Why Winter Can Be the Best Time to Buy a Rental Property



If you’re hunting for a rental income property at an attractive price, you might be wondering when the best time of year to buy an investment property is.

Fortunately, modern online marketplaces are making it easier than ever to get great deals on investment properties—no matter where you live or what time of year it is.

However, if you decide to go the traditional route of searching for an investment property, you may find the holiday months bring other presents in the form of less competition and better deals.

Here are five reasons why winter can be the best time of year to buy an investment property:

1. Less competition

While seasonal fluctuations in the real estate market may be more significant in areas with substantial weather swings, the holidays are still the holidays—sunny or snow-packed. Who has time to view properties when there's shopping to be done, gatherings to attend, and presents to wrap?

The answer: savvy investors who know the majority of their competition is planning to stay put until the holidays have passed or the snow has melted. According to The Street, in 2016 more than 85 percent of buyers who planned to purchase property intended to do so in the spring or summer.

Couples with children also tend to wait until the summer to move, which could mean fewer bidding wars during the winter.

“Typically, parents of school-age children don’t want to re-locate in the middle of the school year,” points out Matt Mullin, Director of Broker Services for Roofstock.

This year, while everyone else is making gingerbread houses and standing in long lines at Best Buy, begin your investment property search while ugly Christmas sweaters are still fashionable.

2. Lower sale prices

Sale prices in metro areas are lowest in the winter and highest in June and July, according to a 2016 study by NerdWallet that looked at two years (2014 and 2015) of sales and listings from Realtor.com for the 50 most populous U.S. metros areas.

Sale prices—the amount a buyer actually pays—in the nation’s largest metro areas typically peak during the summer, dip in the fall and are lowest in winter. — NerdWallet

Findings from the NerdWallet study showed sales prices dropped nearly 3% on average from summer (June through August) to fall (September through November). In January and February, single-family homes cost almost 8.5% less on average compared to June through August.

Recent statistics support the fall trends cited in the 2016 NerdWallet study. As of September 2017, monthly sale prices of single-family homes dipped 2.1% from July, according to Realtor.com.

3. Time is on your side

Properties tend to stay on the market longer in the winter, data shows.

If a property is still on the market as winter approaches, sellers may be more motivated to enter negotiations. This potentially puts buyers in a stronger bargaining position.

Alternatively, by the time spring arrives, more competition on the market could mean added pressure on buyers and less wiggle room for negotiations.

4. Motivated sellers

As Realtor.com points out, owners who put their home on the market during the winter may be more eager to move, and might close faster.

Just like on the buyer side, there will be a subset of sellers that are motivated by tax reasons to get a deal done before the end of the year.

5. Tax benefits

Which leads us to our next point: There is a real benefit to closing on your investment property before the end of the year, since certain expenditures can be written off.

These tax incentives may motivate sellers to accept lower bids in order to expedite the closing process.

Conclusion

Winter may be the best time to buy real estate, but any time of year is a great time to buy an investment property.

While the winter season may bring less competition and potentially better deals, rental property investors can take advantage of modern solutions that offer access to affordable, cash-flowing rental properties—no matter the season.

Rental property investors can purchase tenant-occupied homes and start collecting rental income as soon as they close. Just ask your agent, or see what MVP Properties has available.


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