I was thinking about how fast the summer has been flying by and a question entered my mind. For those of you who live in more extreme climates (hot hot summers, freezing cold winters), is there a certain month in the year where you stop looking to buy properties? I can imagine that it could be more difficult to rent out units in December/January than it would in July/August, and if you close on the property in say October, the units may not be ready to go until a month or two later.
If you are buying, why stop just because the weather is a little too hot or a little too cold for everyone else?
The conventional wisdom says that real estate sales slow down in the winter months because people generally don’t want to move during the holidays. Well if noone else is buying during the holidays, I bet there is some frustrated seller that will seriously consider a discounted purchase offer if only there were a serious buyer making an offer – any offer.
As a general rule, if I buy during the winter, I don’t get a tenant in place until the spring. October, November, December months are when I accept six month rental applications and negotiate on the rent to get a vacancy filled now. When the lease renewal is up in the spring or summer, then I only renew for a 12 month term. At the very least, a six month lease lets me push a vacancy into the spring and summer months.
Not to argue with Dave T (whom I have great respect for as he always provides good information), but I have found that people like to buy homes in November and December as people like to be in a “new home” for Xmas. But it slows down tremendously in Jan, Feb, and does not pick up again until the spring buying season starts. It slows down again after August because people like to have their children registered for school so they don’t have to switch schools after school starts. Keep in mind this is for OO properties. As a majority of my business is NOO there really does not seem to be a “season” for buying. When a good deal pops up investors jump on it. Hope this helps.
Oh believe me, you won’t see an argument here… just an open mind. I hadn’t really thought of lowering the rent a little for just a 6 month period. I’m actually not even sure that would completely erode my potential cash flow for those 6 months, so excellent idea! Of course, it also helps that the mortgage on a specific building I have in mind would only cost a little more than my car payment, which will be paid off in a few months.
This is all true. That means that if you buy a house (as I typically like to do) around Christmas because there is a substantial discount towards the end of the year. I also need a month or two to do a rehab. That means you come out of the slow season with a brand new rehabbed house. You didn’t waste any of the selling season with rehab time.
I am just citing the “conventional wisdom”. The conventional wisdom says that one reason sales slow down in November and December is that people don’t want to move during the holidays.
I always assumed this meant that the sellers did not want to uproot their families during the holidays if they could help it, and therefore real estate sales fell to their annual lows during November and December.
Do you have any correlation in the mortgage industry for this? Are there fewer residential purchase money loan closings during November and December than at any other time of the year (all other conditions being equal)?
I like buying in winter. There are fewer buyers, so less competition.
Also, I can see what the roof and driveway are doing when they are wet or snow covered. It’s a good time to evaluate the soil.
Obtaining tenants, on the other hand, is a lot more work during winter. They stop moving about Thanksgiving and aren’t on the move again until tax return time (unless they are being evicted).
I seem to be able to get tenants during winter, but it is darn hard work.