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Is it Still a Good Time to Buy Rental Properties?

October 06, 2019

Should I Buy a Rental Property?

Home prices are expected to grow this year, and most renters won’t be able to finance a house or condo.

Which is why some property investors might wonder whether this is a good time to buy a rental income property.

With interest rates persistently low, rent prices high, and a slowing new home construction market, we might see demand for rental property pick up. A recession is highly unlikely, but rental property is a good income earning asset during an economic slowdown.

The equity and returns aren’t as fantastic as several years ago, but rental property still has a strong value proposition for investors.

Smart investors look for the best properties at the right price point, at the right time.  They know they can make their rental property work even under trying conditions. 2020 could be the year you become a landlord.

When do the Stock Market People Buy?

This latest lull in the housing market means the average home or apartment sellers might be more eager to sell as they panic to get out of it. Price is but one factor in your buy decision, yet you’d want to act before prices begin to rise in the months ahead.

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The question is whether the right type of rental property is available at the right price for you.

You’ll be needing a good, mobile friendly property management software solution to take the workload away from you.

The Economy has Momentum

The US economy is strong, regardless of the global economy, which is strong too. Demand for housing in the US likely won’t subside anytime soon. There’s a lot of money chasing few properties. And if people can’t afford to buy at today’s high prices, they will surely need to rent.

Vacation rental property is hot. Airbnb rental prices are making vacation rentals a lucrative segment of the property investment market.

Read the US rental housing market report and the report on apartment rental prices, and find a city that matches your risk/return profile.

5 Key Reasons Why Investing in Rental Property Makes Good Financial Sense

  1. the renter pays the mortgage
  2. property generally keeps its value
  3. the economy likely isn’t going to tank
  4. you can manage your properties efficiently using rental property management software
  5. you can write off your expenses against your own income

From tax savings to capital gains to minimal mortgage payments, it’s a lot easier to earn money on real property. And you own it.

The Right Neighborhood, City, and Price

Should you stick your neck out on expensive properties? Well, in New York City right now,  overall apartment sales are down 20% YoY, and apartment prices dropped 15% YoY. However the real story is that it’s the demand for upscale apartments (well above the $1 million average) that is skewing those statistics.

If you bought a 2 bedroom apartment under a $1 million, you’d still have plenty of renters eager to get your ultra-rare vacancy. No worries about tenant vacancy in New York, San Francisco, Dallas, Washington, or Seattle. And even in Florida, the glut of apartments is expected to dry up.

Buy Multiple Units at Lower Prices

Investors across the US might be scared away from expensive properties that are tough to rent out at more than $2100/mo. So although the upscale property attracts a better rental tenant, higher priced rents are harder to get and keep unless you’re a very good landlord.

The demand for lower priced properties nationwide is the strongest and these have the highest cap rates, cash flow and lowest tenant vacancy. You’d be wiser to buy much lower priced units, reno them and rent them out at a good rate. Think Michigan, where a revived auto industry might make investors there look really smart.

Take your time, get focused and find lower priced properties in the best cities. You don’t actually have to buy local unless you are looking to do renovations yourself. The ROI from the best cities/neighborhoods might outperform your local properties 5 to 1. If you’re going to take risk, consider a big ROI.

As you grow your property portfolio, you’ll discover why a good property management solution is so helpful. Whether you call it landlord software or a property management solution, is your business.

Give ManageCasa a test drive right now. It’s an investment in your investments.

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