From my personal experience as a real estate investor, I’ve developed a particular approach to buying investment properties. It’s important to remember that each investor has their own strategy that works for them, and that’s perfectly fine as long as it’s effective. One common principle among investors is knowing when the best time is to buy more properties to boost financial gains.
### Wintertime Real Estate Investment
As many real estate agents know, the best time to sell a property can vary a lot. Winter is generally considered a less favorable time for selling houses. This is because of the holiday season, bad weather, and the hassle of moving children to a new school in the middle of the academic year. As a result, fewer people move house towards the end of the year, making property sales harder.
However, this situation creates a great opportunity for real estate investors looking to grow their portfolios. When I started searching for my first investment properties, I focused on the end of the year. I found several benefits, like more available properties, lower prices, easier negotiations, more time for renovations, and tax benefits during the winter. Initially, others thought my approach was odd, but once I explained my reasons, it started to make sense to them, and soon other investors began looking for properties in the winter as well. Investing in properties before the year-end appears to be a smart move!
### Seasonal Strategies
Investing in real estate can be tough during peak selling seasons because investors often make lower offers than primary home buyers, putting them at a disadvantage. But during off-peak seasons, like the last months of the year, investors have a bit more leverage.
One good step is to study historical data in your target areas. This information can give you useful insights into the number of homes listed each month, average sales prices, rental rates, and other important metrics. Doing proper research before buying a property is always wise. There’s a right time for everything!
### Pricing Advantages
The final months of the year are often seen as a bad time to list a house for sale, leading to lower initial asking prices. Prices are influenced by supply and demand. Generally, a house listed in the spring will sell for more than the same house listed in autumn or winter. Additionally, properties that have been on the market for a while tend to sell for less. Realizing this can be very advantageous for real estate investors.
### Bargaining Power
Most properties listed in the latter half of the year are put up for sale out of necessity, so sellers expect lower offers. Investors can take advantage of this and wait for sellers to agree to better terms. This obviously isn’t great for the sellers, but it’s beneficial for the investors.
### Extra Time for Renovations
Since the rental market slows down during winter, finding tenants takes longer. So, if you buy a property at the end of the year, it might stay vacant for a bit. Even though you might miss out on a few months’ rent, it gives you time to renovate the property. Smart investors use this time and budget wisely to make the most of the rehab period.
### Tax Benefits
Buying properties at the end of the year also comes with tax perks. Tax laws vary by state and change frequently, so it’s essential to stay updated. Buying an investment property towards the year’s end could provide better tax write-offs since you haven’t earned any rental income yet. When I made my year-end purchases, I benefitted from write-offs on things like the purchase price, closing costs, property taxes, insurance, mileage, advertising, and utility deposits. Always check the IRS website each year for the latest regulations.
### Conclusion
Looking for new investment properties at the year-end, if you’re prepared to negotiate, willing to work hard, and have patience, can be very rewarding. Personally, the end of the year is my favorite time to search for new properties.
Have you ever bought investment properties towards the end of the year? If so, what motivated you, and was it successful? Feel free to share your experiences.