The best time to buy a house for investment is always NOW. The sooner you buy an investment property and start renting it out, the sooner you will make money in real estate. Considering the fact that market analysis, property search, and figuring out finances take some time, if you start right away, you should be able to invest in a house by the beginning of 2020. The reasons why 2020 is the best time to buy a house for investing are the following:
The US Housing Market 2020 Is No Longer a Hot Seller’s Market
While it is still early to talk about the US real estate market becoming a buyer’s market, it is definitely experiencing a transition which will continue in 2020. Supply of residential real estate properties is slowly catching up with demand, and housing inventory is stabilizing. Appreciation among homes for sale is still happening but at a reasonable speed, ruling out the risk of a housing bubble in 2020. Trends among mortgage interest rates are also helping in this regard. Overall, buying a house as an investment property is an excellent idea in 2020 because you will be able to score a good deal and buy a rental property at fair market value without entering into a bidding war with homebuyers or other real estate investors. This means that even newcomers will find opportunities for making money with real estate investing.
Related: Will the 2020 US Housing Market Be a Seller’s Market or a Buyer’s Market?
Real Estate Prices Are Affordable for Investors
Many real estate experts are warning about an affordability issue in the US housing market in 2020. However, skyrocketing home values are a major issue only in some locations such as the New York real estate market and the San Francisco real estate market. Other best places to invest in real estate like the Dallas real estate market and the Atlanta real estate market are not expected to face such problems in the next few years.
Moreover, real estate investors have an advantage over homebuyers when it comes to how to buy a house as they have more financing options such as hard money loans and private money lenders. As some first-time homebuyers might need to postpone buying a house in 2020 due to increasing property values, rental demand will increase, benefiting real estate investors in traditional rentals. This is one more reason why 2020 is the best time to buy a house for investment purposes.
Appreciation Is Working in Favor of Property Investors
One of the reasons why the present moment is always the right time for buying a house is natural appreciation. Real estate property prices increase all the time because land is a limited resource while the population size keeps growing. Even if home values take a downturn when the housing market crashes, this is only temporary, and they bounce back as quickly as the market stabilizes.
Real estate appreciation will be reasonable and stable in 2020, according to US housing market experts. This means that 2020 is the best time to buy a house to make money in the long term, once you decide to sell your house.
Investment Properties Are a Hedge Against Inflation
According to economic researchers, the inflation rate in the US economy is expected to reach 2.5% in 2020. The results of Zillow’s Home Price Expectations Survey reveal that real estate appreciation is forecast at 2.8% for 2020. Once again, real estate prices will grow faster than the inflation rate, as has been the case in the last few decades. Thus, to buy a house in 2020 is a smart move to protect your assets against inflation.
Real Estate Investments Are Low Risk
In 2020 there will be many different investment opportunities for those with some extra cash. Various investment strategies will come with varying levels of return and risk. Naturally, investors are averse to risk and prefer safer investments. Buying an investment property is one of the lowest-risk strategies for investing in 2020. Real estate is a physical asset, so you can’t lose everything overnight, as in the stock market. As long as you choose one of the top locations for investing in rental properties and get appropriate property insurance, you should be safe.
Interest Rates Are Low
Most real estate investors, especially beginners, rely on taking a loan when buying a house to rent out. Thus, interest rates are one of the most important factors for deciding if now is the best time to buy a house or not. Well, in 2020 interest rates are expected to remain low, not exceeding 4.2% for a 30-year fixed mortgage. This means that financing the purchase of an investment property with a mortgage will be a feasible and affordable option.
Rental Demand Is Going Up
Focusing on traditional rentals, not only the number of renters but also the proportion of renters is expected to increase in the US rental market in 2020. This is due to migration as well as millennials’ choices regarding homeownership. Lack of affordability among homebuyers will also play a role. All in all, demand for long term rentals is set to go up, which means that landlords will be able to charge higher rent and get better return on investment in terms of cap rate and cash on cash return.
In terms of Airbnb rentals, people not only travel more but also more and more frequently decide to stay at vacation rental properties instead of hotels. The rapid expansion of the Airbnb industry is expected to continue in 2020. However, this will happen only in the cities which have not imposed prohibitive regulations in this regard. If you think that 2020 is the best time to buy a house to rent out on Airbnb or another short term rental platform, make sure to study the local legislation in the real estate market of your choice carefully.
Rental Properties Make Money Right Away
Making long term profit with real estate is important. However, it is equally important for investors to make some quick cash. Investing in properties provides this opportunity. As soon as you buy an investment property in 2020 and start renting it out, you will start collecting rental income, whether traditional or Airbnb.
Related: The Ultimate Guide to Buying an Airbnb Property with Ease
Investing in Real Estate Is Accessible for Everyone
Real estate investing used to be a good strategy for experienced, full-time investors as they had the knowledge, time, and expertise to research markets and analyze properties. This will not be the case in 2020. Buying a house for investment has never been so easy and accessible as it is now. Big data, predictive analytics, AI, and machine learning have given rise to a bunch of real estate investment tools which give access to the best deals in the US housing market to just about anyone with a computer or a smartphone. In 2020 investors will not have to engage in complicated real estate market analysis or conduct time-consuming investment property analysis. With the help of a heatmap, a Property Finder, and a short term rental property calculator, investors will turn 3 months of research into 15 minutes. Now, that definitely means that 2020 is the best time to buy a house for renting out, doesn’t it?
What Is the Best Time of the Year to Buy a House?
Knowing that 2020 is the right time for starting a real estate business is great but not enough. You also need to know the best time of the year for buying an investment property to maximize your rate of return. Believe it or not, Christmas is often highlighted as the best time for buying a house by different real estate experts. The winter real estate market is slow, so property investors face less competition and have more power in price negotiations. A study by ATTOM Data Solutions identifies 26th of December as the best day of the year to buy a discounted real estate property. So why wait until 2020 to start investing in rental properties? Considering how long it takes to buy a house, you will be just on time to buy your first investment property this Christmas. What more can you ask Santa for?!
Related: Why Christmas Is the Best Time to Make an Offer on a Property
Tips for 2020 Real Estate Investors
Now that you’ve decided to become a real estate investor in 2020, here are a few tips to get off on the right foot and maximize your return on investment right away:
- Invest in real estate markets where Airbnb is legal. In this way you can switch between rental strategies if the need arises.
- Start out small. Buy a cheap, simple investment property which does not require much maintenance and management.
- Look for foreclosures, bank owned homes, short sales, and off market properties as they sell below market value.
- Hire an agent. As a first-time investor, you will benefit greatly from the services which an experienced real estate agent can provide.
- Consider opting for professional property management. A property manager can optimize the process of maintaining and renting out a property and push up your rate of return.
- Use real estate investment tools to study markets, do neighborhood analysis, and find money-making rental properties.
To sum up, when is the best time to buy a house? 2020! So, hurry up and sign up for Mashvisor now to start searching for top-performing traditional and Airbnb rental properties across the US real estate market.