Have you wanted to get into the real estate investment business and you feel you are ready this year? You might be wondering whether it is a good business move in 2023.
In the world, the real estate industry in the USA is considered solid. Even foreigners want to invest in the market.
Even though the predictions for 2023 and 2024 have been all over the place, some things still remain true – the market is going to stand solid for several years to come.
If you compare an example of a house buyer in 2021 to one in 2023, the one buying right now will pay less. The predictions show that the market is slowly turning from a seller’s market that has been experienced for the last two years, attaining balance.
See a few reasons why you should invest in real estate in 2023 going forward:
1. Real estate still remains a very reliable investment
As you venture in the real estate market in 2023, you can do it in the short-term and long term. This means buying property, holding for some time and selling when the median home price rises.
People will always need homes, either to buy or to rent. Whether there is inflation or not, people will still buy homes. They might hold off a bit when the rates are too high, but they will eventually buy when a window opens.
In all of their predictions, there is nowhere the market experts are saying that there will be a crash such as was witnessed in 2007 to 2009. There is no bubble about to burst!
A home is a tangible asset, so you can hold onto it if the prices are not good, and sell years later.
Another thing that makes investing in this business good is that the predictions are always almost correct.
2. Tax benefits
The real estate business sees some of the biggest tax benefits.
Ask your accountant – they will tell you about all the write-offs that you can use to save money every month. You will be surprised that you can write off the regular office expenses.
What are some of the business expenses that you can deduct? These are advertising fees, legal fees, accounting costs, business equipment cost, travel, and office space.
Deduct the interest on your mortgage too. Talk to your accountant and they will find several legal ways to lower the taxable rental income.
If your rental income every month is $35,000, calculate the qualified tax deductibles/write-offs. Assuming they add up to $10,000, you will only pay tax on $25,000. That is a good save right there!
3. Good long term investment opportunity
If you look into 2023 and beyond, you can see that all factors that cause the appreciation of property prices are there.
For instance, the population is growing in the USA, immigrants are still coming and inflation has pounded the country for a straight 15 months (by May 2023).
When there is inflation, mortgage rates go up. There are fewer buyers. It is possible to find a nice buying window. Take advantage. In 3 to 5 years, the property can gain hundreds of thousands of dollars in value.
As you invest, consider the location carefully. Properties in prime places will always appreciate more. The buying price will be high, but your selling price in a couple of years will also be higher.
It is also good to time your purchase, so that you buy when the mortgage rates are low. Avoid buying when it is a seller’s market.
4. The demand for rental units is rising
The economy has been looking up from the effects of the Pandemic, employers are holding onto their employees longer in fear of losing talent, and incomes are steady and rising and the rental business is thriving.
Even as people start going back to working in the office, many still prefer to work from home. This is impacting the rental industry positively as people look for bigger spaces.
From an article on Forbes, many people are looking for suburban homes, preferring the quieter neighborhoods away from the hustle and bustle of city life.
The cost of renting keeps rising, and as an investor, this is good news for you. As more families or friends start living together there is a bigger for larger rental space.
Conclusion
2023 is a good year to invest in the property market. This kind of investment will still make sense in 2024 and many years beyond.
While there is inflation and mortgage rates are rising, the market looks very good. People are holding onto their jobs longer, and new buyers are getting home loan approvals daily.
Whether you want to invest in rentals or buy and flip homes, this is a good time. To hedge against inflation, buy property to hold onto and sell in future. Research shows new homes will never lack market.
Just remember … location is very important. If you are able, buy homes in the warmer zones.
