What is the real estate outlook for 2024?
Most models show that the next several years could be profitable for landlords and property managers. Much of the rosy outlook is rooted in the ongoing housing crunch as most markets have more demand than supply, and the high mortgage rates are keeping many first time buyers away. This housing shortage helps boost the rental industry's prospects, but is also fueling a surge in costs and other financial turmoil. The current high mortgage interest rates are expected to come down slightly, yet stay relatively high through 2024. For landlords, this means rental demand is likely to remain high through 2024, as it was in 2023.
Efficiency promises to be one of the greatest challenges. Increasing labor costs and labor shortages are hitting many landlords in the pocketbook. Some rental owners have been forced to sell off properties to offset loss of income from evictions and rising costs. This may benefit those real estate investors who are in a position to add to their portfolios. Many property managers and landlords may consider increasing rent to offset inflation and rising costs in 2024.
Many property owners are currently revising Rental Applications and Lease Agreements to increase certain fees and associated costs borne by the renter. This is one step that may be taken to ensure continued profitability in 2024. Your applications and agreements may cite the latest codes and regulations, which may have changed since the pandemic.
Are condo and multifamily properties expected to continue gaining value in 2024?
All signs point to an increasing demand for multifamily homes, but the supply may also be increasing. Properties that can offer convenience and attractive amenities may attract a wider array of both buyers and renters.
This may help sellers and rental owners overcome some of the financial hurdles from the pandemic-fueled drop in demand for multiunit and multifamily properties. Demand for these properties is expected to continue to rise for the next several years until construction can catch up. For 2024, however, the demand may start to spread out more as construction has started to catch up and increase the supply.
Will 2024 be a good year to invest in additional properties or improvements?
Landlords and property managers stand a good chance of attracting better tenants in 2024 by improving existing holdings and purchasing other properties to expand their portfolios. The rental market is expected to remain strong for the next several years as many predict that the mortgage rates may remain high for at least a few years.
Some common area improvements, like a fitness center, business center, meeting space, or patio renovation can draw in prospective buyers and tenants. Many renters are looking for amenities that you’d expect in a home you own, like in-unit washers and dryers, walk-in closets, and air conditioning. These improvements bear an upfront cost that can be recovered through increased rents.
There may be opportunities for property buyers looking to expand this coming year as more developers finish multifamily properties. It might also still be a good time to acquire undervalued properties that stand to be profitable over the next five years.
Should rental property owners expand into other property investments?
While single-family rentals will continue to be the biggest earner in 2024, investors can consider other options to enhance profitability. One current trend that may continue is the migration of renters from high-cost cities to low-cost suburbs. A real estate investor can look into purchasing properties in uncommon places rather than focusing on expensive rental units in cities where demand has fallen.
Investors may want to consider vacant commercial properties, especially turnkey opportunities. Former restaurants, hotels, and brick-and-mortar businesses might be a viable way to increase profits without a huge outlay of cash if you can find the right tenant.
Some lucrative opportunities may come from the renovation of former industrial sites. In Dallas and Newark, industrial spaces are being renovated into apartments and multifamily housing. Certain redevelopment locations may have the benefit of distinctive architecture and a location that can drive rents higher while also providing tax breaks.
The rental market in 2024 could be just as confusing as recent years. If you have more questions about being a landlord or property manager in 2024, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.