will never get drained until Putin vaporizes this with nukes. The swamp has a way of sucking in everybody. The good news out of this is that asset owners will ultimately be the winners until the force majeure.
Seems like the leftist have won again as Elon is folding to the protests against his business.
I wouldn’t read too much into this stuff. Trump has actually done quite a bit in the short amount of time he’s been back in. It’s going to be difficult to unwind a lot of his stuff to go back to the way it was during Biden.
Biden was overboard loving the black people. The only people who love black people are black people. Most people I talk to can’t stand them. I’m talking Asians and Hispanics as well. They laugh at them.
Heck, blacks don’t even respect each other. They always put their fellow black down and they call each other niggers.
To all those renters out there, keep in mind that Tuesdays are Soylent Green days. Get your rations.
Heaven help those who don’t own a property and are smart enough to know that they should own assets.
I know I come across as finding multiculturalism and miscegenation as disgusting, which of course is forbidden in the Bible, but it’s very profitable to landlords. I cannot believe the amount of money I make from broken families, broken hopes and dreams, depression and despair, hopelessness, self-absorption, and victimhood.
The more disgusting and decrepit society becomes, the more money I make. It’s that simple.
The whole scene outlined in Sodom with the narrative between the angels and Lot discusses the obsession with strange flesh. All that is about are the white folk in the city who are banging all the foreigners and are obsessing with same-sex sex. What do you think strange flesh means? It’s rather obvious, or it was before the synagogue took over the schools and media.
People’s obsessions with strange flesh are instrumental in driving up rents in a very profound manner. It’s all so predictable.
This is exactly why the SoS promote obsession with strange flesh, multiculturalism, and promiscuous sex. This all benefits those up top as they prey on those who commit these sins.
Debauchery is a huge moneymaker for those up top.
Jude 1 : 7. Strange flesh, a direct manifestation of satan! A corrupt and perverted mind.
A classic movie!
ADP comes in hot
ADP Nonfarm Employment Change (Mar)
Act: 155K Cons: 118K Prev: 84K
Looking to buy a rental hopefully in the next year or two. If it wasn’t for your blog I fear we wouldn’t have had the courage to pull the trigger on the property we have now. Almost 3 years in now. It needed alot of work and still has a ways to go but once I am done the last remaining repairs and renos I think it’s probably appreciate 50 percent judging by the action in the local market. Thx Stone!
“superior appreciation potential” in otherwords less stress and worry about damage and evictions. lol I’ve seen the horror stories, leaving the bathtub water on, broken windows, busted walls, litter and animal feces thruout. Do you have something in the contract that allows you to perform and inspection once a month?
The tenants are only as good as the landlord.
This tenant is in her late 40s, coming out a divorce with three children, blonde hair blue eyes, high school Spanish teacher, finishing up her PhD program, makes 90k a year. Her previous landlord, a Realtor, is selling and she gave her a great recommendation.