Is there a best time of year to invest in a rental property? Top investors say that September to early October is typically the ‘sweet spot’ for purchasing an investment property. They generally avoid markets with low inventory and high costs (i.e., spring and summer), making Fall ideal for buying real estate.
Summer is perfect for moving—it’s a carefree time of year when families are relocating and college students are getting ready for a new school year. Summertime is great, then, for getting in on the investment action (and scoring a quick tenant), you might think. Not always. Competition is fierce in the summer real estate market, with a limited number of properties and increasing market prices.
Fall usually sees a slower demand for rentals and real estate in general. The summer rental surge is over, so it may take longer for an investor to secure a tenant. But sellers are often motivated after having their properties sit on the market for a while. A smart investment, therefore, could be a targeted property (negotiated wisely) to attract people in a growing job market or college students who haven’t gone back to school yet.
Location can be key in picking up a great deal on an investment property during Fall. But, even if you’re not in a booming job market with an influx of relocators or an area with students heading back to class late, Fall can be an ideal time for growing your investment portfolio. Low competition, high inventory, and negotiable sellers can make this season the best time to acquire an investment property.
Benefits of Investing in Rental Property During Fall
Below are some benefits to investing in rental property during Fall.
More Affordable Prices
The real estate market tends to slow down during Fall and Winter. Homes sit on the market longer, which means you can get a more affordable price from a motivated seller.
Motivated Sellers
Slow demand forces sellers to be more open to negotiating on terms to find a buyer.
High Inventory
There are generally more properties available during the Fall, giving you options for finding the right investment and time to shop for a property that will provide the greatest ROI.
Lower Competition
Fall typically sees fewer buyers shopping for properties, so you may face less competition and have more room to negotiate better terms.
Tax Benefits
You might be able to secure some great tax advantages via closing costs, deductions, property taxes, and deferred capital gains taxes if you invest shortly before the new year.
Drawbacks to Investing During Fall
Searching for a rental property during the Fall isn’t always a great idea. Here are some reasons why you may want to postpone your search.
Slower Rental Demand
Many college students have already secured their rentals for the Fall semester, leaving some investors without tenants for their properties. College demand in some towns may not pick up until spring, making the first or second quarter a better time of year for securing an investment home. Fall tends to have less rental demand in general, so investors should weigh the benefits of lower prices and competition with the potential drawback of having no tenant options for a season or two.
Cold Weather Deters Showings
Colder weather and less sunlight can make it more difficult to show property during Fall. Investors may also have challenges scheduling viewings for properties they want to purchase.
What to Consider When Looking for Rental Properties During Fall
Prudent investors will keep the following in mind when deciding whether purchasing a rental property during Fall is a good idea.
Property Location
Depending on the location, college students may still be looking for rentals during Fall. Job seekers could also be in the Fall rental market in certain areas. But, in a typical town, Fall means an investor has already lost out on college students going back to school and career relocators. Therefore, you might have a hard time finding a renter. Additionally, investors should consider whether the city they want to purchase in is generally a buyer’s or seller’s market. In a buyer’s market, housing supply is generous and there’s not too much demand. Seller’s markets, on the other hand, have properties that don’t stay listed for long—there aren’t enough homes to meet demand.
Investment Type
If you’re looking for a rental for college students or relocated workers, Fall might not be the best time to purchase an investment property—unless you can potentially wait months to find a renter. But, if you’re investing in a vacation home, you’ll find that the rental cycle is completely different. Fall might be a great time to buy a vacation property, a type of long-term rental that you could quickly get rented to short-term renters going on Fall and Winter holidays.
Long-Term Perspective
Real Estate investing is generally a long game, so minor fluctuations in the market due to seasonal factors aren’t always as important as your long-term holding strategy.
Are you looking to sell or buy a new home? Let Better Homes and Gardens® Real Estate walk you through the process.