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2020 Could be a Great Year to Buy Rental Property

Posted by oralie on January 11, 2020
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The housing market is a lot like the weather. If you don’t like it, just wait—it’s bound to change. Real estate experts are forecasting some major changes in 2020 that might make this one of the best opportunities in years to invest in rental property.

2020 Could be a Great Year to Buy Rental Property

Is Another Recession on the Way?

A recent Zillow poll surveyed real estate experts from across the country, and the results were pretty clear. Most agree that another recession is on the way, with more than half of the experts surveyed expecting it to begin in 2020.

Thanks to tighter lending regulations, this isn’t likely to be the same kind of catastrophic crash we saw during the financial crisis of 2008-2009, and most experts don’t expect the housing market to be the direct cause of the next recession, but a downturn is still expected. The current trend of economic expansion is the second-longest in American history, but it won’t last forever.

What a Recession Means for Rental Properties

With the possibility of another recession, putting your money in the stock market could put you in for a bumpy ride. Buying a rental property is a much safer and more stable investment, especially as home prices could start to tick downward if and when the recession begins.

The threat of recession may also discourage a lot of first-time home buyers, who might consider it safer to stick with renting until the next storm blows over. This is especially the case in cities where rentals remain in high demand. Rental property is also a good investment because even if a recession slows or stalls the growth in property value, you can still keep a steady profit coming in from rent.

Low Interest Rates Will Continue

Another perk for anyone considering buying rental property in 2020 is that interest rates are expected to remain low. If you’re like most buyers, you probably won’t be buying property in cash—you’ll be applying for a mortgage—which is why interest rates are such a crucial factor in the coming year.

Interest rates remained fairly steady in 2019, with the average rate for a 30-year fixed mortgage hovering between 3.7 percent and 4 percent. As Bankrate.com points out, those numbers are expected to remain in the same general range for the next year, which is good news if buying rental property is on your mind.

Lots of Great Markets

Regardless of what the market does, the growing demand for housing isn’t going to stop in 2020. Even as property values skyrocket in major cities like New York, Boston and Los Angeles, there are other, often smaller, markets where factors like affordable houses, low unemployment, growing population, and expected increases in property value make buying rental properties a great investment. Some of the top contenders, according to a report from MillionAcres, are:

  • Tampa/St. Pete/Clearwater, Florida
  • Oklahoma City, Oklahoma
  • Atlanta, Georgia
  • Amarillo, Texas
  • Indianapolis, Indiana
  • Cedar Rapids, Iowa
  • Dallas/Fort Worth, Texas
  • Jacksonville, Florida
  • North Charleston, South Carolina
  • Louisville, Kentucky

The Bottom Line

At the end of the day, there’s no such thing as a 100 percent safe investment. Still, buying rental properties looks to be one of the surest bets for 2020. It’s not only a great short-term strategy that gives you regular income from your renters, but also an excellent long-term investment in areas where real estate values are expected to continue rising.

With interest rates expected to remain steady, and the threat of a new recession on the horizon for 2020, the next year is likely to offer one of the best opportunities in years to buy rental property.

If you own rental property, you may be looking for a property manager. Son-Rise Property Management has been serving the property management needs of Bellingham and Whatcom County since 1996. Contact us today to see how we can help you find a rental property for your family or manage your rental properties.

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