It’s a fascinating time if you’re an investor – property values are weathering the inflation storm and rents have remained strong throughout the economy’s post-pandemic challenge.
Leading industry researcher CoreLogic predicts prices across America will rise an average of 3% in 2023, and that’s on top of the 6% increase we witnessed last year.
If you’re an investor who spreads their risk geographically, you’ll want to know CoreLogic predicts the strongest markets will be scattered across the US and include Miami (+19.5%), Houston (+8.7%), Chicago (+5.8%) and Phoenix (+5%).
More good news comes in the form of lower mortgage costs. With The Federal Reserve beating down inflation for six successive months we’re seeing interest rates dropping, too.
On top of this, employment numbers remain at their strongest since the ’70s, so the market for finding tenants has rarely been better.
Rental income will likely not be a problem, with Realtor.com showing occupancy rates at record levels. Median rents nationally jumped almost 18% in 2021.
For investors, this makes it an ideal time to begin or expand your portfolio or plan a re-entry.
Careful planning and research will unveil significant opportunities in the medium to long term, especially as real estate continues to rebound on the back of falling inflation.
These tips may serve as a refresher if you are looking to the investment market right now.
Up and comers
Neighborhoods experiencing increasing popularity and attracting younger residents are ideal hunting grounds for investment properties. Prices will be below more established areas, offering good capital growth in the medium to long term.
Limit risk
Diversify your investments. Don’t plough all your money into a neighborhood or even the same city. Your portfolio should be spread over several geographies to protect yourself from local market volatility.
Cash conscious
Attracting good quality tenants is essential to your success. You can only do that by offering quality accommodation. However, you don’t have to buy gold faucets and the best of everything to do it. Purchase only mid-range fixtures and fittings.
Debt danger
Don’t over-leverage yourself. While the rental market is producing record levels of income for investors today, it won’t always be like this. Don’t let a couple of empty properties tip you over the edge.
Favorite rentals
There’s pretty much a market for every type of property right now. Over the years, however, the single-family home has proven to be the most reliable at attracting loyal tenants and strong rental income.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.