Investing in Multifamily in Today's Market

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Investing in Multifamily in Today's Market

Martin JonesPro Member
Member since 2022 · 3 posts · 1 vote

I'm a young individual who is deeply interested in investing in long term multifamily. I don't exactly understand how anyone invests in today's market (especially as a beginner). If anyone has any input or advice on whether to invest now versus waiting on the market to hopefully cool off, I would greatly appreciate it.

thanks! 

Martin 

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Bryce JamisonPro Member
Rental Property Investor · Mebane, NC · Member since 2015 · 494 posts · 439 votes
2y

Time in the market beats timing the market. If you're hoping to wait until interest rates come down, not only do we have no clue if or when that will happen, but when it does you may see prices go up as buyers are able to get larger loans. Although we may see more inventory hit the market as people can escape "rate lock".

I invest in today's market by searching hundreds of properties on the MLS, then going to see the top 10-20, then making an offer on the best at a price where I can cashflow after all expenses and putting 25% down. While my cash flow isn't amazing today, I'm investing in areas I think will experience appreciation and rent growth, and if rates do ever come down I'll refinance and be doing great. I admit it's not sexy and it's slow, but it works.

If I had to do it all over again, I'd buy a personal home with 3-5% down then repeat every 12-18 months. You can house hack while doing this too to really speed up how fast you can scale. Multifamily can be challenging to find because basically all investors want to start by buying a 4 plex and living in one unit. If you can't find one you can house hack, found houses with garages, attics, or basements you can rent out, or find property where you can add ADUs or put trailers out for people to rent.

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  • Bryce JamisonPro Member
    Rental Property Investor · Mebane, NC · Member since 2015 · 494 posts · 439 votes
    2y

    Time in the market beats timing the market. If you're hoping to wait until interest rates come down, not only do we have no clue if or when that will happen, but when it does you may see prices go up as buyers are able to get larger loans. Although we may see more inventory hit the market as people can escape "rate lock".

    I invest in today's market by searching hundreds of properties on the MLS, then going to see the top 10-20, then making an offer on the best at a price where I can cashflow after all expenses and putting 25% down. While my cash flow isn't amazing today, I'm investing in areas I think will experience appreciation and rent growth, and if rates do ever come down I'll refinance and be doing great. I admit it's not sexy and it's slow, but it works.

    If I had to do it all over again, I'd buy a personal home with 3-5% down then repeat every 12-18 months. You can house hack while doing this too to really speed up how fast you can scale. Multifamily can be challenging to find because basically all investors want to start by buying a 4 plex and living in one unit. If you can't find one you can house hack, found houses with garages, attics, or basements you can rent out, or find property where you can add ADUs or put trailers out for people to rent.

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  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 756 votes
    2y

    @Bryce Jamison I'll agree with you on all of this especially if I had to start over as well. 

    However, it is possible to still find a MF at a decent price though not often! I recently had a client purchase a quad in Jacksonville, Florida with 3.5% down. It's still worth a try if you can find it.

    Also, I love househacking too. I am currently doing it with SFH and it has been wonderful for the most part. Great way to lower the expenses of the primary

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  • Brian Adams
    Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
    2y

    I bought 5 homes in 5 years thanks to being in the Army between ages 22-27. Turned most of them into rentals after I moved. 

    But while the plan was always to house hack, I didn't spend enough time looking at what would make the best rental. I was still looking for homes I would personally be comfortable in. 

    By House #4 I figured out I should do fourplexes/duplexes, and managed to get a fourplex with owner-occupant financing. But if I had done that one House #1-3 I would be several hundred thousand dollars richer today. 

    Not all metros have good 2-4 unit options, but I would look there first as a house-hacker.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    What would be the point of waiting? Not waiting doesn't mean you have to buy, it means you keep learning, looking, and seeing what's out there. No one has a crystal ball to when rates will get better and if rates get better, there will be 5x the buyers out there so prices will go up. Everything is relative. Don't look for an excuse out, just be active in real estate and see where it goes.

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  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    2y

    @Martin Jones Be patient and analyze tons of deals. I look at the MLS in my target markets every day, sometimes twice a day.

    I’ve determined after much research that my existing markets make more sense for me than going out of state. This is primarily due to the team I have in place and not due to such great returns. I have accepted that this is a long term strategy.

    I’ve recently looked at 6 properties all of which should either be condemned or needed hundreds of thousands of dollars to make them really work. It was disheartening to see how some of these tenants were living and I’m ashamed of the landlords that own these properties and that society lets this happen.

    I only buy properties that I would live in either when I buy them or once I’ve renovated them. This is making my searches a little harder.

    Set your investing criteria and continue searching. It’s not a get rich quick scheme.

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  • Bradley BuxtonBusiness Member
    Real Estate Agent · NV · Member since 2023 · 1k+ posts · 720 votes
    2y

    @Martin Jones

    Money is how people invest today. The first step is getting your finances in order. Know how much you need to buy in the market that works for you. Talk to a lender and figure out the best way to use your capital. 
    Learn the market and buy a house to live in. Ideally it can be a duplex, triplex, or 4 unit. If not buy a house and get in the game.  Once you have that first property door will open because you bought a value add house that you now have equity.  Then you can take that equity and roll it into something that will make you more equity or buy something else. Keep in mind why you want to invest? What is your end goal and when do you want to exit? 

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    2y

    @Martin Jones

    The real estate market, mainly multifamily properties, has long-term perks like steady cash flow, rising value, and regular rent. But higher interest rates and tough markets can cut returns. To invest now, look at strong rental markets where more folks are moving in. Learn the ropes, try house hacking, and meet investors with know-how. Start with small homes or house hacking to learn and save on costs. The choice to invest now depends on your money and how much risk you can take. If you're not sure, start small or with house hacking to get the feel of the market.

    Good luck!

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