Rental properties have long been a popular investment option for those looking to diversify their portfolios and generate passive income. However, as we enter 2023, the rental market is evolving, and build-to-rent, fix-to-rent and buy-and-hold investors need to be strategic in an increasingly competitive market. Below are five rental investment strategies for 2023 that will help landlords maximize their returns.
1: Invest in rental properties in high-growth areas
One of the most important rental investment strategies for 2023 is to invest in high-growth areas. This includes cities and towns that are experiencing population growth, job growth, and increased demand for rental properties. By investing in these areas, landlords can potentially see higher rental income and appreciation in property values.
When looking for high-growth areas, it's important to consider factors such as economic growth, local amenities, and infrastructure development. Landlords can use data from sources such as the U.S. Census Bureau and real estate analytics companies to identify these areas, or try a Google search with the term "high growth areas for rental investing" to see a list of articles and resources.
2: Diversify your rental property portfolio
Diversification is a crucial investment strategy, and this applies to rental properties as well. By diversifying your rental property portfolio, landlords can reduce their risk and potentially increase their returns.
This can include investing in different types of properties, such as single-family homes, multi-family properties, and vacation rentals. It can also include investing in different locations or markets to spread out risk.
3: Consider short-term rental properties
Short-term rentals, such as those listed on Airbnb, can be a lucrative investment opportunity in 2023. Many travelers prefer the comfort and convenience of a short-term rental over a hotel, and this trend is expected to continue.
However, landlords need to carefully consider local regulations and the potential risks involved with short-term rentals. They may also need to invest in additional amenities and services to make their properties stand out in a crowded market. Due diligence is the key--definitely do your research.
4: Consider energy-efficient rental properties
Sustainability is becoming increasingly important to renters, and landlords who prioritize energy efficiency can potentially attract more tenants and give renters the extra incentive of saving money on utility costs. Energy-efficient properties can include features such as solar panels, energy-efficient appliances, and smart home technology.
By investing in energy-efficient properties, landlords can also potentially increase the value of their properties and appeal to environmentally conscious renters.
5: Invest in property management technology
Technology is rapidly changing the rental market, and landlords who invest in property management technology can potentially see higher returns and reduce their workload. This can include tools such as property management software, online rent payment platforms, and smart home technology.
By automating tasks and streamlining operations, landlords can save time and money while providing a better experience for their tenants.
These five rental investment strategies for 2023 can help landlords maximize their returns and stay ahead of the competition. By investing in high-growth areas, diversifying their rental property portfolio, considering short-term rentals, focusing on energy efficiency, and investing in property management technology, landlords can potentially increase their rental income, reduce their risk, and appeal to a broader range of tenants.