What Should a New Investor do In These Times?
Rental Property Investor · Columbus, OH · Member since 2021 · 231 posts · 188 votes
What Should a New Investor do In These Times?
Most Popular Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesThe "times" will impact all deals all the time, depending on the "times". Don't invest or not invest based on the "times"...invest in RE based on the deal presented to you, at that "time".
29 Replies
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
The "times" will impact all deals all the time, depending on the "times". Don't invest or not invest based on the "times"...invest in RE based on the deal presented to you, at that "time".
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes4y
Quote from @Joe Villeneuve:
The "times" will impact all deals all the time, depending on the "times". Don't invest or not invest based on the "times"...invest in RE based on the deal presented to you, at that "time".
"The times will impact all deals all the time depending on the times"
That would make a great shirt man! You should copyright those statements. It's funny as hell and 100% accurate.
@Thomas O'Donnell the reward for investing is taking the risk and waiting to have more money later vs less money now.
Not investing has risks too. You can put it in the bank and get a crisp, shiny new nickel each month in interest while the property you didn't buy appreciates by more than that.
Your concerns are shared however nobody can time the market. You can't predict if prices will drop, when or by how much for how long. Just as Joe eluded to, buy smart, plan for challenges should they occur, and over the long run you should come out ahead.
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesI tell potential REI all the time. "You can always get you money back, but you can never get your time back". This doesn't mean you just jump in unprepared, just to move faster.
Quote from @Rodney Sums:
Quote from @Joe Villeneuve:
The "times" will impact all deals all the time, depending on the "times". Don't invest or not invest based on the "times"...invest in RE based on the deal presented to you, at that "time".
"The times will impact all deals all the time depending on the times"
That would make a great shirt man! You should copyright those statements. It's funny as hell and 100% accurate.
@Thomas O'Donnell the reward for investing is taking the risk and waiting to have more money later vs less money now.
Not investing has risks too. You can put it in the bank and get a crisp, shiny new nickel each month in interest while the property you didn't buy appreciates by more than that.
Your concerns are shared however nobody can time the market. You can't predict if prices will drop, when or by how much for how long. Just as Joe eluded to, buy smart, plan for challenges should they occur, and over the long run you should come out ahead.
My tagline on all my emails reads:
"The things that come to those who wait, are the things that are left behind, by those that got there first".
In the end, the best use of time is when it's filled with education, so when you do move forward, you're not blind. - Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes4y
Hey Thomas,
Great question! Markets are difficult to predict because of the number of factors that come into place. I would not concentrate my efforts on predicting when the next recession would be but I will re-evaluate my strategy to mitigate the most amount of risk possible during times of uncertainty.
If I were you I would keep looking for opportunities, I would analyze them with a higher safety margin and offer only when your numbers make sense.
Best of luck!
David
- Member since 2019 · 7k+ posts · 4k+ votes4y
I will wait until the Fed slows down the rate hike and/or continue to restart QE and/or oil price goes back to pre-covid level ($80).
Sometimes the best I can do is just to wait until the weather is getting better.
Thing is we don't know til what level the 30YFRM going to settle, it could be 5%,6% or 8% , the higher the rate obviously has impact on house pricing and disposable income. - 4yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Thomas O'Donnell:
Hello all!
I am a new investor looking to move to Columbus, OH soon and purchase my first property via house-hacking. However, I am not sure what to expect with this market as in waiting for prices to drop or buying asap. Interest rates are rising ans I feel like the RE market has some uncertainty surrounding it at the moment. I want to be smart with the minimal cash that I have and make sure that I am buying a great deal to protect myself. I don’t want to dive in head first and then watch the market crash. What are some ways that I can enter this market and when should I enter the market? All advice is greatly appreciated!It is never a bad time to house hack. Sure you might get a better deal in 5 years but if you started today and keep investing then you will be a multimillionaire in 5 years.
I house hacked in Columbus, Ohio in 2017
- 4yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
- Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes4y
@Thomas O'Donnell Look at how much you'd be reducing your living expenses while house hacking. There's more to consider than just the price of the home. Google "NWROI Craig Curelop".
- Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes4y
A couple of thoughts:
1. Many investors focus on cash flow. If prices go down but interest rates go up, you could be paying the same or more on a month-to-month basis regardless.
2. There are zero credible sources that say prices are going down. They are just suggesting a slow down. The longer you wait, the longer you are chasing the market.
3. Let's say the market dips in two years. Who cares? It's a paper loss. But yet each payment you make goes towards building equity. In 30 years, you might even forget what you paid for it.
4. If you move and paying rent, you aren't building anything. If you are paying $12,000 in rent for a year and the market dips by $10,000, you think you won but you actually didn't. You are still negative from the rent paid, equity built, and the tax benefits lost.
5. In my experience, the people who come up with excuses not to buy now, will almost never buy. If the market dips, those same people will say "well the market is down, what if it keeps going down?"
6. If the market tanks like in 2008, we have much bigger problems to deal with than the equity in a property.
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes4y
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
Not that I disagree with one item in your list and the whole thing is accurate:
How about instead of "I could cover my investment’s expenses even if I received no rent, ever"
It was "I could cover my investment expenses even if I received no rent over the amount of time it would take to sell it Plus several extra months"?
It wouldn't make sense for anyone to hold a property intended to be an investment for the life of the mortgage collecting no rent.
- 4yRyan KellyBusiness MemberReal Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
@Thomas O'Donnell you stated you want to house hack, which put more simply, means you want a home to live in. Focus on that first and use roommates or a duplex unit to help pay down your mortgage. Don’t overthink it and don’t try to time the market. You don’t have to get all the way back to even. Just saving a high percentage of your mortgage is winning.
By the way, my wife and I bought our primary home in September 2008 the day Lehman Brothers collapsed. While the home barely moved in value for the first few years, it has now tripled in value. Time in the market is far more important than timing the market.
Ryan Kelly Group - Keller Williams5110 Reviews - Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
This is a thoughtful, wise list and not enough people are going to pay full attention to it.
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesI was wondering about that myself.
Quote from @Rodney Sums:
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
Not that I disagree with one item in your list and the whole thing is accurate:
How about instead of "I could cover my investment’s expenses even if I received no rent, ever"
It was "I could cover my investment expenses even if I received no rent over the amount of time it would take to sell it Plus several extra months"?
It wouldn't make sense for anyone to hold a property intended to be an investment for the life of the mortgage collecting no rent.
- 4yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Quote from @Rodney Sums:
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
Not that I disagree with one item in your list and the whole thing is accurate:
How about instead of "I could cover my investment’s expenses even if I received no rent, ever"
It was "I could cover my investment expenses even if I received no rent over the amount of time it would take to sell it Plus several extra months"?
It wouldn't make sense for anyone to hold a property intended to be an investment for the life of the mortgage collecting no rent.
Very fair points! I suppose that caveat would be very reasonable. “No rent for the duration of the hold period.”
- 4yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesWhy would you pay for someone else to live in your property?
Quote from @Scott Trench:
Quote from @Rodney Sums:
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
Not that I disagree with one item in your list and the whole thing is accurate:
How about instead of "I could cover my investment’s expenses even if I received no rent, ever"
It was "I could cover my investment expenses even if I received no rent over the amount of time it would take to sell it Plus several extra months"?
It wouldn't make sense for anyone to hold a property intended to be an investment for the life of the mortgage collecting no rent.
Very fair points! I suppose that caveat would be very reasonable. “No rent for the duration of the hold period.”
- Real Estate Agent · Columbus | Toledo · Member since 2019 · 607 posts · 768 votes4y
Quote from @Thomas O'Donnell:
Hello all!
I am a new investor looking to move to Columbus, OH soon and purchase my first property via house-hacking. However, I am not sure what to expect with this market as in waiting for prices to drop or buying asap. Interest rates are rising ans I feel like the RE market has some uncertainty surrounding it at the moment. I want to be smart with the minimal cash that I have and make sure that I am buying a great deal to protect myself. I don’t want to dive in head first and then watch the market crash. What are some ways that I can enter this market and when should I enter the market? All advice is greatly appreciated!House hacking is a great way to start in any market. The hike in rates will slow retail home buying down since your money is less than it was a year ago but people will still need a place to live. The rental market will continue to be strong especially in strong growing markets like Columbus, OH.
- Springfield, MO · Member since 2022 · 11 posts · 2 votes4y
Quote from @Rick Albert:
A couple of thoughts:
1. Many investors focus on cash flow. If prices go down but interest rates go up, you could be paying the same or more on a month-to-month basis regardless.
2. There are zero credible sources that say prices are going down. They are just suggesting a slow down. The longer you wait, the longer you are chasing the market.
3. Let's say the market dips in two years. Who cares? It's a paper loss. But yet each payment you make goes towards building equity. In 30 years, you might even forget what you paid for it.
4. If you move and paying rent, you aren't building anything. If you are paying $12,000 in rent for a year and the market dips by $10,000, you think you won but you actually didn't. You are still negative from the rent paid, equity built, and the tax benefits lost.
5. In my experience, the people who come up with excuses not to buy now, will almost never buy. If the market dips, those same people will say "well the market is down, what if it keeps going down?"
6. If the market tanks like in 2008, we have much bigger problems to deal with than the equity in a property.
Number 2 is just not true. Granted if the calculations make sense and your strategy isn't BRRR or flipping, you can get in the market at any time but to say that house prices aren't going down at the moment is incorrect.
- Property Manager · Syracuse, UT · Member since 2020 · 28 posts · 22 votes4y
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
@Scott Trench Great list! Thanks for posting this.
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes4y
Quote from @Thomas O'Donnell:
Hello all!
I am a new investor looking to move to Columbus, OH soon and purchase my first property via house-hacking. However, I am not sure what to expect with this market as in waiting for prices to drop or buying asap. Interest rates are rising ans I feel like the RE market has some uncertainty surrounding it at the moment. I want to be smart with the minimal cash that I have and make sure that I am buying a great deal to protect myself. I don’t want to dive in head first and then watch the market crash. What are some ways that I can enter this market and when should I enter the market? All advice is greatly appreciated!You should wait if you want to pay more for a property, at a higher interest rate, and lose out due to opportunity cost.
- 4yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
Quote from @Joe Villeneuve:
Why would you pay for someone else to live in your property?Quote from @Scott Trench:
Quote from @Rodney Sums:
Quote from @Scott Trench:
A new investor should be able to say "YES" to every item on this list in my opinion:
- - I understand my end-game. I know what kind of portfolio I want to build over the next 5-10 years, and what kind of life I will lead when I build that portfolio. Real Estate will help me get there.
- - I Believe that Real Estate is a Good Long-Term Investment for me compared to an alternative like stocks, bonds, cryptocurrencies, or private businesses.
- - I don’t have to go “All-in” to purchase my first property - I have a strong income and savings rate and/or a financial partner.
- - I earn a strong income relative to my my investment
- - I could cover my investment’s expenses even if I received no rent, ever
- - I have a Strong Cash Position + Access to Liquidity:
- - I have the Down payment in cash (even if that down payment is 3% or less)
- - I have cash for any anticipated Closing Costs
- - I have cash for any anticipated Rehab Costs
- - I have access to plenty of credit and short-term financing, after the mortgage, should I need it on top of my cash cushion
- - If I don't have a strong financial position, I have a financial partner who does
- - I have a Strong Credit Score (700+)
- - I have or will commit a Meaningful Amount of Time to Real Estate, especially upfront
- - I am willing and able to DIY everyday household projects if necessary, and/or am willing and able to skillfully hire and manage contractors and property managers
- - I have Strong Analysis Skills - I know what a “good” deal means to me in my target market and can analyze a potential deal in 15 minutes
- - I have a Strong Economics Foundation
- - I Understand terms like IRR, NPV, CoC, ROI, and CAGR, and have a preferred way to compare investments
- - I Understand macro factors (supply, demand, interest rates)
- - I have a strong understanding of local market (zoning, easily calculate ARV, "path of progress", etc.)
If you can answer yes to all of this, then you should get going - no reason to wait.
If you can't answer yes to all of this, then you should get going on figuring out what it would take for the answer to be a resounding "yes" to the whole list, and THEN get going.
Not that I disagree with one item in your list and the whole thing is accurate:
How about instead of "I could cover my investment’s expenses even if I received no rent, ever"
It was "I could cover my investment expenses even if I received no rent over the amount of time it would take to sell it Plus several extra months"?
It wouldn't make sense for anyone to hold a property intended to be an investment for the life of the mortgage collecting no rent.
Very fair points! I suppose that caveat would be very reasonable. “No rent for the duration of the hold period.”
I would try to avoid this at all costs. But we have heard the horror stories. @Will Barnard I believe had a property with a squatter for YEARS.
No one wants to float the costs of a property without rental income. But we should be financially prepared for a worst case scenario.
- Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes4y
Not the "wishful thinking worst-case scenario" with nuts and sprinkles and whipped cream.
The real worst-case scenario.
I keep finding this business is clearly divided between the people who work to avoid lying to themselves and the broke.
- Rental Property Investor · MD · Member since 2018 · 287 posts · 205 votes4y
House hacking is just so powerful guys. I can't fathom how else I'd be in the position I am in without it.
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes4y
Buy assets and hold (depreciating) debt. Those who are not are getting creamed right now.
- Member since 2022 · 48 posts · 119 votes4y
Quote from @David Ramirez:
Hey Thomas,
Great question! Markets are difficult to predict because of the number of factors that come into place. I would not concentrate my efforts on predicting when the next recession would be but I will re-evaluate my strategy to mitigate the most amount of risk possible during times of uncertainty.
If I were you I would keep looking for opportunities, I would analyze them with a higher safety margin and offer only when your numbers make sense.
Best of luck!
David
Agree. The biggest mistake is to jump in just because. If the right opportunity presents itself don’t holdback. Remember yes we are seeing rising interest rates but outside of the previous 10 years - since the 70s we’ve never seen interest rates this low and yet people were still investing. Don’t let those deter. Let poor opportunities deter you.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
There is always going to be something @Thomas O'Donnell, some fear of now vs later because for every player out on the field making the actions to score the TD's, there is 10,000 sitting in the stands watching yelling out what those players "should" be doing, and guess how many points they score from those seats....
Everything in REI boiled down to the simplest possible explanation is *"Don't try to put square pegs in round holes". A deal is a deal, you'll know it when you see it. Ignore the market, ignore the times, tune it all out, turn it all off, and just simply do the analysis of that deal and answer the question, is it or isn't it a deal.
When it comes to timing the market, have you ever heard the sorties of all the people who jumped in buying properties in '09', because they had been waiting knowing the price drop was coming? No, because there isn't any. Or how about all the people who went hog-wild buying everything in '12-18' because they "knew" values were going to take massive jumps up????? No, again. If you can time the market for these kinds of moves, it's a league of you and you alone, think about that, are you better then literally every human alive to peg such a thing? So right there we know "timing the market" is a complete mirage, it does not exist, it's what people riding the bench say to make an excuse for why they are not doing anything vs the truth of admitting they don't know what to do, or are letting fear win over work.
Don't force it, run the numbers, act like an investor and not a gambler.
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