Those who own investment properties benefit from hot real estate markets because values are on the rise and demand is high. New property acquisitions aren’t easy at this time. A high level of competition means you’re often competing with multiple offers that are often higher than what you’re looking for. The property is also likely to cost more.

Real estate investment profitability is affected by more than just price. An investment’s return is also directly influenced by factors such as demand, cash flow, and borrowing costs. Nevertheless, price plays a major role in the equation. Experts and analysts predict that prices will decline in 2023, but prices are still positive.

There is a possibility that home price growth will slump to 0% in 2023 according to Goldman Sachs. According to other analysts, if rates don’t keep rising, prices and demand will continue to rise.

It is likely that prices will decrease this year, but rising interest rates will still pose a problem. Federal Reserve officials have taken an aggressive stance regarding the federal funds rate hike in 2023. Despite the fact that it does not determine mortgage rates, the federal funds rate has an impact on them.

There is also a decline in rental demand. Due to this, investors should consider their investment property numbers very carefully in 2023 because the rental rate you secure could be very different from market rents in 2022.

However, you shouldn’t let those factors stop you from investing. During the Great Recession, vacancy rates and homebuyer demand reached their lowest levels ever. Yet the years that followed were among the best for real estate property purchases in history. It is still far from time for a major housing correction like we saw between 2008 and 2012.

Cash flow and risk mitigation are the key factors to consider when buying. Investors who purchased the property with a long-term view have been rewarded handsomely over the past 10 to 20 years, and the same may be true in 2023.