When is the Best Time to Invest in Long-Term Rental Properties?

With the various market factors in real estate, do you know when the best time to invest in long-term rental properties is? Looking at the current trends in the market, you can determine if now is the right time to make an offer. Continue reading to learn about the factors that impact the housing market and how to determine the best time to invest in long-term rental property.

Non-Economic Factors that Impact Housing Trends

Competition

The number of properties available for sale on the market will be a determining factor in the price of the property you wish to purchase. Generally, winter months see slower demand, making it easier to obtain a property at a lower price when compared to the high-demand summer months. During the spring and summer, the housing market generally sees more competition as this is a popular time to sell. When looking for investment properties, be aware of the competition currently in the market; if it’s highly competitive, this can make buying a property more difficult.

Price Reductions

In many cases, sellers who opt to keep their properties on the market during winter are under great amounts of pressure to sell. Buyers can use price reductions to their advantage by leveraging them to single out the properties that are under pressure to sell. The properties that have price reductions are generally under more pressure to sell quickly than properties who haven’t reduced their price.

Seasonality

During the cold winter months, it can be difficult for seller’s to offload property because there are less buyers during this period. With the holidays approaching and school in session, more people are inclined to move during summer than winter. Purchasing property during high-demand summer months isn’t a bad thing, but be prepared for a harder fight as you’ll be competing with more buyer’s. The cold months make for less demand on the market. Generally, at the start of fall you can see the demand from summer start to dwindle. Less demand means more inventory, which is something to consider when looking for properties.

When is the Best Time to Invest in Long Term Rental Properties?

Buyer’s vs. Seller’s Market

What’s the difference between a buyer’s and a seller’s market? For starters, it traces back to supply and demand. A buyer’s market is one that has high supply and low demand, while a seller’s market is one where demand exceeds supply. In a buyer’s market, the buyer has the advantage in negotiating because seller’s are under pressure to offload their properties. A seller’s market gives the advantage to the seller, as there is more demand than supply, thus meaning they have the power to manipulate prices and choose a closing deal that best suits them. Sellers are much more willing to negotiate offers in a buyer’s market to avoid buyers from walking away.

Best Time to Buy

To determine the best time to buy, think about your investment strategy and what kind of market you want to buy into. Is the current market adequate for purchasing property? You can start your research by looking at the current macro and micro trends in the market. For an investor comfortable investing in a buyer’s market where supply exceeds demand, then the colder, winter months are the perfect time for you to buy. Some investors prefer to purchase in spring and summer considering there are more choices on the market even though it is a very competitive time. If you’re an aggressive investor with prior experience in long-term rentals, you will be able to navigate any kind of market; seasonal changes are not as relevant to your strategy.

RCN Capital

RCN Capital offers short-term and long-term financing options for real estate investors. Whether you are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that are suited to your needs.Connect with us todayto discuss your next real estate investment