Investing

The Biden administration announced it will cancel $1.2 billion in student debt for 35,000 workers.
The relief is a result of the U.S. Department of Education’s fixes to the Public Service Loan Forgiveness program.

US President Joe Biden speaks about student loan relief at Madison College in Madison, Wisconsin, on April 8, 2024. 
Andrew Caballero-reynolds | AFP | Getty Images

The Biden administration announced Thursday it will cancel $1.2 billion in student debt for 35,000 workers, as a result of its recent fixes to a popular debt relief program for public service workers.
“Once again, the Biden-Harris administration delivers on its historic efforts to reduce the burden of student debt — making needed and long overdue improvements to the Public Service Loan Forgiveness Program,” U.S. Secretary of Education Miguel Cardona said in a statement.

The PSLF program, signed into law by President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after a decade in repayment. But the program has been plagued by problems, making people who qualified for the relief a rarity in the past. Often, borrowers believed they were on track to loan cancellation only to learn at some point that they didn’t qualify on a technicality, such as their loan type or repayment plan.

Under the Biden administration, the U.S. Department of Education gave borrowers a second chance to qualify, as long as they’d been making payments on their loans and working for an eligible employer. Borrowers were able to consolidate their loans and get credit for previously ineligible periods via a waiver opportunity that expired in October 2022.
The Biden administration has so far cleared $69.2 billion in student debt for 946,000 borrowers under PSLF, according to the Education Department. Before President Joe Biden took office, just 7,000 people had received relief through the program.

Legal battles have affected student loan forgiveness

After the Supreme Court struck down the Biden administration’s sweeping debt cancellation plan last summer, the department examined its existing authority to reduce and eliminate borrowers’ balances.
Mainly through fixes to long-troubled loan relief initiatives, the Biden administration has now approved nearly $169 billion in loan forgiveness for roughly 4.8 million people.

More from Personal Finance:What Project 2025 could mean for your wallet’Rentvesting’ can be a path to owning a home3 money moves to make ahead of a Fed rate cut
Thursday’s announcement included smaller numbers than the administration’s previous waves of relief. That’s likely due to the recent lawsuits against the Education Department’s new affordable repayment plan for borrowers, known as SAVE. That plan led to expedited loan forgiveness for hundreds of thousands of people.
However, in late June, two federal judges in Kansas and Missouri temporarily halted significant parts of SAVE, after a number of red states argued that the department overstepped its authority and essentially was trying to find a roundabout way to forgive student debt after the Supreme Court’s decision. More

In 2022, 39% of the 134 million families residing in the U.S. did not own the home they lived in, according to estimates from the American Community Survey by the U.S. Census Bureau. 
Among those who did not own their home, roughly 7.9 million families were considered “income mortgage-ready,” Zillow found.
Here are two things to know if you’re in a good financial position to buy.

Halbergman | E+ | Getty Images

Are you ready to buy a home? Many renters have no idea.
Millions of renter households in 2022 would have been able to buy a house that year, according to a new analysis by Zillow, which is based on estimates from the American Community Survey by the U.S. Census Bureau.

In 2022, 39% of the 134 million families residing in the U.S. did not own the home they lived in, according to Census data. Among those who did not own their home, roughly 7.9 million families were considered “income mortgage-ready,” meaning the share of their total income spent on a mortgage payment for the typical home in their area would have been 30% or lower, Zillow found. 
Some people simply choose to rent over buying. But on the other hand, households might be unaware they can afford a mortgage, said Orphe Divounguy, senior economist at Zillow.
More from Personal Finance:What Project 2025 could mean for your wallet’Rentvesting’ can be a path to owning a home3 money moves to make ahead of a Fed rate cut
If you’re coming to the end of your current housing lease, it may be smart to see if you’re in a position to buy, said Melissa Cohn, regional vice president at William Raveis Mortgage.
“If rental prices are coming up, maybe it’s a good time to consider [buying instead],” she said.

Getting verbally prequalified from a lender can help, said Cohn. “The first step is trying to understand whether or not it’s worth getting all the paperwork together,” she said.
But keep in mind that you’ll need to go into that important conversation with a working familiarity of crucial facts like your annual income and debt balances.
Understanding the status of your credit and your debt-to-income ratio is a good place to start.

1. There’s ‘no harm’ in checking your credit

In order to know if you’re ready to buy a home, it’s important to understand what your buying power is, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender.
Some would-be homebuyers might have no idea what their credit situation is or are “apprehensive to even check” out of a mistaken belief that it will impact their credit, he said.
In fact, experts say it’s important to keep an eye on your credit for months ahead of buying a home so you have time to make improvements if needed.
“That’s changed a lot in our industry where we do soft credit verifications upfront now, where it’s going to have no impact on somebody’s credit score,” said Nevins. “There’s really no harm in checking.”
Your credit matters because it helps lenders determine whether to offer you a loan at all, and if so, depending on the ranking, at a higher or lower interest rate. And typically, the higher your credit score is, the lower the interest rate offered.
That’s why being “credit invisible,” with little or no credit experience, can complicate your ability to buy a home. But as you build your credit, you have to strike a balance by keeping your debt-to-income ratio in line. Your outstanding debt, like your student loan balance or credit card debt, can also complicate your ability to get approved for a mortgage.

2. Debt-to-income ratio

A debt-to-income ratio that is too high is the “No. 1 reason” applicants are denied a mortgage, said Divounguy. Essentially, a lender thinks that based on the ratio the applicant may struggle to add a mortgage payment on top of existing debt obligations.
In order to figure out a realistic budget when home shopping, you need to know your debt-to-income ratio.
“Your debt-to-income ratio is simply the amount of monthly debt that you’re paying on your credit report,” said Nevins. “Think car payments, student loan payments, minimum payments on credit cards … any debt that you’re paying and the estimated monthly mortgage payment.”

One rule of thumb to figure out your hypothetical budget is the so-called 28/36 rule. That rule holds that you should not spend more than 28% of your gross monthly income on housing expenses and no more than 36% of that total on all debts.
Sometimes, lenders can be more flexible, said Nevins, and will approve applicants who have a 45% or even higher debt-to-income ratio.
For example: If someone earns a gross monthly income of $6,000 and has $500 in monthly debt payments, they could afford a $1,660 a month mortgage payment if they follow the 36% rule. If the lender accepts up to 50% DTI, the borrower may be able to take up a $2,500 monthly mortgage payment.
“That’s really the max for most loan programs that somebody can get approved for,” Nevins said.
Affordability and financial readiness will also depend on factors like the median home sales price in your area, how much money you can put into the down payment, the area’s property taxes, homeowner’s insurance, potential homeowners association fees and more.
Speaking with a mortgage professional can help you “map out” all the factors to consider, said Cohn: “They give people goalposts, like this is what you need to get in order to be able to purchase.”

Don’t miss these insights from CNBC PRO More

As Social Security’s trust funds face nearing depletion dates, leaders in the White House may be poised to influence reform efforts.
Here’s what the vice presidential picks for 2024 have said about the program’s future.

Trump’s pick for Vice President, U.S. Sen. J.D. Vance (R-OH) arrives on the first day of the Republican National Convention at the Fiserv Forum on July 15, 2024 in Milwaukee, Wisconsin. 
Joe Raedle | Getty Images

The clock is ticking to fix Social Security’s funds.
The next White House administration may have a powerful role in shaping the program’s future.

Social Security’s combined trust funds are projected to last until 2035, at which point 83% of benefits will be payable, the program’s trustees projected earlier this year. Yet the fund Social Security relies on to pay retirement benefits is due to run out sooner, in 2033, when 79% of those benefits will be payable.
Both President Joe Biden and former President Donald Trump have promised not to touch benefits, though Trump alluded to cutting entitlements in a March CNBC interview.
The November race includes the oldest presidential candidates. Biden, at 81, is the oldest American president, while Trump, 78, is among the 20 oldest world leaders.
More from Personal Finance:Here’s the inflation breakdown for June 2024 — in one chartGen Zers are willing to buy fixer-upper homes. Some regret the decisionLower inflation points to smaller 2025 Social Security COLA
Trump’s pick for vice president — Republican Sen. JD Vance of Ohio — adds another perspective on the issue.

Either Vance, 39, or Democratic Vice President Kamala Harris, 59, may be poised to one day occupy the Oval Office. Historically, one-third of U.S. presidents previously served as vice president.
Some experts have expressed reservations about what Vance as VP could mean for Social Security and Medicare.
“Former President Trump, one day he’ll talk about, ‘We need to cut these programs,'” said Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare.
“And then the next day, he’ll say, ‘Well, that’s not what I what I was talking about,’ and Vance is kind of cut from the same mold,” Richtman said.

In recent years, Vance has said he does not support cuts to Social Security or Medicare, according to press interviews sent by his Senate team dating back to 2022.
“In 2019, we had about $4.4 trillion of federal outlays …. last year, we expect to collect about $4.4 trillion in taxes,” Vance told Fox Business in January. “So the idea that you need to mess with Social Security and Medicare to get to a long-term fiscal sanity picture … I don’t think that’s right.”
However, the National Committee points out that is an about-face from earlier comments he has made.
The advocacy group has endorsed Biden for the 2024 race, which is only the second time it has done so. When asked whether Trump could have picked a better running mate to support Social Security, Richtman said most Republicans would have been the same.

‘Neither candidate really has a plan’

U.S. Vice President Kamala Harris looks on during a campaign event at Girard College in Philadelphia, Pennsylvania, U.S., May 29, 2024.
Elizabeth Frantz | Reuters

The National Committee has endorsed Democrats’ plans for Social Security, which call for applying additional taxes on wealthy individuals with incomes over $400,000.
As part of the White House administration, Harris has supported those plans. As a senator for California, she also backed a plan for similar reforms called the Social Security Expansion Act, which is now championed by leaders including Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass.
“President [Joe Biden] and I will protect Social Security. Donald Trump will not,” Harris posted on X in June. “The contrast is clear.”
Biden has emphasized protecting Social Security in his State of the Union addresses and budget proposals.
While Democrats have called for requiring the wealthy to pay more into the program while expanding benefits, Republicans have opposed tax hikes.
Ultimately, Social Security reform may require a combination of changes.
Vance, in an interview with The New York Times that was published in June, suggested encouraging “seven million prime-age men not in the labor force” to work.
“You shift millions of those men from not working to working; you increase wages across the board; you increase tariffs; and I think that you buy yourself a whole hell of a lot more than the nine or 10 years that the actuaries say that we have,” Vance told the Times.

Getting more people back to work would help Social Security, but it would be difficult to accomplish, said Andrew Biggs, a senior fellow at the American Enterprise Institute who worked on Social Security reform policy in the President George W. Bush White House.
Moreover, Vance overestimates how far that change could go to repair the program, Biggs said.
“There is a much bigger funding gap than Social Security faced in 1983,” Biggs said. “And neither candidate really has a plan to address it.”
Democrats would beg to differ.
“There’s only one candidate in this race who will protect earned benefits that millions of Americans have paid into all their lives — Joe Biden,” said Joe Costello, a Biden-Harris 2024 spokesperson.
Yet come 2029, Biggs predicts the nation will continue to face the same Social Security dilemma. And the president to take office then — whether it be Vance, Harris or someone else — may be forced to address it.
Correction: Former President Donald Trump is 78 years old. An earlier version misstated his age.

Don’t miss these insights from CNBC PRO More

Among the policy issues that Donald Trump and his newly chosen running mate, Sen. JD Vance of Ohio, agree on: Student loan borrowers should not get their debt canceled.
“Republicans must fight this with every ounce of our energy and power,” Vance, a Yale Law School graduate, wrote on X in April 2022.

Republican presidential nominee and former U.S. President Donald Trump and Republican vice presidential nominee J.D. Vance applaud during Day 1 of the Republican National Convention (RNC), at the Fiserv Forum in Milwaukee, Wisconsin, U.S., July 15, 2024. 
Brian Snyder | Reuters

Among the policy issues that Donald Trump and his newly chosen running mate, Sen. JD Vance of Ohio, agree on: Student loan borrowers should not get their debt canceled.
“Forgiving student debt is a massive windfall to the rich, to the college educated, and most of all to the corrupt university administrators of America,” Vance, a Yale Law School graduate and the author of “Hillbilly Elegy,” wrote on X in April 2022. “Republicans must fight this with every ounce of our energy and power.”

Outstanding education debt in the U.S. stands at around $1.6 trillion. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans. Women and people of color are most burdened by the debt, research shows.
Vance seems to approve of loan forgiveness in extreme cases. In May, he helped introduce legislation that would excuse parents from student loans they took on for a child who became permanently disabled.
Vance’s office did not respond to requests for comment.

GOP efforts to eliminate student loan forgiveness

Vance’s readiness to fight student loan forgiveness policies could pose a threat to the Biden administration’s recent efforts to reduce or eliminate people’s debts, experts say. Those relief measures are already under attack by Republicans.
In response to lawsuits brought by several red states, including Arkansas, Florida and Missouri, two federal judges in Kansas and Missouri temporarily halted major provisions of the U.S. Department of Education’s new affordable repayment plan for borrowers in late June.

More from Personal Finance:Why job skills could make or break your next interviewWhy a five-day return to office is unlikelyJob market is still strong but has ‘gotten competitive’
A legal challenge from six GOP-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — also led to the downfall of President Joe Biden’s sweeping loan forgiveness plan. The majority-conservative Supreme Court ultimately struck down Biden’s plan to cancel up to $20,000 in student debt for millions of Americans.
As president, Trump called for the elimination of the popular Public Service Loan Forgiveness initiative, and his administration halted a regulation aimed at providing loan forgiveness to those defrauded by their schools.
Meanwhile, Project 2025, a collection of policy plans developed by conservative think tank The Heritage Foundation, calls for further cuts to student loan forgiveness programs, including the elimination of several affordable repayment plans for borrowers. A number of people who formerly worked for Trump were involved in creating the playbook, and a recently resurfaced video from April 2022 shows Trump speaking at a Heritage Foundation gala about the group’s plans.
“If Donald Trump is given the chance to implement this right-wing manifesto it will wreak havoc on the economic stability of millions of student loan borrowers and their families and make the student debt crisis worse,” said Aissa Canchola Bañez, political director for Protect Borrowers Action.

‘Student debt forgiveness is a working-class issue’

Vance reiterated his view that student loan forgiveness is unfair in an interview on Fox News in August 2022.
“If you want to give student debt relief, you should penalize the people who have benefited from this very corrupt system, not ask plumbers in Ohio to subsidize the life decisions of college-educated young people, primarily young people who are going to make a lot of money over the course of their lifetime,” Vance said on “Tucker Carlson Tonight.”
That’s not an unusual stance from the right.
Conservatives typically question the fairness of forgiving the debt of those who’ve benefited from higher education, and saddling taxpayers with the costs of doing so. Just over a third of Americans aged 25 and older have a bachelor’s degree, according to an estimate by higher education expert Mark Kantrowitz.

Consumer advocates say rising costs force many families to borrow to send their children off to college, an increasingly necessary step to land in the middle class. They also point to failures in the loan system for worsening the crisis and making it harder for borrowers to pay down their debt.
Jane Fox, chapter chair of the Legal Aid Society Attorneys union, UAW local 2325, said it was hypocritical and incorrect of Vance to frame debt relief as a benefit to those who are well off.
“Student debt forgiveness is a working-class issue,” said Fox. “Those in the 1% who went to elite institutions and then worked in private equity as Senator Vance did rarely need debt relief.”
In Ohio, where Vance is senator, student loan borrowers owe $62 billion, and carry an average balance of roughly $35,000, Kantrowitz found.

Don’t miss these insights from CNBC PRO More

After mostly trending up for years, workplace engagement has flatlined.
The latest symptom of this detachment is “coffee badging.”
In part, workers are feeling tapped out and don’t want to spend any more time at the office than they already do, research shows.

Some workers are phoning it in, and it shows.
After mostly trending up for years, workplace engagement has flatlined. Now, only one-third of full- and part-time employees are engaged in their work and workplace, while roughly 50% are not engaged — reflected in the evolution of “quiet quitting” — and the rest, another 16%, are actively disengaged, according to a 2023 Gallup poll released earlier this year.

To be sure, quiet quitting, or coasting, has become a sign of the post-pandemic times, some experts say, with more employees trying to do the least they can get away with without drawing the attention of a boss or manager.
The latest example of this detachment is “coffee badging.”

What is coffee badging?

Coffee badging is the practice of going into the office for a few hours to “show face,” which could entail coffee with co-workers or sitting in on a work meeting — but then leaving to work remotely.
More than half — 58% — of hybrid employees admitted to checking in at the office and then promptly checking out, according to a 2023 survey by Owl Labs, a company that makes videoconferencing devices.
“Employees have become accustomed to the flexibility of working from home and may only come to the office when absolutely necessary,” said David Satterwhite, CEO of Chronus, a software firm focused on improving employee engagement. “It’s just too hard to put that genie back in the bottle.”

More from Personal Finance:Why job skills could make or break your next interviewWhy a five-day return to office is unlikelyJob market is still strong but has ‘gotten competitive’
Roger Hall, a business psychologist based in Boise, Idaho, says this latest trend comes as no surprise, especially considering how much easier it has become to work virtually and how many employees feel disengaged.
“Anytime there is an accountability method that is easy to circumvent, human beings will circumvent the accountability,” he said.

Workers are too distracted to work

In part, there is a fatigue that has accelerated since the Covid pandemic from being increasingly connected to work, Hall also said. “Every time an email or text comes in, we get a ding.”
Almost 50% of workers are distracted at least once every half hour, according to a new study by Unily, and nearly a third are distracted at least once every 15 minutes.

Getty Images

“For every interruption, it takes about 20 minutes to get at a deep level of concentration again,” Hall said. “If you do the math, if their interruptions are at every 15 minutes, then never, in the course of a day, ever [is someone] at a deep level of concentration.”
“At the end of the day, our brain is tapped out,” Hall said. The result is that “we are less productive — that has taken a hit.”
Not engaged or actively disengaged employees account for approximately $1.9 trillion in lost productivity nationwide, Gallup found.

Workers don’t want to spend more time at the office

“The issue isn’t just about employees badging in and out; it’s about what drives this lack of motivation and interest,” Satterwhite said.
Research shows that employees are more engaged when they have opportunities for development, learning, mentorship and career pathing, he noted. “Without these, ‘coffee badging’ is just a symptom of a deeper problem.”

While 56% of workers consider themselves to be ambitious, 47% are not focused on career progression at all, according to Randstad’s 2024 Workmonitor, which surveyed 27,000 workers globally.
These days, employees are more likely to consider work-life balance, flexible hours and mental health support as more important, the report found. And fewer want to spend any more time at the office than they already do.
“We saw a huge acceleration of the shift to hybrid work during the pandemic and people don’t want to give this up,” Sander van ‘t Noordende, Randstad’s CEO, told CNBC.
To that point, 37% of workers now say they would consider quitting their job if their employer asked them to spend more time in the office, and 39% say that working from home is nonnegotiable, Randstad found.  

Don’t miss these insights from CNBC PRO More

Enacted via the Tax Cuts and Jobs Act of 2017, the qualified business income deduction, or QBI, is worth up to 20% of eligible revenue, subject to limitations.
That tax break is scheduled to expire after 2025 without changes from Congress, which could affect millions of filers.
“It’s something that is very important to a lot of privately held businesses,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

The Good Brigade | Digitalvision | Getty Images

Tax breaks worth trillions of dollars are scheduled to expire after 2025 without extension from Congress — including a hefty deduction for millions of self-employed filers and business owners.  
Enacted by former President Donald Trump, the Tax Cuts and Jobs Act of 2017 created the qualified business income deduction, or QBI, which is worth up to 20% of eligible revenue, subject to limitations.

The temporary deduction applies to so-called pass-through businesses, which report income at the individual level, such as sole proprietors, partnerships and S-corporations, along with some trusts and estates. 
“The hope is that this gets extended because it’s going to be very disruptive for a lot of business owners” if the tax break is allowed to expire, said Dan Ryan, a tax partner at law firm Sullivan and Worcester.
More from Personal Finance:Here’s some relief student loan borrowers can count on amid legal challengesFAFSA fallout: How problems with college financial aid affected these studentsGen Zers are willing to buy fixer-upper homes. Some already regret the decision
Lawmakers added the temporary QBI deduction to the Tax Cuts and Jobs Act to create tax rates for pass-through businesses that are similar to tax rates for corporations.
But while the QBI deduction will sunset after 2025, the legislation permanently reduced corporate taxes by dropping the top federal rate from 35% to 21%.

For tax year 2021, the most recent data available, there were roughly 25.9 million QBI claims, up from 18.7 million in 2018, the first year the tax break was available, according to the IRS. 
“It’s something that is very important to a lot of privately held businesses,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.

An extension would be ‘fairly pricey’

As the 2025 tax cliff approaches, there have been “very strong feelings” about whether to extend the QBI deduction, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.  
Business advocates say the deduction promotes growth and have pushed to make the tax break permanent. Meanwhile, some policy experts and lawmakers point to the high cost and the deduction’s complexity.
The QBI deduction is “fairly pricey,” with an estimated 10-year cost of more than $700 billion, Watson said. That could pose a challenge amid debate over the federal budget deficit.

Other critics say the QBI deduction primarily benefits the wealthy because higher earners are more likely to have pass-through income. However, there are millions of middle-income taxpayers also claiming the deduction, according to IRS data.
Watson said some Democrats are eager to see the tax break expire, “but that runs right into the president’s tax pledge.”
White House National Economic Advisor Lael Brainard in June reaffirmed President Joe Biden’s promise to extend Trump’s tax breaks only for those making less than $400,000. More

The Social Security Administration is upgrading its “my Social Security” personal accounts online.
The goal is to provide a simpler login experience and more secure online access, the agency said.
But first, some users may have to log in and transition their current accounts.

zimmytws | iStock | Getty Images

The Social Security Administration is updating its online services.
To make sure you can continue to access your account, the agency is urging you to log in, particularly if you created your online “my Social Security” account before Sept. 18, 2021. These account holders will soon have to transition to a Login.gov account to access online Social Security services.

The online “my Social Security” accounts enable both beneficiaries and people who are not yet receiving benefits to access services, including requesting Social Security card replacements, estimating future benefits, checking on the status of benefit applications and managing current benefits.
The online services aim to save time for both current and future beneficiaries, as well as the Social Security Administration, as the agency grapples with long wait times for its national 800 phone number. The average speed to answer those calls was about 36 minutes in the second quarter, according to the Social Security Administration. The agency is working to bring that average wait time down to 12 minutes by the end of September 2025.

How to make sure your account is up to date More

“Rentvesting” means that someone rents their primary residence while trying to enter the housing market by buying a home they can afford elsewhere.
However, there are a few considerations to make before jumping in.

Oscar Wong | Moment | Getty Images

Not every renter wanting to buy a home dreams of ditching their lease. Some wish to remain tenants even as they become landlords.
The concept behind “rentvesting” is that an individual rents their primary residence in one city and then buys an investment property somewhere else that they let out as a short- or long-term rental, according to Danielle Hale, chief economist at Realtor.com.

“It can be a good way to get into the property market,” she said, especially if you live in a city where home prices are out of your budget.
More from Personal Finance:Here’s why housing inflation is still stubbornly highThe decision to sell your home vs. rent it outHomeowners typically spend nearly $55,000, report finds
That said, becoming a landlord at a distance can be tricky, and rentvesting may be trickier for a first-time homeowner than buying a property they intend to live in.
“There are some costs involved you’ll want to make sure that you research and consider before you get in,” said Hale.

When ‘rentvesting’ can make sense

Rentvesting may be an option for someone who has a relatively high income from a job in a major city where rents are high and home prices are even higher, said Hale. She said these individuals might have room in their budget to save but find it too expensive to buy a home in their metro area.

“So they would look for a less expensive market where their savings might be able to translate into a nice down payment,” said Hale.
Small investors, or those with up to 10 investment properties, made up 62.6% of investor purchases in the first quarter of 2024, according to a recent report from Realtor.com. That figure represents the highest share of small investor activity in the data’s history, going back to 2001.
Hale said the data does not necessarily distinguish whether the small investors are rentvestors. It also doesn’t specify whether they own their primary residence or a second rental home.
“There’s a lot of concern about big investors getting into the single-family home space and competing with owner-occupants,” she said. “Although big investors have been making headway and growing their share, they’re still a relatively small share of the overall landlord population in the United States.”

Some shifts in the market in buyers’ favor may also benefit rentvestors.
Mortgage rates have dropped to 6.85% for a 30-year fixed-rate mortgage, the lowest level since March, according to a new analysis by real estate brokerage site Redfin.
“Somebody with a $3,000-a-month budget can now spend $20,000 more on a home for that same budget,” said Daryl Fairweather, chief economist at Redfin.
She said lower rates are going to be “welcome news” for rentvesters looking for a mortgage. But it will be important to keep in mind that rental prices are coming down as more supply comes on the market.
“They might have a hard time filling it with a tenant if there are other properties down the street that are renting for less,” said Fairweather.
“Rents are going up a little bit, but not all that quickly, and they’re actually falling in parts of the country where a lot of new supply is coming online,” she said.

5 questions to ask yourself before rentvesting

While rentvesting can be an opportunity to become a homeowner, those who want to try that path must consider all the pros and cons. Here are five questions to ask:
1. Does this strategy work for the property I want to buy?
Take stock of the short-term rental regulations of the town, city and state you’re considering, as some areas can have rules that limit or even prohibit rental activity. As you narrow your search to particular properties, be aware that some homeowner’s associations and condo or co-op boards can have regulations limiting rentals, too.
2. Do I need to hire a property manager?
If you want to become a landlord, you could either manage the home or apartment on your own or hire a property manager to serve as the middleman between you and the tenant.
About 55% of small-portfolio rental owners hire a property manager because they don’t live near their rental property, according to the State of the Property Management Industry Report by Buildium, a property management software company. The site polled 1,885 property management professionals in May and June 2023. 
However, hiring a property manager comes at a cost, which depends on factors such as the property location and services provided. Property manager fees can reach up to 25% of the monthly rent price, depending on the specifications, according to Apartment List.
3. Can I afford all the costs associated with homeownership?
Buying a property goes beyond affording the down payment, closing costs and monthly mortgage. You must also consider property taxes, insurance and maintenance, among other expenses.
Having a clear understanding of what those dollar figures might look like now and how they might change over time is key, especially in an area you’re less familiar with.
After you assess all the factors involved, then you can figure out whether renting out the home is enough to cover your expenses.
4. How much competition will you have?
You may have more competition with other landlords or rentals if you’re getting into the rental market right now, said Fairweather, especially in places like the South, where more new builds are becoming available.
“Pay attention to rental trends,” said Fairweather.
Rent prices are increasing in coastal areas. But in regions like the South, they’re coming down. That’s good news for renters, “but not good news if you’re a property owner,” said Fairweather.

5. Can you afford a vacancy?
Short-term rentals include perks such as the ability to use the property yourself and more flexible pricing based on seasonal demand. But high vacancy throughout the year can be a drawback, said Hale.
In slower periods, you could end up paying for two monthly housing payments: the rent price of your primary residence and the mortgage payment for the investment property.
The monthly mortgage payment on the typical $400,000 U.S. home is about $2,647 with the current 6.85% mortgage rate, according to Redfin. Check to make sure that you can potentially afford this on top of your own monthly rent.

Don’t miss these insights from CNBC PRO More