Insights from Kiavi's Charles Goodwin on the Rental Market Dynamics and Investment Strategies

The rental market is currently experiencing a period of significant differentiation, with performance varying widely by region and property type, according to Charles Goodwin, VP of Bridge and DSCR Lending at Kiavi. Goodwin highlights that while the apartment sector faces downward pressure on rents due to a surge in construction starts during the COVID era, single-family rentals (SFR), build-to-rent (BTR), and apartments are maintaining stability. The Midwest emerges as a standout region, benefiting from limited new construction during the pandemic and strong rent performance, contrasted with Sun Belt markets where oversupply has led to slower rent growth.

Goodwin points out that the affordability gap between owning and renting a home, now roughly double the cost of renting nationally, is driving demand in the SFR market. Despite this, rent growth has moderated from the pandemic highs, settling around 4% year-over-year. He advises investors to focus on markets with strong demand but without a significant construction boom, suggesting areas like the Midwest, parts of the West Coast, and Northeast as promising for consistent returns.

On the topic of insurance, Goodwin outlines three essential coverages for real estate investors: property, liability, and loss of rent insurance. He emphasizes the importance of securing coverage well in advance of closing, especially during high-risk seasons, to avoid delays. For investors considering out-of-state properties, Goodwin recommends thorough due diligence and building local partnerships to navigate regulatory and operational challenges effectively.

Addressing investment strategies, Goodwin affirms the viability of the BRRRR (Buy, Renovate, Rent, Refinance, Repeat) approach, highlighting the role of bridge and DSCR loans in facilitating this strategy. He cautions against expecting a surge in foreclosure opportunities, noting the current strong equity positions of homeowners. Instead, Goodwin encourages investors to focus on building direct relationships with sellers and preparing their financing and insurance in advance to capitalize on opportunities in today's market.

For more insights into real estate investment trends and strategies, visit Redfin's data center, a resource Goodwin recommends for checking for-sale and rental trends across different markets.