By following seasonal trends, Maryland investors can diversify their finances and see significant returns. Property investment strategies can change depending on the time of year. The right strategy empowers homeowners to pay their debts, improve their portfolios, or even renegotiate with their Maryland mortgage lenders.
This article details the best seasonal property investment strategies for Maryland investors. With the proper guidance, homeowners can use their property to reduce debt and futureproof their finances in a dynamic market.
Live in Rental Properties First
In a "live-in-then-rent strategy,” property investors can improve their financial status in a property they plan to rent out. This often requires living in the property for at least a year before applying for an owner-occupant mortgage. These mortgages usually come with more favorable interest rates and down payments, potentially saving the owner thousands of dollars in the long run.
Take Advantage of Equity
Homeowners can build equity by making mortgage payments on time. This equity can be used in future refinancing or loans to fund improvements or other investments. Lower interest rates on owner-occupant mortgages allow owners to build their equity faster. Still, any gradual increase can be used to the owner’s advantage.
As their equity accumulates, the market may appreciate, leading to even greater returns. As equity improves, Maryland mortgage lenders may be willing to renegotiate interest rates or other terms based on the property owner’s new investment potential.
Rent Rooms in the Primary Residence
One popular approach for Maryland property investors is to rent out spare rooms in their primary residence to bolster income and expedite mortgage payments. This is especially popular with new property investors since it requires little financial planning but can reap significant rewards. With a one-room rental space or Airbnb, homeowners can start or expand their portfolios without buying new property.
Invest in Short-Term Rentals
Short-term rentals and vacation homes have been well-established as strategic investments for property owners. This investment strategy has only grown more popular with new online platforms dedicated to helping potential lodgers find a property. Depending on seasonal activity, short-term rentals can yield significant income.
Wholesaling Properties
While short-term rentals are ideal for investors with little market knowledge and experience, wholesaling can be advantageous for those with more motivation to learn the market and attract numerous buyers. Wholesaling involves finding properties with favorable purchasing terms, such as pre-foreclosures, and negotiating advantageous deals. These properties can be sold at an inflated premium to other investors, provided the owner can network quickly and take advantage of seasonal demand.
Identify Seasonal Peaks
Especially in heavy tourist areas and areas close to colleges, investors can leverage seasonal peaks in property demand to market and sell their investment properties. Well-maintained properties will be in high demand, with students and vacationers looking for affordable housing. So long as investors can predict market conditions, they can leverage high seasonal demand to maximize occupancy during peak seasons.
Focus on Single-Family Properties
Single-family properties remain a solid investment, especially in periods of high tourist activity where high-quality rental properties are in high demand. Purchasing these properties can be an advantageous investment strategy, provided the investor understands the responsibilities that come with it. For example, single-family homes require maintenance and regulatory compliance checks. Additionally, these homes appeal to large demographics.
However, they can remain vacant during the off-season, leading to a drain on the initial investment.
Consider Condos as an Alternative
Condos and co-ops provide different opportunities than single-family homes and can provide significant returns for well-informed investors. They can deliver several distinct benefits over single-family properties, including:
- Lower maintenance responsibilities owing to co-ownership and HOAs
- Higher demand for vacation stays and short-term rental properties
- Attractive condo amenities that entice renters
- Value appreciation over time, increasing resale potential
- Higher off-season value and leasing potential
With their prime locations and desirable amenities, condos in high-demand areas can provide investors with significant rental revenue and resale potential when seasonal market conditions become more favorable.
Seek Outside Funding
Property investors can seek outside sources of funding to open more investment opportunities. Crowdfunding allows investors to pool money with other like-minded investors to buy into seasonal properties such as vacation rentals, lodges, and condos. Shared ownership lowers their financial and logistical responsibility while reaping seasonal income.
Real estate investment trusts (REITs) provide another source of external passive income. These companies provide qualified investors interested in seasonal investment with access to income-generating properties. This allows property investors to gain useful exposure to seasonal rental markets and earn passive income on properties without dealing with the responsibilities of direct ownership.
Partner With Qualified Investment Advisors to Invest in Seasonal Properties
At Woodsboro Bank, our team of qualified advisors helps Maryland investors find seasonal property investment strategies that suit their situation. Contact our team today to learn how to use seasonal properties to pay down loans with Maryland mortgage lenders and diversify your investment portfolio.