Welcome to the Pocket List, investors 👋

Let’s make some money today, shall we?

First, let’s check in on mortgages…

The 411 on rates… Rates have ticked up over the past week, but not because of any particular news. The only potential catalyst has been a handful of Fed members hinting at rate hikes being a possibility (but by no means a done deal).

THE LEAD

Rentvesting

Adult children moving back in with their parents isn’t the only consequence of an entire generation not being able to afford housing…

Meet “rentvesting.” Rentvesters typically rent a primary residence in a more expensive location (think: a city) and buy a single or multi-family in a cheaper location as a rental property.

Why though?

For many millennials and Gen Z, buying in the most sought-after locations is out of reach financially.

But, by buying in a more affordable area they get the best of both worlds: ownership (and that sweet, sweet cash flow from a rental property), while still living where they want to.

Should I take the plunge?

Like everything, there are pros and cons.

The pros…

• Building equity in a property

• Rental income from property

• You could be able to cover the mortgage and part of your rent with the rental income

• More personal flexibility (you’re still just a renter after all)

The cons…

• You still have to come up with the cash for a down payment

• Oh, and you need to juggle the primary and rental payments (this could become a real issue if you’re having trouble renting)

• Rent at your primary could rise faster than rent at your property if it’s a more competitive market

• You are a landlord… and that comes with all sorts of headaches

💭 Mr. Pocket Listing says… Buying a rental property in a far-flung place (or even a state or two away) is my worst nightmare. I can’t imagine being more than a few minutes away from one of my rentals if anything goes wrong.

Of course, that’s what property managers are for. But those can get pricey. If you don’t work those added costs into your initial analysis, you can get underwater really quickly. And don’t forget all the upcharges buried in the fine print (think: property managers retaining 50% of late fees in some cases).

There are some good resources and calculators out there to help you get a good idea of what you can expect to pony up.

And that’s just the costs you can measure. Remember: in real estate, there is no such thing as passive income. You will have to spend a lot of time and mental capacity managing a rental property.

WHAT ELSE?

More headlines I’m keeping an eye on…

• Home Sales Fell Again in April After High Mortgage Rates Damped Activity (Read)

• Housing May 20th Weekly Update: Inventory up 1.7% Week-over-week, Up 36.0% Year-over-year (Read)

• One-third of single-family homes for sale are newly built, report finds. Here’s what buyers need to know (Read)

• Single Family Built-for-Rent Up 20% Year-over-year in Q1 (Read)

• New survey suggests that current house renters could be buyers within five years (Read)

• Is this a ‘new crazy idea’? Combating housing affordability and loneliness by matching senior citizens and students. (Read)

• More Baby Boomers Find They Enjoy Renting (Read)

• Consumer interest in wellness has reached a critical mass (Read)

Let’s get tactical…

• During our final walkthrough, the seller’s agent told us someone died in the house. After we moved in, I found a lot of blood. What should we do? (Read)

• The decision to sell your home vs. rent it out is 'complicated,' experts say — what to know (Read)

• This Is How Much Americans Typically Spend on 4 Popular Home Renovations (Read)

• Interior designers share the 9 biggest mistakes people make when decorating and designing a bathroom (Read)

• A millennial couple bought an abandoned cottage for half the price of nearby houses. It's a major fixer-upper, but it's worth it. (Read)

• Broken Chandeliers and Oven Fires: What Happens When a Real-Estate Pro Damages a Listing? (Read)

• Interest in This Insanely Simple Home Upgrade Has Skyrocketed—Plus, 5 More Red-Hot Renovation Trends (Read)

• These home remodeling projects offer the highest return on investment in history, report finds (Read)

• This Instagram post about why pools should be illegal is all you really need to know about pools… (Watch)

Mr. Pocket Listing’s favorite property of the week (a guy can dream, can’t he?)…

PROPERTY TOUR

It’s time to get a pulse on markets around the country…

(1) Spokane-Spokane Valley, WA tops the list // 5 Metros That Will Become Instantly More Affordable If Mortgage Rates Drop (Read)

(2) Hudson Valley, N.Y. is #2 // Time To Buy in ‘Quantum Valley’? Upstate New York Home Prices Are Poised To Skyrocket as Big Tech Moves In (Read)

(3) Los Angeles, CA is #2 // Top 10 U.S. Counties with Greatest Numbers of Foreclosure Starts in April 2024 (Read)

(4) New Haven, CT is on the list // Ranking Multifamily Markets By Revenue (Read)

(5) New Orleans, LA made the cut // I’m a Real Estate Investor: 10 Places I Would Never Buy Property (Read)

SURVEYING

Last week, I asked, “Reply to this email with the BIGGEST real estate investing mistake you’ve ever made. I’ll share some of the best answers next week (anonymously, of course).”

By far my favorite answer was the guy who bought his first single-family rental in the Summer of 2008 because he read online that the bottom was in. He lost the house and narrowly escaped with his primary. BUT, we can all laugh about it now because he has a dozen doors in his portfolio and is on track to retire in his 50s.

Here’s today’s question…

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One last thing…