If you are familiar with the real estate market in Orlando and Central Florida, you’ve likely heard how hot the real estate market currently is, and for a good reason. Not only are sellers benefiting from the tight housing inventory, so are Orlando rental property owners and landlords. As a result, rental property owners in Orlando and Central Florida make the most of the historic rental rate increases.
According to the Orlando Regional Realtors Association, national rental rate growth hit double digits in August. Rents in the Orlando market hit an increase of 21.4% from last year; the hottest rental markets in Florida are Tampa, Florida, and Orlando, Florida.
It is essential to understand what is causing such significant rental growth rates in these rental markets. As a professional property management company in Orlando, Florida, we’ll be breaking down what is causing such high rental rate increases, our favorite rental market (Orlando), and a few of our managed homes that racked in tremendous rental growth.
Underlying Causes of Rental Rate Increases in Orlando:
- Low Rental Housing Inventory
- Population Growth
- Pandemic Induced Rental Bottleneck
- Landlords Pushing Rental Rates Higher
- Buyers Becoming Renters
1. Low Rental Housing Inventory
Orlando, Florida, is experiencing a shortage of rental housing units. According to Zumper, there are currently only 115 available rental units (3 Bedroom Rental Units.) With such low inventory, rental rates are continuing to push higher in Orlando and Central Florida.
Screenshot Courtesy of Zumper.
2. Population Growth
It seems like everyone from around the nation is moving to Florida. Specifically, in Orlando and Central Florida, we have seen a massive increase in our prospective renter’s pool. Renters from around the world reach out regarding our available homes for rent in Orlando and Central Florida.
3. Pandemic Induced Rental Bottleneck
During the pandemic, everyone was staying put and holding off their move. However, we saw renters wanting to extend and renew their lease agreements. According to My Move, a significant number of renters during the pandemic were forced to continue their lease agreements due to their inability to seek new housing or apartments physically.
4. Landlords Pushing Rental Rates Higher
Landlords across the country, especially the large metropolitan areas, are pushing rental rates to their limits. Rental property owners in Orlando and Central Florida are reaping the benefits of this real estate market, causing rental rates to double-digit, numbers never seen before. According to WTSP News in Tampa, Florida, they interviewed a tenant residing at an apartment complex in Tampa that was requesting their renewal rate to double in price.
5. Buyers Becoming Renters
Many of our tenants in our management properties have mentioned that they chose to rent for a year or two until the real estate sales market slows down. The real estate sales market is so competitive that many home buyers are left in the dust in the Orlando and Central Florida market. With such a large buyer population unable to purchase a home, they rent a home in Orlando and Central Florida.
Double-Digit Florida Rental Markets
It is no secret the housing market is on an absolute tear here in 2021. I mean, seriously! Have you seen this story of the scorched Boston home that just caught $400K? They should have called the report “Fire Sale At Boston Burnt Home Was Lit …” because it went under contract within 14 days; take a look at the Zillow listing and photos.
The real estate sales market always gets the press, but people don’t talk about the Rental Market. I get it; the rental market is lacking the glist and glam the sales market provides.
However, with approximately 43 million housing units occupied by renters in the United States and a renter population becoming more than 100 million strong after a decade of sustained growth from 2010 to 2019, the American rental population reached 108.5 million in 2018, up from 99.4 million in 2010. Meaning more than ⅓ of the American Population is a Renter, which will continue to increase year-over-year, for what I believe to be forever as the affordability of purchasing a home for many will continue to be out of reach as home prices continue to sore. So, when Realtor.com threw out their Monthly Rental Report, National Rent Growth Hit Double-Digits in August, and more than half of the 50 largest metros in the US reported rents with double-digit gains year-over-year.
Florida Rental Markets with Double-Digit Rental Increases
Florida is producing excellent rental rate increases for rental property owners and investors. Our favorite Florida Metros broke the Top 10 Markets for Rent Increases:
#1 Tampa at 30.6%
#3 Miami at 27%
#9 Orlando at 21.4%
- This last August marks the first month on record where rent growth has reached double digits (11.5% Y/Y). For the nation, the median rent was $1,633, up 11.5% year-over-year, which translates to an additional $169 per month for renters. Rent growth now outpaces home price growth (8.6%). Check out the Monthly Rental Report from Rental.com.
Our Managed Homes Boasting Double-Digit Rent Increases
1. Lake None – Orlando, Florida
Operating a Property Management Company in Orlando, Florida – The Listing has firsthand experience increasing rental rates substantially for our property management clients over the last year. This property is in Lake Nona, Florida, a suburb in the Orlando Area.
- This townhome in the Laureate Park community is a three-bedroom, two-and-a-half-bath investment property with 1,913 sqft and just last year went from $2,500/mth to almost $3,000/mth, a 20% increase y/y.
- Lake Nona is an excellent area that residents are flocking to in the Orlando area. According to Orlando Magazine, Lake Nona is a participative, caring community; people love to live in Lake Nona.
- As a Lake Nona property management provider, we have firsthand experience of the desire to make Lake Nona a home. When our rental homes get listed, they are leased in under 30 days for top dollar.
- According to the Orlando Sentinel, this single-family home is located below in one of East Orlando’s 2nd most in-demand & most search zip codes in East Orlando.
2. Vista Lakes – Orlando, Florida
- This property in the 32829 zip code is in the southeast region of Orlando or the Vista Lakes area, where the typical single-family home value is around $322,038. The low supply of homes available for potential buyers and tenants in this area is driving up the single-family rental rates in this area like crazy. The property pictured below is located in the 32829 zip code was recently leased out for $2,600/mth in August.
- Previously leased at $2,295/mth, the increase was a $305 difference and roughly 13.4% increase. Residents enjoy the Vista Lakes area in Orlando, Florida, due to its excellent location and easy accessibility to the Orlando Expressway.
Why use an Orlando Property Manager?
If you have a professional Orlando property management company, then you’ll likely be able to have your rental property manager advise you on the local Central Florida rental market.
Orlando Property managers will look at local area comps and determine the right rental rate increase for new leases and renewals. However, you’ll want to consult a professional if you don’t have extensive knowledge of the Orlando and Central Florida rental market. If you price your Orlando rental property too high, you may end up with a “Why is my property not renting?” situation.
Your property management company in Orlando will advise you and create a beneficial rental rate for you and your tenant. Keeping your tenant happy and not moving out will create a long-lasting relationship for years to come.
Property Managers Summary
This rental market in Orlando and Central Florida produces excellent returns for real estate investors and rental property owners. Orlando and Tampa are both in the double digits, with rental rate increases year over year.
As you can see from a few of The Listing Real Estate Management’s rental properties, the rental market is on the rise. So it looks as though Orlando will continue to be an excellent area to buy a rental property.
If you have any questions or would like to get in touch with our Orlando property management team. Feel free to Contact Us for the best property management services in Orlando and Central Florida. Cheers!
