Buying an investment property is the first step towards generating passive income and wealth through real estate. In a few short years, you could have several investment properties that generate enough income to cover your living expenses.
But buying an investment property is risky, especially if itâ€™s your first time doing it. This article explains the basics of buying an investment property and how to decide when itâ€™s the best time to buy an investment property.
What impacts seasonal housing trends?
Seasonal housing trends are influenced by many different factors, including:
Supply and demand
The main driver of home prices is supply and demand. More homes on the market mean more power to the buyers. On the flip side, when fewer homes are on the market, sellers can demand more for their homes and receive favorable selling terms from buyers.
Time on market
Homes generally sit on the market longer in the winter for several reasons. First, the cold weather isnâ€™t ideal for house hunting. Cold and snowy conditions tend to force people to remain indoors, while the bright sunny days of spring and summer lend themselves well to house hunters.
Price reduction and decline in home values
Buyers can see the history of price reductions that sellers make to sell their homes in the winter. You may also find that some motivated sellers offer special pricing during the winter months in hopes they can offload the property quickly. This gives real estate investors bargaining power when dealing with sellers in the winter months.
So far in 2022, weâ€™ve seen runaway inflation contribute to a meteoric rise in home values. This is partly due to the fact that there are too many buyers in the market compared to sellers. In other words, the competitive landscape among buyers is more intense when weâ€™re in a seller’s market like today.
Why buy in the winter?
Winter tends to be the best time to buy for those that want to get a good deal on a home or investment property. However, the quality of homes in the winter isnâ€™t as high as at other times of the year. Below are some additional reasons why buying a home in the winter may be an excellent option for you.
Home prices are down
Home prices tend to fall when the weather gets cold. Buyers arenâ€™t motivated to put in competitive offers on homes, and not as many homes are listed for sale during this time. This means that real estate investors can often get a good deal on an investment property.
Less competition in the winter
Additionally, there is much less competition among buyers in the winter. The total number of properties for sale drops in the winter since many homebuyers and investors put their real estate plans on hold over the holiday season. Savvy investors may make offers below the asking price since motivated sellers in the winter may choose to sell.
Snow removal services
Areas that receive high amounts of snow during the winter need a way to plow the snow off the streets so people can make their daily commute. Luckily, there are plenty of options that buyers and sellers can choose for snow removal. These snow removal services are ideal for investors since they donâ€™t need to worry about removing the snow themselves.
Check out our website to find everything you need to know about home winter preparation and snow removal services in the New England area.
Investing in the spring
The spring is one of the best times to buy an investment property. The school year ends in the spring, and people are starting to come out of their homes when the weather gets warmer. Itâ€™s important to understand that most homes show better in the warmer months when flowers and trees bloom, and the spring sunlight makes for better photography.
Buying in the summer
Summer is often seen as the most popular time to buy a home in many areas. Those willing to wait until the end of summer stand to get a great deal on a house that didnâ€™t sell or is newly listed by sellers looking to get in on the end of the summer market.
However, real estate investors active in the summer months should expect to come in with higher offers and less favorable financing terms than they can find in the winter. Sellers in the summer months want to be sure that youâ€™re a strong buyer and can close the deal on time.
The real estate market tends to slow down during mid-August. This is when sellers are slashing prices in hopes of selling their properties before the fall season. Potential investors shouldnâ€™t be put off by a home that didnâ€™t sell in the summer. There are plenty of reasons a home might not sell, and homes that have been on the market for a while may prove to be great investments.
Buying in the fall
Buying in the fall can be an excellent option for those trying to save money when buying a home or investment property. Sellers are motivated and donâ€™t want to enter the slow holiday season without selling their homes. Many home sellers donâ€™t want to start the moving process in the fall or winter, and buyers can often find a great deal during this time.
Buying in the fall is also beneficial because real estate agents arenâ€™t as busy and can give you more time than they might be able to in the summer or spring. Fewer homes on the market mean lower demand and not as many buyers.
Knowing when the best time to buy an investment property may be difficult if youâ€™ve never bought one before. Buying in each season has pros and cons, but those looking to get a deal should try to buy a home in the fall or winter.
Investors who want the opportunity to get a high-quality home and pay full price will find that the summer is the best time to buy and the season with the most competition.