The Rental Debate: Amid Bidding Wars, Should You Buy, Sell, Or Hold?

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The real estate market is chaotic right now. During the pandemic, when interest rates fell and more people shifted into remote work, they bought homes in places all around the country, often sight unseen. As the economy recovers, however, and as the real estate industry contends with the aftermath of supply chain interruptions, the housing stock available just can’t keep up with demand. This puts current property owners and those interested in investing in real estate in a difficult position. 

How do you navigate such a challenging market while remaining future-oriented?

Find Your Fit

One of the most important things to keep in mind when deciding how to engage with the real estate industry is that there are many ways to be involved. You can be a broker, an owner, or a manager. You can also invest in REITs or other related funds. It’s a complex sector and you’ll be more likely to succeed if you keep an open mind. 

Know Your Local Market

While prices are up all across the country, conditions vary by region. That’s why it’s important to pay attention to the specific economic conditions where you live. In some areas, it may be wiser to get out of the rental market if you own single or two-family homes because home prices are high, while rental prices are more stable. In general, it seems like a lot of investment purchases are concentrated in the hands of the ultrawealthy or, often, that these properties are being snapped up by private equity firms with no ties to the area.

Consider Inflation Issues

As expensive as property is right now, current cost isn’t the only factor you should consider. In fact, one reason we may be seeing a rush on investment properties is as a bulwark against inflation. After pandemic-related stimulus payments and other economic interventions come to bear on the economy, stowing funds in property, which will then also be a source of income, could be a smart move.

Get The Right Help

Just because you’re interested in investing doesn’t mean you can handle the entire process on your own. In addition to having a great real estate agent and lawyer on your side, you should also consider connecting with a property management company. Once you’ve purchased an investment property – or several – experienced property managers can help you evaluate the financial situation, stage and market the property, and handle day-to-day operations.

Why Get Out?

Obviously, there are a number of reasons to consider buying real estate right now, despite the high prices, but are there any reasons to sell right now? There are a number of reasons you may want to get out of your current situation. 

One reason to sell your rental property is because there isn’t a lot of demand in your area. Without sufficient demand, rents will decline, and you may be better off moving to a more active market. Or, you may choose to sell because home prices are fairly high in your area and you bought at a much lower price. The income from high-priced properties could fuel a new undertaking, be set aside as savings while you make some decisions, or be used in another way.

While it’s unlikely that this is a good time to sell larger multi-family properties, with single-family home prices so high, the benefits of selling may be greater than the benefits of holding onto your rental property. After all, while property tends to appreciate over time, the bidding wars dominating the market today could ensure you have the funds to get back in the market in a few years, no matter what comes your way.