Should we buy in this inflated market?

Question

Prices are high in my local market, but I’m itching to get started- don’t want to be the waiting guy any longer. Should we be buying in this current market for buy and holds?

Theresa Harris · Answer

Run the numbers and if they work, buy.

Joe Villeneuve · Answer

Mistake number one:  Stop focusing on getting a property ASAP.  You're not going to get a good deal that way.  The focus should be on the deal...always.

Mistake number two:  Assuming that the overall financial market dictates whether a deal, or the possibility of a deal, exists.  Deals are made based on your cost (cash ONLY that comes out of your pocket), the specific market (geographically) that you invest in (actually, that should read "micro-market", what strategy you use to execute the deal (not all strategies work for every deal), the terms of that specific deal, and how the combination for the micro-market and strategy used generates a profile that matches the criteria that comes from your specific REI Plan.

Ronald Allen Barney · Answer

Because rents have a tendency to catch up with property prices over time, it's not especially useful to try to time the market.  It's always a good time "in general" to buy.  It may not always be a good idea to buy a particular property due to unrealistic asking prices above the general market or unusually depressed rental prices in the area (e.g., due to crime).

Jacob Maes · Answer

If you're looking to buy and hold, I don't really see a reason not to buy. If you were looking to flip it might be a little different but since you're going to hold just buy. Sure, you might pay a little over what you could pay in a down market but if the property is in a good area with solid rent, just buy.

Sean Kehoe · Answer

All good advice. Thanks everyone!

Allen Wu · Answer

@Sean Kehoe

Analyze the deal. If it makes sense, you buy. I was like you 10 months ago. Picked up 4 units during covid. I’m a class A and B investors and must hit .8% as it relates 1% rule. Also, must net me at least $100 a month net of all expenses and accruals.

Nicholas DeCespedes · Answer

You don't know if the prices are ever gonna go down because you don't know the future. IMO it is always a good time to invest, but it depends on the deal obviously. People are speculating saying it's a bubble but what if the prices never go down? Youll be on the sidelines forever.

Mohammed Al · Answer

@Sean Kehoe

I believe Fannie & Freddie are predicting the market to increase by 6% this year and 4% in 2022. I think it might be a good idea to buy now.

You want to make sure that you target the property that you think can & will hold its value.

If you buy one that’s in a great location too, you should be ok long term!

Ian Walsh · Answer

It's always a personal decision.  I find using comps before the price escalation took off helps put my mind at ease.

Jaron Walling · Answer

@Sean Kehoe It's always a good time to buy. Like you I'm struggling to find motivation to find another deal and sitting on the sideline with cash. I'd like buy another distressed property with value add potential, SFH or multi-family duplex, but the effort to do so is enormous (if you don't have deal flow).

Don't be in a rush to buy a property. Stick to a strategy and stay on that path for a while. Focus on networking, researching, and finding/creating a deal.

Should we buy in this inflated market?

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