With properties selling for top-dollar you may be thinking to yourself, is it time for me to cash out on my investment property? While high prices might have you reaching for the “For Sale” sign, savvy investors should instead consider transitioning their property into corporate housing to reap the biggest reward.
Market conditions are prime for investors choosing to hold onto properties. Over the past two years, the housing market has been fueled by record low interest rates. Whether you secured a low rate upon purchasing a new property or by refinancing, you are now sitting on an interest rate goldmine as the days of record-low rates come to an end. The Federal Reserve has already begun aggressively raising rates and has indicated it will continue to do so for the foreseeable future. If you sell now, you will forfeit your advantage as it’s unlikely you will be able to secure a mortgage at these rates for quite some time—if ever.
In this economy and market, low rates are much more valuable to real estate investors than fast cash. If you sell now, you will have limited opportunities to reinvest your cash in real estate. Inventory is still low, rates are on the rise, and economists are continuing to sound the alarm bell on growing inflation. On the flipside, holding on to your investment property and converting it into a corporate rental will have each of these factors working in your favor.
It is important to understand that there is a confluence of reasons for the record high housing prices we are seeing today, including record low inventory that has incited bidding wars and driven up prices nationwide. While these record high sales might instill in you a panic to sell your investment property fast, considering your options will help you to recognize the power you currently have to grow your income for the long-term.
First off, know that you are in a good spot as an investor. Home prices are continuing to grow and remain high. In fact, Fannie Mae recently reported that in just this past quarter, home prices grew at an annualized rate of 19.4%, still wowing the market. So rather than sell, strategize. Revamping your investment property into a highly covetable corporate rental will allow you to continue to see increased income from the property for years to come. Here’s why:
The past two years marked by the COVID-19 pandemic have created a bottleneck in the housing market. Buyers far outnumber sellers, causing those looking for houses to rely on rental properties as they look for their next home. Companies too are continuing to adapt to new work styles, either relocating offices outside of cities or allowing workers to remain remote. This new flexibility is sparking more demand for corporate housing. Homebuyers moving to new locations want to test out an area before making a purchase and must rely on medium-term rentals to fill the gap. Furthermore, the competitive housing market has potential homebuyers looking for temporary housing solutions as they try to secure highly competitive properties.
In many cases, companies are the ones to front the cost of temporary housing for employees relocating. This shift in corporate culture has increased demand for corporate housing units. Companies fronting the cost of temporary housing for their employees find more value in fully furnished rentals from trusted corporate management companies and are willing to pay top dollar for a property that meets their requirements. Location, safety, design, quality, and ease of access are among the top considerations for corporate clients, which is why fully furnished medium-term rentals are prime for investors to receive the biggest bang for their buck—especially in this housing market.
