Rental Property Trends: Is 2021 the Time to Invest or Cash in?

2 August 2021 | General, Renting

As we move further into the second half of 2021 and COVID-19 begins to release its fierce grip on our everyday life, we find that there are many questions worth asking. 

Following the uncertainty brought on by the pandemic and its threat to plunge the American economy into another recession, a vital question on the mind of investors is whether real estate is a good investment in 2021. 

Although most of the nation is still trying to return to normal, we can tell you that the short answer is yes. 

In this article, we’ll take you through emerging rental property trends, analyze what they mean and why you should consider adding real estate to your portfolio in 2021. 

Rental Property Trends in 2021

1. Impending foreclosures and evictions


Impending foreclosures and evictions

In 2020, the government announced an eviction ban to protect tenants and homeowners facing financial difficulties due to the pandemic and reduce the spread of the virus. But this national eviction moratorium expired on June 30th, 2021, making way for impending foreclosures and evictions. 

As lenders and landlords try to recoup income lost in the form of missed rent and mortgage payment, this presents a golden opportunity for you to purchase rental properties at great prices. 

On the other hand, current landlords and investors face problems like raising capital due to constricted cash flow. However, UCLA reports that COVID cases have risen since the lifting of the eviction ban. Hence, the future of this trend is uncertain as the government might want to scale back on foreclosures and evictions. 

2. Low-interest rates

Prospective real estate investors are in luck as the second half of 2021 unfolds. Efforts to mitigate a financial recession and curb growing concerns about a second wave means mortgage rates are at an all-time low. 

The average rates are now making new records as interests fall below 3%. That means owning a home is now increasingly affordable, and new investors with great credit and some savings can acquire one or more new rental properties. 

Fixer-uppers are also an excellent way to increase your income because their rates are even cheaper. Buying a house that needs renovation might seem like a costly undertaking, but with the proper know-how, you could make a quick return. 

3. Tax breaks

While there might not be an influx of cash to support new investors who would like to become landlords, there is some financial relief in the form of tax breaks. 

There are several costs property owners incur that are eligible for tax cuts, so if you’re worried about the underlying costs of renting out a house, you could already have coverage. 

New tax policies provide breaks for costs like home insurance, HOA fees, housekeeping, and other staff fees. With these tax advantages in place, you could significantly increase your returns or at least get a much-needed breather. 

4. An emerging seller’s market


An emerging seller's market

There’s a nationwide housing shortage due to the combination of record-low mortgage rates and a rise in the population of immigrants.  The halt in construction work earlier this year due to the pandemic, has also contributed to the housing shortage, turning the real estate industry into a seller’s market. 

Limited housing units at affordable prices mean that demand is higher than supply, which is good news for current property owners. But it’s not too late for fresh investors to jump in and make a profit. 

Strategic investors are looking to acquire high-value homes in selected neighborhoods, make some upgrades, and sell them at a higher price. 

5. Increase in rent

Real estate has garnered a reputation as a stable form of investment. However, since the pandemic, there has been some uncertainty concerning real estate prospects, seeing as small landlords were hit pretty hard when profitable ventures started to run at a loss thanks to eviction bans and foreclosures. 

Despite that setback, projections predict that there will be an increase in home prices. This trend is because the world is adjusting to COVID-19, and the end of the moratorium is insight. 

Moreso, the industry is failing to keep up with the demand pushing prices up even further. While this trend might be a concern for tenants, it signals economic growth for property owners. 

6. Surge in construction 

Surge in construction

As things return to near regular activity, projections expect construction to pick up with a lot of steam. To curb the housing shortage, the construction of new housing units should meet that of 2019s even surpass it. 

There’s also some reluctance to buy due to fear of a recession. That indicates that there will be a surge in rental properties across the board. While there is a demand for all types of homes, some are expected to overtake others. 

Single-family and moderate-income apartments are now attracting more attention, fueled mainly by the predominantly young market. Earlier trends saw a softening towards multifamily rentals, and there’s no indication of that interest disappearing overnight. 

7. Some return to urban cities

Many people fled urban cities during the pandemic due to the lockdown and a switch to remote work. But as COVID cases drop, more people get vaccines, and jobs return to a physical or hybrid setting; residents will gradually return to big cities.

So with things returning to normal and their usual state of activity, vacancies should fill up pretty quickly, especially when you consider the rising trend in the housing shortage. That means investors looking to purchase or construct new units in dense cities are more likely to see a return on their investment. 

Conclusion

Real estate has always been a dependable source of passive income, but its profitability varies with trends. Although COVID-19 has negatively impacted the industry in some ways, as we move into the second half of 2020, owning rental properties looks more attractive.

Of course, you have to manage your property efficiently to get the most out of whatever investment venture you find appealing. An excellent property management company could take the load off your plate by providing round-the-clock maintenance services, thorough tenant screening, and other related services.