If you're planning to begin your foray into buying investment properties next year or intend to add to your existing portfolio of rental units, you'll want to know about expected trends. Are there any trends to expect in 2023? If so, what are they? Having the answers can pay dividends.
People invest in rental properties for many reasons such as rental income, property valuation appreciation, inflation hedge, tax benefits, and investment diversification.
According to one report, investors purchased a quarter of the residences sold in the U.S. in 2021. It'll be interesting to see how things pan out at the conclusion of 2022 on this front.
Continue reading to check out three real estate investment trends expected for 2023.
1. More Fractional Rental Property Investing
One trend expected next year is an increase in fractional rental property investing. If you invest in stocks, you probably know about fractional buying. It's a helpful feature if you want to buy a relatively expensive stock but don't have the financial flexibility to buy it outright.
With fractional buying, you can purchase a portion of a stock. So, if you like a company that has a stock value of $2,500 per share but can't afford to buy it, you can buy one-tenth of a share for $250. Fractional buying in the stock market is about purchasing portions. Depending on the platform you use, you can usually buy any sized portion of a full stock using fractional investing.
Fractional rental property investing works under the same principle. It may be the answer if you can't afford to take out a loan for hundreds of thousands of dollars to purchase a rental property. Various crowdfunding platforms allow investors to buy fractions of rental properties. It can open up opportunities for you if you want to invest in real estate but can't buy a home outright.
Because of the increasing popularity of crowdfunding tech, expect to see more and more people taking advantage of fractional rental property investing in the year to come.
2. Technological Advancements Will Make it Easier to Invest
Technology is helping to level the playing field for real estate investors across different socio-economic categories. You can expect to see technology making its presence felt even more in 2023. You can use technology at various phases of the property-buying process. For instance, you can use tech to do the following using technology:
While it's probably best to physically go and see a property of interest before pulling the trigger, it's technically possible to seek out and purchase a property sight unseen. You can expect to see more and more investment property buyers leverage the power of tech. Technology really is about leveling the playing field. If you live in an expensive part of town or if your state's real estate prices are higher than average, you can focus on properties in other areas. Using technology will open up more investment opportunities to take advantage of.
3. More Demand for Rural Properties
Do you remember the work-from-home orders in place not long ago? The authorities wanted to slow down the spread of the coronavirus, and they requested that businesses allow workers to work from home. Many people, working from home and no longer commuting, decided to relocate to rural areas.
You can expect to see greater demand for rural properties in 2023. If you're a new real estate investor, you can often find better deals if you're willing to buy in rural regions of the country. But prices have gone up in some rural areas because of the increasing demand. Depending on the rural areas you're focusing on, you can find some reasonable prices for rental properties.
These are just a few trends to be on the lookout for in 2023. If you're interested in buying investment properties, you'll want to look at a proverbial crystal ball to see what's up next. It'll make you a more informed investment property seeker in the year ahead.