With talks of a possible recession on the horizon, investors may be more cautious about putting their money into the real estate market right now. It’s true that housing prices are predicted to drop in 2023, likely due to the jump in mortgage rates caused by the Fed’s fight with inflation. This drop in pricing, however, presents a unique opportunity for investors to pick up a property at a discount. When it comes to rental properties in particular, there are a number of other factors that serve to make them a great buy. Continue reading to learn more about these factors, and why the coming months might just be the perfect time to purchase a rental property.
Less competition in the market
During a recession, people tend to tighten their purse strings and prioritize saving over spending. This means that fewer folks will be looking to make large purchases, such as investing in real estate properties. That can be a great thing for someone who’s on the lookout for a good deal. Fewer people buying means less demand for these properties, which can lead to drops in pricing as owners look to offload their homes quickly. Timing is also important; if you’re willing to keep an eye on the market, you can jump on great deals before anyone else has a chance to.
Winter months mean a slowdown in activity
There’s typically a slowdown in purchase activity for real estate in the winter because fewer people are looking to move homes in the colder time of year. This is another factor that causes demand for real estate to drop, and another chance for buyers to find homes going for a discount. Conversely, there is usually an uptick in buying activity in the summer as families look to move before the start of a new school year. If you have any plans to sell property, you can fetch a higher price by listing in the summer months.
One of the best benefits of owning real estate property is that it can grow in value over time without you having to lift a finger. This is known as appreciation, and it’s what makes real estate one of the best investments you can make with your hard-earned money. Homes generally tend to appreciate over time, and the occasions where they will actually drop in value are few and far between. If home prices really are going to drop in the coming months, that could make it one of the best times to purchase a home for a low price and immediately have appreciation start working for you.
Rents are still rising
Rental properties make for a great investment because they provide a reliable source of income to the owner every month. Despite worries that home values will fall in early 2023, experts are predicting that rent prices will continue to rise throughout the year. That means more income for you as a landlord and an even better return on your investment. The sooner you purchase a rental property, the sooner you can capitalize on and benefit from this rental growth.
There are benefits to owning a rental property that hold true regardless of greater market conditions. A great example of one of these benefits is all the tax breaks you can receive from owning rental property. You can deduct all of the maintenance and upkeep expenses associated with a property, and you can also benefit from depreciation with a cost segregation study. In a cost segregation study, you depreciate all of the assets on a property over the usable lifespan of the assets. This depreciation occurs regardless of whether the property is gaining or losing value, making it beneficial to own rental property during any type of market.
The easiest way to save on a rental property purchase is to find a trusted lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital also has flexible and competitive loan options available. Are you looking to purchase or refinance a long-term rental property? Connect with us today.