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Should you Invest in Rental Properties in the Current Housing Market?

Should you Invest in Rental Properties in the Current Housing Market?

May 30, 2023

Investing in rental properties can prove to be a lucrative decision. But with the fluctuating housing market and an up-and-down economy, you may wonder: is now the right time to invest in rental properties?


  • Rental property is not completely recession-proof, but unlike other commodities, there will always be demand for housing.
  • Before investing in rental properties, you should thoroughly research the rental market in your area, including employment rates and median salaries.

There will always be demand for housing.

Unlike other expenses, which consumers can adjust accordingly, people will always need a place to live — whether that’s owning or renting. And with the disparity between demand and supply in some major markets, renting is, for many, the best housing option as families and individuals wait to find their own home to purchase.

In many ways, rental properties can be a reliable investment, as opposed to other types of investments. However, real estate investment is all about long-term payoff — not quick cash.

Yes, mortgage rates are high. But they have been higher.

Yes, mortgage rates are high, with the average 30-year fixed mortgage rate at 6.39% at of May 18, 2023 — up from 3.2% in January 2022.

But historically, this is not the highest mortgage rates have ever been. For example, in 1981, mortgage rates spiked to 18.45% in the United States. Rates remained in the double digits for most of the 80s. In 2000, rates were above 8%.

You can also consider refinancing to a more favorable rate in the future.

Research the rental market in your area.

Though mortgage rates are higher than they were in years past, arguably the more important consideration in your decision to invest in rental properties is this: what is the rental market like in the area you’re considering purchasing? Is it competitive, or are units sitting unrented? Is the city’s population growing, or are people moving away?

Consider also unemployment rates and median salary. An area with low unemployment and a high median salary makes for a higher likelihood of finding reliable tenants who will be able to pay a healthy rent each month.

Beyond that, it’s up to you as landlord to work hard to keep your tenants happy: providing fair leasing terms, responding quickly to maintenance requests, and nurturing a professional relationship. This will increase your chances of keeping reliable tenants long-term, and decrease the chances of owning empty rental property.

Before investing in rental properties, make sure you have resources to cover the mortgage should the property remain vacant.

This is true always, not just when the housing market is fluctuating. If you do not have adequate cash reserves to cover your rental property’s mortgage should it remain unrented, it’s not wise to invest in a rental property.

Should you invest in rental properties in the current housing market?

The “right time” to invest is not about timing the market — it’s about buying when the time is right for you.  You have researched the rental market in the area and found it to be strong. You know that owning a rental property is a long-term investment, and not a means to a quick buck. You have adequate reserves to cover the mortgage, should the property go through a season of vacancy.

A Landmark Financial advisor can help you decide if investing in rental properties is right for you.

One of our financial advisors can help guide you to the best decision for your current financial situation. Contact us to get the conversation started.