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Winter Is Coming…With Lower Investment Property Costs

house for sale housing home sell signSoon, investors will find themselves purchasing more single-family rental properties due to the changing of seasons.

The Seasonal Single-Family Rental Investment Advantage Report, generated by HomeUnion, revealed that the winter off-peak period is the best time of the year to acquire SFRs. The report also found that investors will pay 7.2 percent less per square foot during the winter than they would during the summer months for the same property.

“Based on seasonal cap rate fluctuations, our study conclusively found that early winter is the best time to acquire SFRs,” said Steve Hovland, director of research for HomeUnion. In many metros, median home prices drop substantially during the colder months, while rent losses were marginal for investors.”

The markets offering the best winter discounts for investment housing are Pittsburgh, San Francisco, Milwaukee, Philadelphia, and Chicago. Cities rounding off the top 10 are Columbus, Boston, Cincinnati, Cleveland, and Greenville, South Carolina.

Many investors are cashing in on investment properties because of the lower prices that you typically wouldn’t see during the warmer months. Tim Herriage, CEO of the 2020 REI Group, told DS News that winter is a great time to buy because investors are able to get a better deal. “Many investors and homeowners just check out during that time period. The law of supply and demand takes hold so if there’s less demand, you’re typically able to get a better bargain,” he said.

Because of the holiday season, investors are advised to deal with maintenance at the top of the year. D’Arcy Young, president at Residential Recovery Partners, said, “It’s often difficult with the holidays to get labor and contractors to do the work that’s required. It’s best to buy before the end of the year and focus on the rehabilitation at the beginning of the new year.” He also suggests winterizing the home yourself even if it has already been done for you.

As the year concludes, investors are spotting industry trends and are creating other avenues to approach investment housing.

“There’s a big distinction between the way most people think about investing in single-family housing and the way that the new industry is emerging,” said Greg Rand, CEO of OwnAmerica. “2017 will be the first year where there are visible marketing campaigns from the industry to educate the world about investing in the housing market and buy performing and existing rental properties that already have people living in them.”