What is the real estate outlook for 2023?
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. This housing shortage helps boost the industry’s prospects, but is also fueling a surge in costs and other financial turmoil.
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 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 2023. Your applications and agreements may cite the latest codes and regulations, many of which have changed during the pandemic era to protect both renters and owners during the financial uncertainty that arose during COVID-19.
Many property managers and landlords may consider increasing rent to offset rising taxes in 2023.
Will the eviction process be easier in 2023?
The pandemic-era protections that prohibited landlords and property managers from evicting tenants have ended. Those protections led to widespread nonpayment of rent that devastated many small landlords financially. Unfortunately, though these protections have ended, the effects may continue to be a challenge for years to come for many of the impacted landlords.
Generally, it should be simpler for landlords to remove tenants in 2023 than it was in 2022. Although the temporary restrictions on evictions that remained were lifted nationwide, some counties and cities did implement new laws to update the process and add protections for renters. Fortunately, courts are back to operating at their full capacity and the eviction process is working again.
Are condo and multifamily properties expected to continue recovering value in 2023?
All signs point to an increasing demand for multifamily homes. 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.
Will 2023 be a good year to invest in additional properties or improvements?
Property managers stand a good chance of attracting better tenants in 2023 by improving existing holdings and purchasing other properties to expand their portfolios. Many renters are looking for amenities 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.
Common area improvements, like a fitness center, business center, meeting space, or patio renovation can also draw in prospective buyers and tenants.
There may be opportunities for property buyers looking to expand this coming year as financial difficulties could force some owners to sell. It might 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 2023, 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.
While the pandemic forced thousands of businesses to close, investors may have turnkey opportunities available as a result. Former restaurants, hotels, and brick-and-mortar businesses might be a viable way to increase profits without a huge outlay of cash.
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 environment in 2023 could be just as confusing as recent years. If you have more questions about being a landlord or property manager in 2023, 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.