Timing the Market: When to Invest in Orlando Property for Optimal Returns
It’s always the right time to buy an Orlando investment property.
Investors interested in buying their first property or growing an existing portfolio often ask us about the best time to buy an investment property in the Orlando market. The perfect time would be at the bottom of the market, but it’s difficult to get the timing exactly right. And the existing market is strong. It’s competitive. It’s moving quickly.
You should still invest. We expect these trends to continue.
Real estate, even in a market like the one we’re currently experiencing, tends to move at a pace that’s slower than stocks and other types of investments. A few years ago, we saw everyone else selling, especially if they had single-family homes. They wanted to pull the cash from their homes and their investment portfolios. Smart investors kept their properties through all the ups and downs that ensued, and today there’s even more demand and even higher price points.
As local Orlando property management experts and fellow investors, we want you to know that there’s really never a bad time to invest. What matters is how you position your investment and how you approach the market – no matter how you find it.
We can help you. And today, we want to provide some of our thoughts on how you can structure your acquisitions, your renovations, and your financing in order to leverage the strengths and opportunities of any Orlando real estate and rental market.
Pro Tip: The Right Time to Invest in Orlando Real Estate is Any Time
At Homevest Management, we are professional property managers in Orlando, and we work with a lot of investor clients who are local and also outside of the area. Some of our rental property owners understand the nuances of the Orlando market, but many of them turn to us for advice on buying, selling, and renting out the assets in their portfolios. We’ve seen the market and participated in the market at its soaring heights and its most devastating lows.
We never make impulsive decisions.
After all this time of investing and helping others to invest in rental property, we have come to see that the best time to buy is really any time.
That should not be a controversial opinion, especially if you consider recent history. In the Tampa Bay area, there are cycles of growth as well as contractions that demonstrates the Tampa real estate market is pretty strong. Values tend to double every 10 years. That’s a pretty good indicator that you’re going to make money on your investment no matter when you buy.
Buy to Hold and Acquisition Timing Rarely Matters
It’s our position that the amount of time you spend in the market is far more important than the point of time in which you approach the market. Make your investment a long-term plan. This means that whether you buy during a strong real estate market or a slow real estate market, you’re maximizing what you earn and minimizing what you lose by holding onto your asset as long as possible.
It’s simple math and it’s also good business sense. Especially now, when home prices are so high.
It’s often attractive for investors to buy and flip, hoping to make some quick money on a deteriorating asset that needs a little extra work. The idea of making some quick cash is appealing. But, it doesn’t always work out the way you expect it to, especially with materials and labor so expensive and contractors overbooked and understaffed. You could find yourself waiting longer to get a flipped property onto market. You could also find yourself spending more on the renovations and earning less on the sale.
But, if instead your strategy is on buying a stable rental property, keeping it occupied by great tenants for five or 10 years or even longer, and then even paying off the mortgage to earn cash every month while the home appreciates – you’re in a strong and enviable position. Your tenant is paying down your mortgage while you rent it out. You’re accumulating equity and watching your property increase in value. You’re making systematic and strategic improvements and renovations so that the rental value of your property continues to increase and you earn more in recurring and consistent income.
Buying When Mortgage Rates are High
Unless you’re paying in cash or conducting a 1031 exchange, buying a property now is going to come with some pretty high interest rates. This isn’t a deal breaker; refinancing when the rates come down is an attractive option.
As interest rates remain high, mortgages are more expensive. This has led many real estate investors to consider whether this is the right time to buy an investment property. While high mortgage rates can indeed pose challenges, they can also present unique opportunities for savvy investors who know how to navigate the market.
Here’s how to leverage an investment during a period of higher than normal mortgage rates:
- Enjoy Fewer Competing Offers
One of the most significant advantages of buying an investment property when mortgage rates are high is reduced competition. Many potential buyers may be deterred by the higher cost of borrowing, leading to fewer bidding wars and more negotiating power for those who remain in the market.
- Potential for Price Adjustments
High interest rates can also lead to price adjustments that may work in your favor. Sellers could potentially be more willing to negotiate or lower their asking prices to attract buyers, providing opportunities for investors to acquire properties at a discount.
- Long-Term Investment Horizon
Real estate, as we said, is most profitable when you approach it as a long-term investment. If you’re planning to hold onto the property for several years, short-term fluctuations in mortgage rates become less critical. Over time, you may have the opportunity to refinance at a lower rate if and when rates decline.
Don’t be too dissuaded by the higher rates. We do expect them to come down a bit before the end of the year, and we know that if you plan on holding this asset for the long term, it won’t really matter later.
Buy When Everyone Selling
It’s sometimes hard to remember that you’re actually making money when you buy. Do you make money when you sell an asset? Of course. But, buying the property is also providing revenue, even if you can’t see it yet.
When everyone else is buying, you’re not going to make a ton of money right away. But, if no one is buying and you’re acquiring everything you can, you’re going to be in great shape as the market begins to rebound.
Options for Expanding Your Real Estate Portfolio in Orlando
We think it’s a good time to buy, and a lot of investment experts would agree. But, maybe you’re not prepared financially. If the economic factors are not in your favor currently, it doesn’t mean you cannot grow your portfolio and increase its value. There are other ways to make yourself more profitable. Consider:
- Increasing Portfolio Values
Maybe your investment goals aren’t just about acquiring new rental homes. Maybe you want to earn more money on the properties you already own. If you’re in a period where you’re not going to buy, paying attention to property value and rental value is a great way to cement portfolio essentials. Your Orlando property management partner can help you do this. Rely on their recommendations on how to drive up rental values for the homes you’re currently renting. Sometimes, a simple coat of fresh paint or hard surface flooring instead of carpet can bring in extra rents. You can improve the landscaping and curb appeal or switch out those old appliances for new, energy-efficient models. There are lots of options and opportunities.
- Consider a 1031 Exchange
A great way to grow and diversify your investment portfolio without making much of a financial investment yourself is by conducting a 1031 exchange. You can trade one investment for another through this tax-friendly transaction. Maybe you’ll want to sell one property that isn’t performing the way you’d like it to and use the proceeds to buy another property or even two properties. Sell a single-family home, for example, and buy a small apartment building. This grows your portfolio by giving you several income streams instead of one. And, you don’t have to pay capital gains taxes on the home you sold just yet.
We do not believe there is only one specific time that is ideal to buy investment properties. Our opinion is that it’s always a good time, even if the market presents its challenges. This may not be true everywhere, but in Orlando, you’re always earning money when you invest in real estate. Rents are higher. Tenants are abundant. It’s a good market for making money.
If you’d like us to take a look at your investment goals and make some recommendations, we’d be happy to do it. Contact us at Homevest Management, Inc. for all of your Orlando property management needs. We serve all of Central Florida, including Winter Garden, Doctor Phillips, Baldwin Park, Winter Springs, and Windermere.
