Investors: Our Market’s Hidden Opportunity
The current market offers a hidden opportunity for investors.
With interest rates approaching 8% for some types of loans, it might not seem like an ideal time to make a real estate purchase, especially an optional one. However, the reality is that there are still some good opportunities in our market. In our DC market, I think that the best opportunity right now is for buy-and-hold rentals, and here's why.
Higher inventory levels for single-family homes are creating opportunities where buyers have a lot of negotiation leverage, and rents are higher than they've ever been before. While they may not continue to increase at the same rate that we saw in the last 12 months, I think that rents for single-family homes in our market will continue to go up.
This isn't a metric that's very closely tracked. Generally, when you hear statistics about rents, they're across the board for all types of rental properties. I think that as our area has seen an explosion of growth of apartments, we haven't seen a lot in the number of family-sized housing being built, and I think that that trend will continue. I believe that if a property is cash flow positive with current interest rates, then that's a great opportunity, even if it's just breaking even. I say this because we know rates will go down, and when they do, prices will go up. Once rates go down, investors can refinance and then be in a position where they have a lot better cash flow, and that should probably be 12 to 24 months.
"I think that the best opportunity right now is for buy-and-hold rentals."
I believe that family-sized housing has a lot of potential right now. This means homes with three or more bedrooms. This has less competition with apartments and detached single-family homes. One reason for this is that there are people who would like to purchase that just aren't going to be in a position to do so because of interest rates being high, and they're probably still going to want to proceed with their moving plans and want the benefits that single-family homes offer.
If you're scared to make a move because prices might fall further, remember that the thing about a buy-and-hold rental is you're not playing the short game; you're playing the long game. If prices go down a little further, it doesn't matter because they’re going up eventually. Now is the opportunity to make a move.
If you have any questions about this, or if you are looking to take advantage of this opportunity in our market, feel free to reach out by phone or email. I would be happy to help you get started.