Are Real Estate Investments Still Worth it in 2023?

June 16, 2023 at 16:33 PM EDT

The global economy has taken a hit over the past few years. With a gradual increase coming since the end of the COVID-19 pandemic, investments, especially those in the real estate market may not seem the most advantageous option. Although there is no such thing as a risk-free investment, carefully planning how and when to invest your capital has proven time and time again to be fruitful.

Although 2023 may not seem at face value to be the best year to take the plunge and invest in the real estate market, research has shown that, based on long-term appreciation, steady rental income, and the ability to hedge against inflation real estate offers, one may benefit from purchasing this year.

When purchasing a property, there are a number of things to take into consideration. Aside from the tips we will offer in the rest of this article, we also want to stress one more element: visiting the property prior to purchasing. With the internet becoming one of the most popular ways for many to advertise and sell their properties, it is important to see the property upfront prior to making any offers, as it is very possible that one can be sold something which is different from the pictures provided online.

If you have to travel somewhere else in the country, aside from booking flights it is recommended to organize transportation to and from the airport. Depending on where you are traveling to in the country, you can usually rely on public transport, such as a bus or train, rent a car, or book a transfer directly from the airport.

For public transport, a quick search can provide you with a number of options, as well as their timetables and prices. For private transfers, a popular service that covers most of the country is the airport transfers from A to B, which provide an affordable and convenient option to quickly get to and from the property you want to look at. If you want to take matters into your own hands rather than rely on a professional driver, car rentals are also a good option to consider. Most large providers of car rental have booths at the airport, from where you can quickly organize your car; although the insurance waivers can oftentimes be a little expensive.

2023 and Investing in Real Estate

With mortgages gradually becoming more accessible to the average homebuyer, more individuals are being able to enter the market, this is especially the case for first-time buyers. Experts have speculated that, due to low inventory still upsetting the real estate industry, the market is most likely to remain competitive throughout the year, meaning property purchase, although definitely not easy, will be possible if done correctly.

The value of a given property will fluctuate based on a number of factors. The most prominent include inflation, population growth, as well as the overall demand for housing in a location. Due to these fluctuations, making wise purchases now can see a sizable ROI in the future, if the market is to continue on a similar path.

A shift in the market has shown a growth in rental properties, with many individuals preferring to rent rather than own, purely due to the inability to currently purchase. If one is able to currently purchase, quickly placing the property on the rental market is sure to bring in a gradual income stream until the property can be resold for a profit at a later date. Due to the high demand for rental properties, finding a tenant doesn’t pose the same risk it did in the past.

The Economy in 2023

Fannie Mae believes the US housing market will find it difficult in 2023, but this shouldn’t serve to discourage you completely from the real estate market. A recent report has shown that the prices of houses in the US market have continued to drop for a seventh consecutive month, even after mortgage rates went down across the country. Due to this, sellers are currently struggling to sell their properties, thus becoming much more likely to accept a lower offer on their houses than previously would have been acceptable.

As mentioned above, the conversion to rentals that have been noted in recent years is a great opportunity to convert any available properties to rentals or purchase a property now at a market low, converting it to a rental in order to cover the expenses associated with owning the property. It also can provide a steady income stream.

Disadvantages

It is important to know that, regardless of how the market looks, there will always be some risk associated with making a large purchase of a property. Although the market usually stays relatively stable and follows trends, it is always possible for this to change and a large dip can wipe out any possible return. It is important to take this into account and prepare accordingly.

Aside from the market, the property itself can devalue due to damage or even destruction. Carefully selecting an appropriate renter, as well as looking into the weather conditions where the property is located can attempt to alleviate the chances of this happening.

This also ties into the overall management of a property. Purchasing real estate is not something that you just do, then forget about maintaining while enjoying the returns. As an owner, you will be in charge of keeping the property in shape, which can be difficult if the tenants are unreliable.

Beneficial Strategies to Implement

Sadly, there is no one formula to implement when investing in real estate in order to ensure a steady ROI. Nevertheless, there are a few tactics that you can put in place in order to increase your chances of success. They are much easier said than done, thus need careful consideration when considering buying as an investment.

Diversify

To mitigate as much risk as possible on your investment, don’t put all your eggs in one basket. Few if any successful investors made their fortune by investing in one thing, this is also true in the real estate market. It is recommended to diversify across different locations and different types of properties. Carefully looking at the market to pinpoint the demand in a certain area will assist you in making the correct moves at the correct time.

Keep Up to Date

Nothing could be more important in investing than knowing what is going on. Falling out of the loop can seriously harm any potential ROI, as you will begin to make mistakes, which could easily be avoided if you had been on top of things. The investment strategy you implement today will need to be constantly monitored and fine-tuned along the way, depending on what is happening.

Research

Tying into the diversity mentioned above, conducting adequate research prior to making any investment ensures that the moves you make are based on factual evidence, rather than just a whim. Looking at the demographics, location, and economy of a target market will assist in determining what is currently (and hopefully in the long term) in demand. If you find a property you are interested in, search the area for other similar properties in order to see how they are doing.

Hire a Property Manager

If you would rather not deal with the day-to-day practicalities that are associated with owning a property, fortunately, you are able to outsource this to professionals. A Property Management firm will take over all the practical elements of owning a property, such as dealing with tenants and issues, as well as maintenance. Obviously, this will take a sizable chunk of your return, as finding a reliable firm to take over will also cost a pretty penny.

In Closing

Real estate, and investing in it will always be an attractive option. In 2023 it is speculated that it will see a gradual increase in relevance, especially if converted into a rental property. If you are considering adding real estate to your investment portfolio, it is important to take all of the previously mentioned information into consideration prior to doing so. Although investing will never be risk-free, carefully doing your homework before making any moves is a guaranteed way to see a gradual return on your investment.

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