It is no secret that market rents are on the rise in a lot of areas. The increase in demand combined with rising rents have the potential to build a strong level of income investing in real estate in 2016. Investors considering building their rental portfolio by purchasing new properties , should also research how affordable the market is for the renter. In all of the top five least affordable rental markets, average rents represent more than 60 percent of average wages.
According to RealtyTrac (one of my favorite resources) the "millennial magnet" markets have average rents less than 25-30 percent of wages and the most affordable markets. The least affordable markets require more than 43 percent and some were as high as 60% of the average wage earner's income.
I'm curious if the shift in the market coupled with the affordability of the market, will be a game changer for investors? Will the rental affordability analysis be a strong consideration prior to your purchase? What resource are you using to determine average wages vs. market rents?