Real Estate Investing: Opportunities in 2023 in Top Pandemic Markets

The coronavirus pandemic and its subsequent economic effects brought unexpected volatility to the housing market. Soaring home prices defined the market in many areas throughout 2022, but for many, 2023 is an opportunity to look ahead. To find success in 2023’s pandemic-affected markets, it’s important to target the right areas. Read on for a breakdown of some of the hottest markets for 2023 so you can grow wealth by investing in property, whether you’re an experienced investor or establishing a brand new portfolio.

Overview of Real Estate Investing

With today’s explosive stock market and the rise of controversial investment opportunities like cryptocurrency, Americans from every income level may find themselves wondering where to put their hard-earned money to grow wealth. In a time when homes are in great demand, investing in real estate is a key strategy for those looking to expand their portfolio and optimize their returns. Because real estate can generate passive income, which is income investors receive without active labor, it can be an excellent revenue stream to prepare for retirement or build generational wealth.

Key Takeaways

• Real estate investments can be some of the most lucrative for investors hoping to grow wealth.
• With high demand and limited inventory, today’s housing market provides unique opportunities for investors to optimize their returns.
• Real estate investing includes renovating and flipping homes, owning long-term or short-term rental properties, and REITs.
• Real estate investments often supply owners with passive income.

Reasons To Consider Real Estate Investing in 2023

This year might be the ideal time to start your real estate investing journey. With challenging but rewarding market conditions, many experts expect this year to be eruptive in real estate. Here are some reasons to invest in property in 2023:

• Price growth is slowing. While 2022 saw record-high prices in many markets, experts like Goldman Sachs expect prices in most areas to correct themselves in 2023. There is even suspicion that price growth for properties will halt entirely this year, making investing in real estate more achievable, even for those with limited disposable income.
• Houses are in high demand. Experts declared a housing supply crisis in 2022. While builders race to create enough new construction to meet demand, investors are in a unique position that promises a plethora of interested buyers and renters willing to pay increased market prices.
• Property is a reliable investment. There are plenty of new investment opportunities available to today’s investors, from NFTs to cryptocurrency, but these new technologies often come with substantial risks. Real estate is a predictable investment that steadily grows in value over time, meaning long-term investments are likely to earn high returns.
• There’s a lower barrier to entry than you might think. For many, real estate investing appears to be a goal that’s difficult to achieve, but there are actually many paths to buying property today, even for those with little to spare. For example, purchasing an affordable rental property with a mortgage and finding reliable tenants allows you to pay it off over time with minimal upfront costs.

Top Pandemic Markets

The pandemic shook up the real estate market. Cultural shifts, like the move to remote work and a renewed interest in home and family life over career ambitions for many, led many home buyers to seek more space and more affordable or family-friendly environments. The result was a seller’s market. Homes sold at sky-high prices, and buyers, families and investors alike, saw steep competition for these assets.

Prices especially soared in hotbed markets in metropolitan areas. It’s no surprise that in-demand densely populated areas like San Francisco, New York, and Denver were among the biggest markets over the past few years. However, experts expect a shift in 2023. Buyers, frustrated by the rising cost of living and seeking better value for their money, may turn to midsize cities. Realtor predicts the following markets to boom this year:

Hartford, Connecticut

Hartford is a target market for buyers who want an East Coast lifestyle within a reasonable distance from big cities like Boston and New York without the cities’ price tags. Realtor reports that Hartford homes have a median value of $372,000 as of late 2022. While Hartford is facing the same inventory constraints that are affecting the rest of the country, it’s an in-demand location that could be worth consideration for budding investors.

El Paso, Texas

As a recession looms, it’s natural for Americans to worry about job security. The manufacturing industry is a staple of the local economy in El Paso, and many crave the economic stability the area could provide. This, coupled with a median home price of $291,000, which beats nearby markets like Dallas-Fort Worth, makes El Paso an in-demand area. New construction is booming as developers aim to meet the new demand, so there may be investment opportunities on the rise for those targeting the El Paso market.

Louisville, Kentucky

Situated between the Midwest and the South, Louisville, is attractive to buyers who might normally focus on pricier markets like Nashville, Tennessee; Atlanta; or Chicago. This humble metropolitan area offers the promise of affordability, with a median home price of about $300,000 and a healthy economy. Louisville is a magnet for jobs in manufacturing, health care, and food and beverages, which may contribute to its status as a new real estate darling.

Types of Real Estate Investment Opportunities

Understanding the various types of properties available may help new investors establish a plan for expanding their investment portfolio. Different properties offer distinct advantages and risks, so it’s important to select your investments carefully. Here are some options:

Single-Family Homes

If you’re new to real estate investing, purchasing a freestanding single-family home can be an excellent introduction to the market. These properties are relatively simple, as you typically only have one tenant in each. Because of the housing shortage, residential properties are in high demand, which means it’s usually fairly easy to find high-quality tenants to rent your property via monthly or yearly leases.

Apartment Buildings

You could also purchase a multi-unit apartment building. This option typically requires you to work with a property manager who manages tenant relationships and addresses issues and concerns. These buildings require more initial investment, but they provide sizable returns.

Commercial Properties

Buying a commercial property allows you to work with a wide variety of tenants. Commercial properties can include office buildings, retail stores, restaurants, and multi-use properties. These properties can be lucrative, and tenants typically sign multi-year leases, which contribute to less turnover than some residential properties.

Airbnb

Purchasing a residential home to rent out as a vacation rental can be an effective way to earn passive income quickly. Rental apps like Airbnb and Vrbo make it simple for homeowners to locate guests who want to rent their homes on a short-term basis, so keeping up a vacation rental property usually requires minimal work. You can change rental terms, like the price and rules, between tenant stays, and many investors even manage their property from another state.

There are responsibilities associated with Airbnb or other vacation rental properties. These responsibilities can include furnishing the property and cleaning it between stays. However, maintaining a vacation rental can save you the expense and trouble of hiring a property manager.

Mobile Homes

Purchasing mobile homes and renting them out can be an affordable entry point to real estate investing. These properties are cheaper than most others, have more manageable tax burdens, and require less involved maintenance.

Strategies for Investing in Real Estate

Here are some tips that may guide you when investing in real estate:

Research the Market

Know your target market well. Study the local economy and learn what factors could affect home values in the area in the coming years. Compare it to other nearby markets to ensure you’re choosing effectively.

Secure Financing

Investors have many financing options when purchasing a new property. Partnering with an advisor could help you determine the right path for you. You could finance your investment property with:

• A bank mortgage.
• A hard money loan.
• A private loan.
• Existing home equity.

Consider Tax Benefits

When investing in real estate, it’s vital that you know how to optimize your taxes. Real estate investments present unique write-off opportunities, like taxes and insurance along with investment business expenses. Capital gains taxes also apply.

Final Thoughts on Investing in the Top Pandemic Markets

When investing in the top pandemic markets for 2023, it’s important to consider what factors drive demand. Purchasing residential or commercial properties in any of these growing markets could prove lucrative. With research and strategy, you can overcome the challenges of today’s fickle economy to optimize your returns.

Real estate investing can be a solid path to growing personal and generational wealth. If you’re curious about how to start your journey, the experts at Infinity Investing are happy to help. We help new and experienced investors identify the best opportunities to finance their futures.