Timing to Buy Rentals and Cycles in Lease Renewal?

Question

Hello,

I am looking to purchase a SFH next year (in DFW) as a long term rental property investment and was curious about peoples thoughts on timing. I have seen posts/articles that mention end of year is a good time to buy deals but on the other hand the holidays are not ideal to find renters.

Is there a target time of year to buy to rent out? As a landlord would you try to set up the lease contract to end at certain times of the year where you would avoid potential vacancy (like the summer or holidays)? I am a first time investment buyer so any insights would be greatly appreciated.

Much Thanks!

Fatin K. · Answer

Thank you all for the insights, greatly appreciated!

Bruce Lynn · Answer

Generally I would say easier to rent in the Summer.  However that might also depend on where you buy, price range, rent range, etc.  If you buy higher end in school driven markets...then Summer rentals work best.  Then we often time the leases to end in the Summer.....rent in Feburary you might get a 16month lease....etc.

I think these days with the shortage of inventory in DFW it would be tough to time the market on a purchase and a rental and think you are going to either save a bunch of money on the purchase or rent for a lot more by waiting for a certain timing.

There sure seem to be a lot of expensive rentals on the market right now, so buy as cheap as you can stand in the neighborhoods you feel comfortable with.

Bart H. · Answer

We buy the deal, and worry about renting it later.

This is the second year in a row we have been looking at properties and had a house under contract on the Monday after Thanksgiving.

If you are going to do any rehab, then it should be rent ready and on the market by January (if not before that)...

Ron Hall · Answer

If you find a property and the numbers make sense, buy it, if the numbers work jump on it, I do agree that it is better to have a tenant in place if you are buying in the winter, a property being vacant should not be a deal killer if the numbers work.

Thomas S. · Answer

Buy when you find the best deal that works with your numbers. Most likely there will be tenants in place already. Invest in a multi with tenants to begin. If you must buy a SFH find one that is already a rental property with a tenant otherwise you will be paying home buyer prices. Although inherited tenants usually need to be replaced you can do it on your own time table. Move your tenants on M2M leases, when their term leases expire, so that you control the property rather than the tenant.

Mike H. · Answer

I don't know if winter in texas is as big a deal as it is up here in the northern states where you have to deal with all the snow and cold. People don't like to move in the cold. Down there maybe not so much.

In terms of when is the best time to buy a rental, I would say its whenever you can find a deal. Typically, you're right though. Winter time is usually the best time of the year to find a deal. Banks want to get rid of their stuff at the end of the year.

In terms of best time to buy and rent? I wouldn't go there. Given how competitive this market is right now, you might wait for some 2 or 3 month window to find a deal and then nothing is out there during that window so you end up with nothing.

Better to just start looking. If you find a deal, no matter what time of year, take it down. You can always discount the rent 50 to 100 bucks a month to get it rented real fast. Then extend the lease out to 18 mos so you can get thru the winter next time and aren't in the same spot.....

Fatin K. · Answer

Hi Matt K.- yes I agree, that is a very good point! So lets say I might be a little late on locking a deal in the next month. Any other time to target (Spring to early summer) or is the main goal just to lock in a good deal and take it from there?

Matt K. · Answer

It's going to be regional, but put it this way: it's going to take a LOT of profit to make up the money saved on a good deal. If I save 15k by buying at year end because someone wants to dump it and lets say rents 1k I'm probably not going to have a vacancy for 15 months. Plus if I'm only making a profit of 100/mo on this... that 15k is likely the only reason this deal even works....