What the 2023 Market Was Like for Landlords / Investors

​Maybe you got into the rental property market during the Great Crash. In 2008-2010, mom and pop investors were buying houses for 50k or less, spending very little on repairs, and renting them out for 20% or higher Gross Rent Ratios.


We know because many of them are our clients. For such a small investment, by the time 2023 came around, some of these houses were renting for more than $2,000 with a very reasonable track records of repairs and capital improvements. Roof replacements. HVAC. Plumbing. But $2,000 a month!


But rental investments perform very well even when you actually have to pay real money for a house. Our Broker was an investor before the crash. We've helped many clients purchase rental properties, leased and managed them, and have seen the financial benefits flow to the owner. Even when it's not a gold rush, there is wealth to be made.


Probably the worst market for investors was in 2021 and into early 2022. Ugly houses were selling for more than appraised value. Out of date houses were getting twenty of more offers.


2023 has been quite different. I would by no means call this a "Buyer's Market," but it has been a softer market for Sellers and Buyers have had some good opportunities.


Prices and interest rates are both high at the same time.


There have been a lot less homes on the market.


It's a struggle to get an 8% Gross Rent Ratio right now (which is the target number we look for when house shopping for clients). But it can be done. And even a 7% Gross Rent Ratio ends up being profitable.


And there are a lot of other considerations besides sale price and interest rate. How efficient are evictions in the county where you are buying? How quickly do homes rent in a given area? Where will the taxes and/or association fees kill you? How well will the features of a home stand up to normal renter wear-and-tear? How can you identify a potential money-pit?


The bottom line is this: rental investments pay a more modest return now than during the Great Crash, but landlords still find wealth and success in obtaining tenants who pay all or most of their mortgage. 2023 is in the books now and things will most likely get better for landlords and investors in 2024. Inventory is likely to increase. Rates are likely to decrease. Prices are likely to hold steady or decline slightly.


Coming next time: what are the opportunities for landlords / investors in 2024?