When's the Best Time to Buy a Long-Term Rental Property?

Given current inflation, you might be unsure of where to invest your hard-earned money. You might be relieved to learn that, despite the necessity for a diversified portfolio, real estate is often a safe investment plan. But when is the ideal time to purchase a property for long-term rental? Continue reading to find out.

The Best Time to Buy a Long-Term Rental Property

Buyer’s vs. Seller’s Market

When it comes to inventory, you must consider whether a particular area is in a buyers' or sellers' market. Homes don't stay on the market for long in a seller's market, which typically indicates a mismatch between local housing supply and demand. In a sellers' market, there are many potential buyers but not enough available homes to meet demand. Because of the law of supply and demand, sellers can charge higher prices than usual due to a lack of inventory.

A buyers' market, on the other hand, has a large supply of houses and little demand. It is usually related to the time of year and location. Due to low demand and abundant supply, the pendulum swings to the buyers. As a result, they are in a better position to bargain with sellers.

Seasonal Opportunities

The best time to buy real estate is from October to February, whether it will be used as a primary residence or as a rental property. During this time, median sales prices are often more affordable. There are also more price decreases in December. January typically has the lowest median home prices and the longest median days on market. Around March the real estate market begins to heat up. February through April serves as a transitional period between cooler and warmer markets.

Should You Buy a Rental Property with an Existing Tenant?

The idea of purchasing a rental property with an existing tenant is a controversial one. Investing in rental homes that are already rented out has certain advantages and disadvantages. Let's examine a few of them.

Pros of Buying a Rental Property with a Tenant

Thinking about buying a rental property with tenants already in place? The benefits of such a decision might just surprise you. From the steady income stream to not having to go through the tenant search process, it's definitely an option worth exploring. Here are the pros of buying a rental property with existing tenants.

  • No need to find tenants: It takes a lot of time and effort to find tenants. As an investor, you want to locate the best tenants possible for your rental property. It’s more likely that you will inherit an excellent tenant when you acquire an already occupied house.
  • Instant cash flow: In the month after your purchase, you can anticipate quick income because you won't need to spend time locating a tenant. You won’t have to worry about losing money due to vacancy.
  • Code compliant: One of the best investments is a rental property with occupants, as they are almost certainly code compliant. This is due to the fact that the house should already abide by local building regulations as long as it was already used as a rental.

Cons of Buying a Rental Property with a Tenant

On the other hand, rental houses may also come with extra burden, including the following:

  • Lease terms must be honored: Depending on what was mutually agreed upon by both parties, lease terms can vary. Any existing lease terms must be upheld by you as a prospective landlord when you take on tenants along with the acquisition of a property. Unfortunately, you are unable to modify the terms before they expire.
  • Removing a tenant may be challenging: You can't just tell a problematic tenant to leave if the worst happens. Eviction procedures can be expensive and complicated. Depending on the state you're in, it will vary. While some states are more favorable to landlords, others may be more favorable for tenants.

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.