Book Now Available

Get Your Financial Fix! Subscribe For Our Latest Planning Tips.

Buying A Rental Property In 2022? Make Sure You Consider This First.

I honestly wonder if I can make it as a real estate guru at this point. Answering so many questions on the topic causes my clients to treat me like a realty genie. But funnily enough, I end up with my own set of wishes for my clients who are looking to buy.

Going through the process of buying a rental property so many times reveals common patterns and misconceptions. And I wish for my clients (and everybody else) to be more aware of the potential pitfalls and market factors involved in their decision.

In a marketplace like 2022’s, the stakes are particularly high. And that’s because missteps are more expensive than ever. If your wish is to buy a rental property, and mine is to make you more aware, then let’s review the key questions to ask yourself before buying together. 

What’s Your Rental Property Mindset?

There seems to be a typical rental property mindset. And it’s commonly used to conceptualize the “norm” for real estate investing. Let’s review it together, and see how much of your understanding aligns with it. 

Most think they’ll make a down payment, find tenants, establish a short-term rental (often through VRBO or AirBnb), collect rent, pay for the maintenance and mortgage, and pocket what’s left as passive income. As that passive income flows in their property will continue to appreciate in value. In the end, they’ll be able to sell the property for a gain or hold it as a continual source of revenue. 

This general understanding is great, but flawed. It highlights the powerful potential of rental properties, but fails to note the risks. That’s because it’s an ideal scenario. And if you solely think along these lines, you’re leaving yourself vulnerable to many misconceptions.

Are You Aware Of These Common Misconceptions?

There are several stumbling blocks that stand in the way of an ideal rental property scenario. Many don’t want to acknowledge them, or simply fail to see them. But it’s vital to spot them ahead of time. Below, are some of the most common rental property misconceptions:

  • Your Home Will Appreciate: The value of the home is subject to fluctuation. Recently, properties have appreciated to extremely high levels. But they haven’t fluctuated to the respective downside much, if at all. Yes, properties have a tendency to appreciate over time. But this doesn’t guarantee your home will keep appreciating from here. In fact, it may even depreciate. 
  • You’ll Make Passive Income: The income payments you collect are eaten up quickly. Between the mortgage you’re paying, and the maintenance you’re providing, the passive income you make may be very low. Sometimes it’s only enough to lessen the costs of a mortgage and maintenance. Also, many vacation properties only have seasonal income. So the timing of your purchase can greatly impact your income for the year. 
  • You’ll Be Able To Find Tenants: Finding tenants isn’t always easy. You can have an ad out for months with no hits. And even with legally procured background checks and proof of income, there’s no guarantee the tenants you find are going to behave as you imagined. 
  • You’ll Be Able To Sell: Being able to sell your home isn’t a guarantee either. Despite how easy it may seem to sell real estate today, when it comes time for you to sell, it may be a much less seller-friendly market. And if you’re desperate to get rid of it, you may have to drastically drop the price to close the deal. 

Now, don’t get me wrong. It’s entirely possible your home will appreciate while you make passive income. And you may have no trouble finding tenants or selling your home. But the point is this, there’s always risk depending on present market conditions. And your success could depend on your financial shock absorbers. 

Do You Understand 2022 Market Conditions?

Last year we saw trends that created a red hot housing market. These included, but were not limited to work-from-home norms, higher personal savings rates, and demands outstripping supply. Together these forces pushed home prices and remodeling costs through the roof, pun intended

Going into 2022, many industry experts anticipated a notable slowing in the rise of home prices.1 But recent trends have indicated something different.2 The Federal National Mortgage Association (Fannie Mae) now expects the median home price to go from $355,000 to $384,000 this year.2 This 11.2% year-over-year increase does show growth slowing, but not as much as expected.2

The drivers of these home price increases look similar to 2021 as well. Consumer Price Index data shows price hikes for home improvement are greater than many non-house-related goods amidst recent inflation.3 Additionally, labor shortages and supply chain issues continue to persist. 

Richard Branch, Chief Economist of the Dodge Construction Network recently stated, “Rising costs, skilled labor shortages and lack of materials continue to create challenges for general contractors and their clients.”4 It seems many industry professionals agree that these rising prices, supply chain problems, and shortages in labor aren’t going anywhere soon.

Do You Understand The Implications Of These Trends?

As explained with general rental property misconceptions, present market conditions are hugely impactful. And in 2022, they’re going to impact the costliness of real estate investing. Below are a list of implications you need to incorporate into your decision making:

  • Higher Mortgage Payments: The average 30-year fixed mortgage rate hit a decade high in April, 2022.5 And this trend of rising interest rates is forecasted to continue throughout the year. This means more rent money will be needed to offset mortgage payments.6
  • Higher Maintenance Costs: Maintenance in 2022 is going to cost you more in time and money. Supply chain issues have resulted in supply and labor scarcity. This translates to more expensive and time consuming work on your rental. Oh, and more rental income needed to cover costs. 
  • Lower Tenancy Issues: With home demand so high, many won’t be able to compete and close on homes. Additionally, those who moved back in with family due to the pandemic are predicted to re-enter the rental marketplace.7 As a result, rent demand is forecasted to increase and rental vacancy rates are expected to stay near historic lows.8 
  • Lower Inflation Pain: If the trends of 2022 continue into the future, your rental property can serve as a great way to head against inflation. An 11.2% year-of-year increase in the median home price is still ahead of the extreme inflation of 7.9% we’ve seen this year. 

The Bottom Line

Make no mistake, this is not a hit piece on rental properties. When approached correctly, the purchase of a rental property can be a fantastic investment. And it’s one I’ve seen work well for clients time and time again. But let’s be honest. The risk factors are rising for folks who still haven’t bought one. 

But like with any investment, you have to do your due diligence. It’s easy to get sold on the idea when you only focus on the potential upsides. And rental properties have plenty to offer. They can bring in passive income, expand your wealth, and protect against inflation.

But they also have downsides. Property buyers can underestimate the impact mortgage and maintenance costs have on their revenue stream. That’s especially true when it comes to rental prices 2022. 

In the end, getting a rental property may be a wise decision. But that depends largely on your personal situation and prevailing market conditions. At Crafted Finance, our experience has made us rental property experts, and we’re happy to find the solution that works best for you. Reach out to us at (650) 336-0598 or fill out a contact card here, and we’ll reach out to you.

Free eBook

Property Done Properly

Learn how real estate fits into your overall wealth plan.

Investment Advisory Services are offered through Crafted Finance, LLC, a registered investment adviser. Please remember that securities cannot be purchased, sold or traded via e-mail or voice message system. This advertisement and any documents, files or previous advertisements may contain information that is confidential or legally privileged.  If you are not the intended recipient, you are hereby notified that you must not read this transmission and that any disclosure, copying, printing, distribution, or any action or omission of this transmission is strictly prohibited.  If you have received this advertisement in error, please immediately notify the sender by telephone at (650) 336-0598 or return and delete the original advertisements and its attachments without reading or saving in any manner.

Share This Blog Post:

Kristin Harad

Marketing Coach

Step right up and meet Kristin Harad, the Marketing Coach wizard! Guiding businesses through the intricate maze of marketing, Kristin combines her smarts, pizzazz, and a hefty portfolio of wins to show she’s the real deal. Ever wonder what makes a brand pop and a strategy rock? Kristin’s your answer, lighting up the marketing world and turning potential into prowess.

Boasting three decades in the marketing arena, Kristin’s more than just a seasoned pro – she’s a beacon. Whether she’s spotting the next big trend or identifying a golden opportunity, she’s always got her finger on the pulse. And the cherry on top? Her rock-solid commitment to catapulting her clients right to the top of the business game. Dive into the marketing world with Kristin, and watch magic happen!

Jon Fogg

Content Creator

Jon Fogg is a dynamic and innovative content creator who has been making waves in the digital realm. With a passion for creativity and a flair for storytelling, Jon has captivated the financial world through his engaging and diverse content.

When he’s is not working on an SEO blog or case study, you’ll find him enjoying local art galleries or a phenomenal read. Friends and colleagues often commend him for his clear enthusiasm and dedication, which is evident in every project he undertakes. 

Kingston Hollman MBA


Meet Kingston Hollman, the compliance guru everyone’s been talking about. With a sharp mind for regulatory ins and outs, Kingston is all about keeping businesses on the straight and narrow. That’s why he’s a go-to in the compliance world!

Sporting an MBA under his belt, Kingston’s not just about book smarts. He knows the fine dance between business strategy and staying in line with the rules. And guess what? He’s mastered it. Ensuring companies sail smoothly through the often-stormy waters of compliance is his game.

From the get-go, Kingston’s been crafting top-tier compliance programs, tailored just right for all sorts of industries. It’s his eye for detail and that knack for spotting the little things that make him stand out. He doesn’t just set up a system; he fosters a whole vibe of staying compliant, making sure everyone’s on board.

Jessica Martineau

Client Operations Manager

Jessica is a seasoned professional with a diverse background, bringing a decade of expertise across multiple industries. A proud graduate of SPU, her journey in the professional world is marked by significant accomplishments.

With nearly eight years dedicated to managing projects in the graphics and built environment sectors, Jessica has honed her skills as a meticulous Project Manager. This tenure has instilled in her a knack for thriving within organized structures while fostering robust client relationships, a hallmark of her professional ethos.

Her experience in the Finance industry spans almost a decade, where she has held pivotal roles as Lead Client Operations Manager and Director of Operations. Notably, her FINRA SIE Certification stands as a testament to her commitment to excellence.

Jessica’s strengths lie in cultivating enduring client connections, fueled by her passion for delivering thorough solutions. She finds joy in understanding and engaging with her colleagues, nurturing a cohesive work culture.

As a Pacific Northwest native, Jessica enjoys hiking, camping, and skiing. She loves reading, attending live music, plays, and comedy shows. Always a foodie, she delights in discovering new restaurants and revisiting old favorites, especially if there is a water view.

Most importantly, Jessica’s world revolves around her family—her amazing husband, Lee, and their two great kids. They are her inspiration and the anchor to her life outside of work.

Dionne Kelly

Executive Assistant

Let’s dive into the world of Dionne Kelly! Born in St. Kitts and with her roots deep in Barbados, Dionne’s been globe-trotting from her island homes to Canada, the USA, and Belize. Got a love for tropical spots? So does Dionne. Her passport’s got stamps that tell tales of sun, sea, and a bunch of awesome adventures.

Now, when it comes to her profession, Dionne’s the real deal. Over 20 years in the game as an Executive Assistant, she’s been the secret ingredient for bigwig C-suite execs. Think of a challenge, and Dionne’s likely tackled it head-on with her unbeatable organizational skills and eagle eye for detail. 

Oh, and did we mention she’s a foodie? Dionne’s taste buds have danced across diverse culinary landscapes, adding a sprinkle of global flavor to her persona. In the world of executive support, she’s a powerhouse, always two steps ahead and ready to make things happen. 

Joe Wride CFP®

Founder & CEO

Meet Joe Wride, the president and founder of Crafted Finance. With a knack for pension and investment management, insurance, and financial planning, Joe’s all about offering top-notch services without breaking the bank. That’s why he started Crafted Finance!

A proud Finance major from Washington State University, Joe’s got the credentials to back it up as a Chartered Life Underwriter and CERTIFIED FINANCIAL PLANNER™ Professional. Since 2009, he’s been helping individuals, families, and pension plans make sense of their finances. Joe’s even on the board of the Financial Planning Association’s Puget Sound chapter. Check out his LinkedIn profile here.

Joe gets that everyone’s got their own money story. That’s why he’s crafted a unique process to help folks of all stripes manage their finances, whether they’re flying solo, raising a family, or running a company. He’s all about learning and growing to make sure his guidance is just the right fit for his clients.

When he’s not crunching numbers, you’ll find Joe enjoying the Seattle life. He’s into skateboarding at Alki beach, biking, golfing, snowboarding, hiking, and camping. Sports fan? You bet! Joe’s a die-hard supporter of the Cougars, Mariners, Seahawks, and Sonics. But what really matters to him is family time with his wife Jessica, daughter Ocean, and dog Kanga. Joe’s excited to welcome more kiddos into their home through foster care and adoption in the future.

Download for Free

Property Is Power.

Let us know which email address to send this Free eBook to down below:

Please enable JavaScript in your browser to complete this form.
This best describes my experiance in real estate investing:

Get Your Financial Fix!

Subscribe So You Don’t Miss Our Latest Planning Tips.

Search Site