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The Rise of the Reluctant Landlord and How They’re Changing the Rental Market
In today’s housing market, buying a home can feel nearly impossible for many first-time buyers.
With rising interest rates and sky-high home prices, more people are turning to an alternative strategy: co-buying a home with friends, family members, or business partners.
While this can be a smart way to get into the market, it also comes with serious risks if not handled carefully.
Why Co-Buying Is Gaining Popularity
Co-buying is when two or more people purchase a property together without being married. This
trend is especially common in expensive markets like New York, California, and Washington, where buying alone is out of reach for many.
According to recent data, co-buyers now make up about thirty percent of home sales in the United States. The primary reason people co-buy is financial. By pooling incomes, co-buyers can afford larger down payments and qualify more easily for loans.
In fact, many co-buyers are friends or family members. Research from Zillow shows that about half of all co-buyers purchase with a spouse or partner, while others buy with relatives or close friends.
Benefits of Co-Buying
Co-buying has several advantages when done with careful planning and clear communication.
Easier mortgage approval
When multiple incomes are considered, buyers can often qualify for a larger mortgage and better
rates.
FHA loan opportunities
Co-buyers can qualify for FHA loans, which require lower down payments and can offer tax benefits based on ownership percentages.
Faster real estate growth
Some investors use co-buying to move from one property to the next, renting out the first
property after satisfying residency requirements.
Shared expenses
Costs such as maintenance, repairs, and taxes are split, making homeownership more affordable
overall.
Risks and Downsides of Co-Buying
While co-buying can help people enter the market sooner, it also presents some serious
challenges.
Potential conflict
Living in the same home or managing a property together can lead to disagreements.
Exit strategy disagreements
One co-owner might want to sell, while the other wants to hold or refinance. Without a plan in place, this can lead to disputes.
Uneven financial stability
If one person loses their job or cannot meet their financial obligations, the other co-buyers may
need to cover their share unexpectedly.
Different goals
Over time, priorities can change. One buyer might want to cash out while another is focused on long-term growth. A written agreement should address these possibilities in advance.
Real-Life Stories and Lessons
In some cases, co-buying has worked well. For example, two friends in Harlem bought a two- family brownstone together for nearly three million dollars. They set clear boundaries, created a legal agreement, and agreed they were neighbors, not roommates.
In Brooklyn, another group of friends bought a brownstone together. Their success inspired
others to follow the same model nearby. These stories show that co-buying can be ef
In real estate, there’s long been a rule of thumb among seasoned investors: never sell your property. But for a growing group of homeowners, renting out their home wasn’t part of the plan—it was the only logical option.
This emerging trend is producing a new kind of investor: the reluctant landlord. As return-to-office mandates increase across corporate America, thousands of homeowners are suddenly finding themselves in charge of rental properties they never intended to own.
How the Shift to Remote Work Created Accidental Investors
During the pandemic, many workers relocated to warmer, more affordable areas, buying homes with the assumption that remote work was here to stay. These buyers often locked in ultra-low mortgage rates under three percent. But with employers now requiring staff to return to the office, some are being forced to leave their new homes behind.
The big question for these homeowners is what to do with their properties. Selling doesn’t make much financial sense in today’s market. Interest rates have more than doubled, home values in some formerly hot markets have cooled, and the wave of eager buyers seen in 2021 has disappeared.
According to Altos Research, nearly seven hundred thousand single-family homes were on the market at the end of 2024, up from fewer than five hundred thousand in 2022. With so much inventory and fewer bidding wars, reluctant landlords are increasingly choosing to hold onto their homes and rent them out.
A Look at the Numbers
The National Association of Realtors reports that about one in five repeat buyers kept their previous home as a rental or investment property. Data from real estate analytics firm Parcl Labs shows a clear trend in Sunbelt cities like Tampa, Dallas, Charlotte, and Phoenix, where between three and eight percent of homes listed in September were converted into rentals by November.
Two key reasons are driving this decision:
- Selling now would mean taking a loss for buyers who purchased near the market peak, especially in places like Austin, where prices have dropped.
- Waiting for interest rates to drop is risky and uncertain.
Managing a Property Isn’t Always Easy
For many of these accidental landlords, the learning curve can be steep. Dealing with tenant complaints, maintenance requests, rent collection, and property upkeep can be overwhelming—especially for those juggling full-time jobs or family commitments.
While managing a rental on your own might seem cost-effective, it’s not always the best path. Hiring a property manager can remove much of the stress and ensure the property is professionally run. Though this may reduce short-term profits, it can pay off in the long term, especially when combined with the benefit of a low mortgage rate.
When Remote Work Isn’t an Option Anymore
Not everyone can hold onto their remote lifestyle. If returning to the office is unavoidable, there are still ways to make your low-rate property work for you. Some towns remain remote-friendly. Platforms like Resi Club Analytics track areas with high concentrations of remote workers, and sites like Indeed regularly list top remote work companies.
Still, remote job opportunities are getting harder to come by. LinkedIn reports that only eight percent of current job postings are fully remote, down from eighteen percent in 2022, though they continue to attract forty percent of applications. The bottom line: finding a second source of income is becoming more important, especially for workers unable to relocate.
How This Shift Could Affect the Housing Market
An increase in rental properties, especially in the Sunbelt, may affect rent prices. More landlords typically mean more competition, which can drive prices down—particularly if new landlords don’t have the experience to manage well. Mispriced units, poor tenant screening, and high turnover can negatively impact neighborhoods and nearby rental properties.
Markets could become oversaturated in some areas, leading to downward pressure on rents. While that’s not the case everywhere yet, it’s a trend worth watching.
Turning Your Mortgage Rate Into an Advantage
If you’re sitting on a property with a three percent interest rate, you have an asset many investors would love to own. Even if the property is only breaking even on rent, tax benefits and mortgage pay-down mean you’re still building long-term equity.
You can even consider house hacking. Rent out part of the home while living in another section, and use the extra income to fund your next investment. Saving toward a second unit, such as an accessory dwelling unit, could position you for strong cash flow later.
In this market, investors are advised to either buy in cash or put down a large enough down payment to limit financial strain. With high interest rates and growing inventory, now is a good time to find deals and build strategically.
Final Thoughts
Becoming a landlord—especially unintentionally—can be overwhelming. It takes time, effort, and a willingness to adapt. Nearly every real estate investor has faced moments when they wanted to quit. But with a low mortgage rate locked in, your home can become the cornerstone of your investment journey.
If your job situation requires you to return to the office, consider using the rental income to stay financially afloat while planning your next move. Even if the property isn’t profitable now, the long-term gains from tax benefits, appreciation, and loan pay-down can still put you ahead.
So if you find yourself in the role of a reluctant landlord, don’t just endure it—embrace it. That low interest rate could be the key to your financial future.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“
The Rise of the Reluctant Landlord and How They’re Changing the Rental Market
Has the U.S. Housing Market Finally Begun to Thaw After the Pandemic?
It seems like the housing market might be showing signs of life. According to a recent report from Redfin, pending home sales in early October have seen their largest year-over-year rise since 2021, with a 2% increase in the four weeks ending October 6.
This news is likely to be welcomed by real estate investors who have felt the market has offered limited opportunities over the past few years. However, it’s important to take a cautious approach—one promising statistic doesn’t necessarily indicate a broader trend.
Is the Housing Market Truly Recovering?
Let’s explore the different factors at play.
Interest Rate Reductions: A Critical Factor or a Red Herring?
The Redfin report links the surge in pending sales to the Federal Reserve’s much-anticipated rate cut announcement in mid-September. According to Redfin, this announcement prompted buyers to re-enter the market in late September, despite mortgage rates having already been falling for weeks before the cut.
This psychological boost is crucial. Although buyers were aware of the falling rates beforehand, many seemed to be waiting for a formal signal to act. This could be attributed to a lingering fixation on the ultra-low rates of 3% to 4% that buyers enjoyed before 2022.
Any rate cut announcement serves as a nudge for prospective buyers, making them feel that now might be the right time to purchase, even if mortgage rates had been decreasing already. In an unstable mortgage market, such announcements hold significant influence.
However, mortgage rates are just one piece of the puzzle when analyzing housing market performance. As noted by Investopedia, the real estate market is driven by four primary factors: interest rates, demographics, economic conditions, and government policies.
Demographics: Shaping the Market
During the pandemic, demographic shifts had a profound effect on U.S. real estate, with major population movements like the Sunbelt migration fueling booms in cities such as Phoenix and Austin, which later became unaffordable for many.
Age is another key demographic factor, and the millennial generation’s pent-up demand continues to be a driving force behind the rise in home purchases. Despite the challenges of the past few years, millennials who have longed to become homeowners are now entering the market in greater numbers, as more properties become available.
Rising Inventory: A Sign of Stabilization
A key factor contributing to the market’s stabilization is the growth of housing inventory over the last year. The pandemic had a significant impact on the availability of homes, with sellers hesitant to list properties due to COVID-19 restrictions and, later, higher mortgage rates.
Some homeowners, particularly those upgrading to larger homes, found it financially challenging to sell and take on higher mortgages. Others, however, simply chose to wait for a more favorable market.
Although the latest Realtor.com report shows that inventory remains down by 23.2% compared to pre-pandemic levels, we are seeing an upward trend. For instance, new listings have been rising since last year, with a 5.7% year-over-year increase for the four weeks ending October 6.
As of September 2024, some states have even surpassed their pre-pandemic inventory levels, including Tennessee, Texas, and Idaho, with others, like Washington, close behind.
Vulnerabilities in Certain Regions
However, not all regions are showing positive signs. For example, some areas, particularly those affected by extreme weather, have seen inventory spikes not because of market recovery, but due to homeowners trying to offload damaged properties they can’t afford to repair.
For instance, regions like Florida and North Carolina, hit by hurricanes, have experienced increases in home listings, but these may reflect a response to climate-related challenges rather than market health.
Opportunities for Investors
Investors should be discerning when choosing markets, focusing on regions where inventory is growing due to increased home construction rather than climate-related distress. States like Idaho, Utah, North Carolina, and Texas, which are building new homes, offer potential, though caution is needed in areas prone to natural disasters.
The Midwest and Northeast, meanwhile, still face significant challenges in recovering to normal market conditions. These regions have lower rates of new construction, meaning inventory remains scarce, which could present both opportunities and difficulties for investors.
The Bottom Line
The U.S. housing market is showing signs of recovery, but the situation remains complex and varies by region. Interest rates play an essential role in unlocking the market, but investors should also consider other critical factors, such as homebuilding trends, climate risks, and government policies. While the market is heading in the right direction, it’s crucial to examine regional differences carefully before making investment decisions.
In the previous post: “Is Now a Better Time to Invest in Real Estate Debt or Equity?“