The real estate market is changing. Rising interest rates and inflation have diluted the number of buyers, while sales prices are stabilizing. Yet rents continue to increase, as high occupancy rates are driving demand. If you’re working with a client who’s interested in adding real estate to their investment portfolio, now’s the time to do it.
Close to Home spoke with the team at HomeServices Property Management (HSPM) to find out why they recommend investing in real estate today.
Here are the four reasons they shared with us.
Rising rental rates. Rental rates are still rising by double digits in over half of US cities. Would-be home buyers priced out of the market by rising interest rates are driving up demand and prices. Most rental units under construction are multi-family, leaving demand for single-family rentals intact.
Valuable tax benefits. Real estate can be depreciated to reduce your overall tax burden even as it appreciates. Repair costs, management fees and other rental-related expenses can be deducted from your tax bill. Additionally, investors can benefit from deferred gains via 1031, or like-kind exchanges, and purchases in Opportunity Zones.
Inflation protection. Inflation has driven appreciation of real estate holdings while having diminished other asset classes. Rental rates are outpacing inflation in most markets with double-digit growth in over half of US cities. Wage growth for market-rate renters has outpaced the rise in rental rates and demand remains high.
Strength in a diversified portfolio. Real estate holdings are a great hedge against inflation while other asset classes may suffer. It can appreciate while providing a dividend in the form of monthly cashflow. Likewise, annual leases are not subject to short-term market volatility and provide predictable income.
Transform how your clients invest
If you’d like to learn more about real estate investing and help your clients who are experienced or even novice investors, reach out to the HSPM team. HSPM specializes in next-gen property management for forward-thinking investors, and their approach delivers reliable results with proactive communication and clear, simple accounting.