When it comes to purchasing a rental property, there are plenty of factors you need to consider. From location to the expenses to return on investment. Another consideration is the time of year. When do you think is the best time to buy rental property?
According to Time.com, sales of residential properties have the tendency to rise as the temperature increases. Realtor.com found out that half (50%) of those homes for sale are purchased during summer time. RealtyTrac found that homes purchased in October had the greatest discount to fair market value (2.6%) based on their analysis of 32 million home and condo sales over 15 years. The discount in December, January and February remains above 2%, and drops in the spring and early summer. And, according to Zillow, spring listings sell 5.5 to 21.5 days faster and for an average price of $1,500 more than other times of the year.
So, based upon this information, you often get the best deals in purchasing homes when the temperature is at its lowest point, which is during the winter.
But why is winter the best time to buy rental properties? Why are home sales low when snow begins to fall? What is in the holiday months of November, December, and January that properties become so affordable? Here are the reasons why.
Increased warm weather demand
Most people move into new residences during spring and summer seasons. This is because it is more convenient to move when the weather is warm. Families with children in school find summer break less disruptive to their children’s education. For these reasons, more home buyers purchase during this time of the year, leading to more demand. When demand increases, competition increases, and property prices rise as well.
On the other hand, when winter season comes, most people concentrate on spending time with the family, and have extra holiday expenses. Moving during inclement weather is also an issue. As a result, fewer look for properties to buy during this time. That means less competition among buyers. If you buy a property during the winter, you don’t need to compete with as many others.
The fact that there are fewer buyers during the holidays is bad news for home sellers, particularly if their properties have been on the market for a long time. Many sellers become impatient and are not willing to wait until spring, so they become desperate in attempts to sell their property as soon as possible. Because of that, they drop their price expectation or the listing price of their property. So as a buyer, you have the advantage to negotiate with the seller.
However, you may encounter some disadvantages associated with this form of desperation. Some sellers grab this opportunity to sell properties that are in poor condition during the winter. Sometimes snow can hide roofing or landscape issues. So be careful before purchasing a home.
Climate and foliage
Properties appear different as seasons change. A property may seem beautiful and meet your standards during the summer, when trees, bushes and flowers are in bloom. But the same property can look dull and drab without the foliage. Winter snow can hide yard features that are appealing. And the snow can intimidate buyers, especially if the driveway is large and sidewalk long, because of snow removal.
Upon knowing the reasons why winter is the best time to purchase rental properties, I’m pretty sure you now have plans to do your property hunting during the winter season. Alongside other factors to consider before purchasing a property, ensure that you do the following. First, make sure to have the property professionally inspected thoroughly before buying, and ask your inspector to look for problems that might be hidden by snow or fallen leaves, such as foundation issues. Second, try to find some pictures of the property during the summer months when foliage is in bloom. You can ask the seller, or you can do a Google Maps search as this may show the property during the warmer months, although be wary of Google Maps pictures as these may be out of date. These pictures will provide you with a better image of the property, and also see whether there are any landscaping needs. Third, consider driveway and sidewalk in terms of snow removal. Is it really that bad? This is normally a resident’s responsibility, or you could hire a snow removal service. Using these tips will help you to locate a good rental property at a possibly lower price due to seasonal pricing.
If you do purchase a new rental property during the winter, remember that your Real Property Management Pittsburgh can assist you with aspects such as finding tenants, tenant screening, rent collection, property evaluations, maintenance, evictions, and other property management needs.