While most people are celebrating the holidays, traveling, and avoiding the weather during this time of the year, smart real estate investors are capitalizing on the seasonal benefits it brings. Winter ushers in winds of good fortune by making it an excellent time to buy rental properties. This often overlooked time period typically increases investors’ chances of getting great deals on properties.
Why Investors Look to Invest in Winter
Plunging Winter Home Prices
While the majority of homes are sold during the summer time, winter actually provides lower prices. Historically, investment homes have been priced lower during the winter than in any other season, due to a variety of factors – which include less competition and more motivated sellers. Steve Hovland, director of research at HomeUnion®, further illustrates the point, “The price of an investment property in a HomeUnion® market can vary as much as 17 percent between summer peak and winter lull.”
Additionally, when looking at national home prices since 2000, there is a large peak in July and a concurrent trough in January. Investors who buy in winter pay 7.2 percent less than the summer price for the same property! With such a pronounced discount, you’ll want to take advantage and buy investments during this off-season.
Motivated Sellers – Ready to Strike a Deal
Since the holiday season is a busy time period, most home owners only put their home on the market when they desperately need to sell it fast, like for a job relocation. This means homes are priced to sell and grants you significant bargaining power. You can potentially negotiate in even lower-selling price than the listed amount to maximize your total returns.
Tax Advantages Before December 31st
While there are many tax advantages to owning real estate in general, there are specific benefits to closing by December 31st. “You can deduct your property taxes, mortgage interest, and certain incidental costs associated with your new home acquisition, as long as you close by December 31st,” Paul Sundin – CPA and tax strategist at Sundin & Fish – explains. Since it typically takes an average of 30 to 45 days to close on a property, you should initiate the purchasing process now, in order to make sure you’re able to reap the full tax benefits.
High-Likelihood of Interest Rate Hike in December
With the results of the election and the recent performance of the stock market, Fed Chair Janet Yellen was quoted in a recent speech on Reuters, saying, “I believe the case for an increase in the (interest rate) has strengthened in recent months.” Many financial pundits, including our own Steve Hovland, agree that the Fed will raise interest rates for loans after their December meeting. To save yourself the extra costs associated with a potential interest rate hike, you should purchase an investment home now. After all, lower mortgage payments mean an increased return on your investment.
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Reduced Loan Issuance
When it comes to seasonality and loan issuance, there is a distinct correlation – in fact, banks created nearly 75% more mortgages in summer than in winter. “The winter slowdown enables brokers to have more time to dedicate to applicants and finding the right loan to fit their individual needs,” Chris Diaz, vice president of HomeUnion® Lending, states. With less applicants during this holiday season, you can take the advantage of the quality time with loan officers and acquire the loan that works best for your financial situation.
Act Now to Gain all the Seasonal Benefits
Tax advantages, favorable interest rates, and a calm of loan applicants strengthens your winter winds of fortune. Take advantage of this seasonal opportunity by purchasing an investment property now. You can get started by building a portfolio on HomeUnion®’s Investor Portal today.
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