Benefits of Investing In Rental Properties in 2024
We’re almost in the middle of the first quarter of 2024, and it has been a good start. The market is improving, and we have seen the Government put brakes on the rising interest rates and the rent increases.
While there is still uncertainty about a recession, many investors and landlords have started to look for properties that can generate steady income in the long term. If you can adapt and capitalize on the changing dynamics of real estate this year, you might want to consider investing in rental properties. Are rental properties a good investment? Let’s take a look.
What are rental properties?
Rental properties are those assets that you can purchase as an investment and rent out to people for the short term or the long term. There are various types of properties you can invest in. It includes commercial, residential, and industrial property and the goal of all rental properties is to generate cash flow.
The demand for build-to-rent has seen a massive rise as young families, empty nesters, and remote workers are trying to make the most of the homeownership benefits but will not or cannot buy a property. The steady rent income and high occupancy rates increase the investment in this sector and it could be huge in 2024.
The overall outlook for 2024 is positive, and there are several factors behind it. There is high affordability, inventory issues have driven demand, and as we anticipate a Fed rate cut, we could see a better investment environment. Rent prices will also bounce back as the interest rates stabilize.
Reasons to invest in rental properties in 2024
A hedge against inflation
If inflation rises again, the rents will also increase. Real estate investment is often known as a hedge against inflation. This is due to the fixed mortgage rate, where the interest payments remain the same while rental income continues to grow over the years. Besides that, you start building equity in the home and benefit even in times of inflation as you enjoy long-term appreciation of the property.
Property values usually increase after downturns
History has shown that real estate picks up after an economic downturn, and housing appreciation has skyrocketed in the past few years. We have seen double-digit growth in a lot of homes. Yes, there remains a risk of an economic downturn that can change things, but the property value will bounce back and increase in time. Hence, if you are investing for the long term, expect your investment to grow over time.
Real estate is less volatile than the stock market
We have seen that the average annual return on real estate as compared to the stock market is higher over a longer tenure. Hence, if you are confused between investing in the stock market or real estate, you need to remember that you will take home higher gains through real estate investment over the years.
It also has low volatility and there is no correlation between the stock market and the real estate sector, which means it is a good way to achieve diversification in your portfolio. However, first-time investors may have to face a learning curve, but you will need to work on your personal finance goals before you start investing.
The rental demand is high
Home prices are slowing in different markets yet they are not affordable for many. It is anticipated that home prices will keep rising this year because of the demand-supply disconnect. The professionals at Outer Banks Rentals state, “We have seen a massive rise in inquiries for our properties over the past six months, and we expect the same to continue throughout this year.”
There are just not enough properties to meet demand. This means rental properties will continue to attract residents and if you are looking to invest in a vacation rental, you will also see a higher demand due to revenge travel.
Managing a rental property is much easier
With the advances in technology, it has become easy to manage your rental property. You can either do it yourself or hire a property manager to handle it for you. There is a chance to change the rental experience and forget the hassles you faced earlier. With the latest tech and innovation, you can easily manage your property from the comfort of your home.
The real estate sector offers plenty of investment opportunities, and if you are looking to invest in a rental property, whether it is a home or a vacation rental, now is the best time to do so. The economy is improving, and there is high optimism in the industry, making 2024 one of the best years for investment. Consider the purpose of your investment and then go about looking for a property.
