Are you looking to purchase an investment property in Virginia? The Richmond, VA real estate market has become one of the most competitive in the country. Homes are selling in record time, with available inventory shrinking by more than half over the past two years. The city has quickly positioned itself as one of the best places to buy rental property.
In March 2022, Richmond home prices were up 9.5% compared to last year, selling for a median price of $325,000. On average, homes in Richmond sell after 9 days on the market–keeping the quick sales of a year ago even though the number of homes sold in March 2022 showed a decline year over year.
More signs of strength for real estate investments in Richmond: The average gross ROI for fix and flip projects is 69%, according to Attom Data Solutions –more than double the national average.
Including the suburbs, the Richmond housing market contains nearly one and a half million people and is the third-largest metropolitan area in the state of Virginia.
For investors interested in rental properties in Richmond, VA, let’s dive into reasons that now is the time to buy investment property in Richmond.
Richmond’s Rental Market
The real estate market in Richmond is becoming “less frenzy-like” with sellers still receiving multiple offers, but at a slightly slower pace. According to a Virginia Business article, prices are still rising but growth has slowed, creating a potential window of opportunity to invest in rental property in Richmond.
In the Richmond area, brokers and real estate agents are still seeing multiple offer scenarios and competitive offers. For most of 2021, buyers waived all contingencies in many cases, just to seal the deal.
As with many other real estate markets in Virginia, prices are rising simply because there’s not enough supply to meet the growing demand for property in the Richmond metropolitan area. Additionally, rents in metropolitan Richmond surged during the pandemic and show no sign of slowing down.
It has never been more expensive to be a renter in Richmond. The average monthly rent for a one-bedroom apartment in Richmond is $1,435 – an increase of almost 14% from March 2021.
After jumping more than 5% in 2020 — then the highest single-year growth in almost a decade — rents climbed an additional 11% in 2021. Combined, the region’s rent increases have outpaced the national average — an 11% increase in rent prices — since the start of 2020.
Richmond’s rising rents have been fueled by surging demand for apartments and single-family rental homes in Richmond.
Single-family detached homes are the most common housing type in Richmond, accounting for nearly 50% of the city’s housing. Other types of housing prevalent in Richmond include large apartment complexes, duplexes, and row houses.
Richmond’s multifamily sector has become one of the most active parts of the city’s rental market. Between January 2021 and 2022, multifamily construction permits increased 128%. The 2021 Berkadia Mid-Year Multifamily Report showed that 3,946 units had been constructed by November 2021.
This multifamily building boom means that nearly 12,000 units under construction in Richmond at last report. Investments also picked up, with $789 million in transactions closed year-to-date through August 2021, more than double the volume of the same period the previous year.
What Richmond Holds for Investors
A rental property investment in Richmond, VA can be a profitable strategy for 2022. Richmond’s real estate market continues to move briskly, with buyers willing to pay more for homes than sellers are asking and above average appreciation rates.
Appreciation rates in Richmond have been double the national average for the past 10 years. The national cumulative appreciation rate hovers around 6%, but last year, Richmond’s rate was 14%.
Richmond offers several investment strategies for investors looking to expand into the area, and as rental property lenders, Lima One is here to help investors profit. We have financing solutions to help investors, no matter the strategy, and we offer the nation’s premier suite of rental property loans. Additionally, we provide 30-year rental property loans and assistance building a rental property portfolio. The Richmond investment real estate scene moves quickly, but so do we.
As experienced lenders, we’re able to move quickly when you find the right opportunity. Our clients have different investment strategies, so we have designed our loan options to allow us to cater to their individualized needs. Contact us today to discuss your next deal, or if you have a deal in hand, accelerate the process by applying now.