Anyone else waiting to buy once things settle?

Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes

Own a 6+ million dollar portfolio currently. Was more until recent price declines. Waiting to buy more once things settle, rates go back down, etc.

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Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

You have 6+ million reasons to trust your own judgment...nice work.

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Conner Olsen
Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
3y
Quote from @Jack B.:

Own a 6+ million dollar portfolio currently. Was more until recent price declines. Waiting to buy more once things settle, rates go back down, etc.

A lot of investors I talk to are waiting for prices and and rates to go down. Unfortunately prices and rates work inversely of each other.
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Jack B.
OP
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Quote from @Conner Olsen:

Quote from @Jack B.:

Own a 6+ million dollar portfolio currently. Was more until recent price declines. Waiting to buy more once things settle, rates go back down, etc.

A lot of investors I talk to are waiting for prices and and rates to go down. Unfortunately prices and rates work inversely of each other.

If we enter a recession like we did in 2008/2009 rates should come down. Properties here don't cash flow with such high rates, in fact they operate at a 1-2K loss per month. Add to that declining prices and it makes no sense to buy right now. I could pay cash for houses and cash out refinance them later, but it makes no sense to do so. I had 4 vacancies recently, with one of them approaching 4 months of vacancy and still empty. I sleep better with equity in the properties and cash on hand...
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Mohammed Rahman
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
3y
Hey @Jack B. - agreed there's an inverse relationship with rates and prices, but just a heads up having 4 months of tenant vacancy is usually a strong indicator that there's something off about the way you priced out your rental based on the market it's located in.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
3y
Ive been buying for 20 years. I think I saw things settle down once in 2014....that was about it lol.
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Carlos Valencia
Lender · 92703 · Member since 2022 · 326 posts · 538 votes
3y
Congratulations on your success so far Jack. I am waiting only because I'm still working on saving more money to begin my real estate investing journey. Running the numbers right now is a bit harder to hit those cashflow goals. Buying for appreciation might be your best friend right now while things get better then refi. Let's see how this plays out.

@Albert Bui @Matthew Kwan
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Jack B.
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Quote from @Mohammed Rahman:

Hey @Jack B. - agreed there's an inverse relationship with rates and prices, but just a heads up having 4 months of tenant vacancy is usually a strong indicator that there's something off about the way you priced out your rental based on the market it's located in.

Not sure how long you've been a landlord but in 15 years I've learned that winter time is the hardest time to find tenants. I've had hundreds of applicants. None have met the screening criteria. Seattle has become a dump.
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Dustin Allen
Real Estate Agent · South Lake Tahoe, CA · Member since 2016 · 680 posts · 644 votes
3y
@Jack B.
People have been “waiting” for all of time.
Why wouldn’t you keep looking for good deals? Buying a good deal at a lower price means you can refinance if/when rates ever come down. Waiting until rates come down means you’ll likely pay more and you don’t get a redo on the purchase price.
Of course, a bad deal is a bad deal and rates are killing a lot of them right now but we’re still seeing good ones occasionally even with the higher rates.
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Bernard Joseph S.
Investor · NJ · Member since 2022 · 154 posts · 223 votes
3y
Quote from @Jack B.:

Quote from @Mohammed Rahman:

Hey @Jack B. - agreed there's an inverse relationship with rates and prices, but just a heads up having 4 months of tenant vacancy is usually a strong indicator that there's something off about the way you priced out your rental based on the market it's located in.

Not sure how long you've been a landlord but in 15 years I've learned that winter time is the hardest time to find tenants. I've had hundreds of applicants. None have met the screening criteria. Seattle has become a dump.

Not saying anything you haven't heard already but why stay? I left all my NYC investments for similar reasons and never looked back. Unless Seattle changes dramatically, not the least of which is political, it will remain just like NYC, a dump.

Buy in the path of progress. Don't hold in a place of decline. Just my thoughts.
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Jack B.
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Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Quote from @Bernard Joseph S.:

Quote from @Jack B.:

Quote from @Mohammed Rahman:

Hey @Jack B. - agreed there's an inverse relationship with rates and prices, but just a heads up having 4 months of tenant vacancy is usually a strong indicator that there's something off about the way you priced out your rental based on the market it's located in.

Not sure how long you've been a landlord but in 15 years I've learned that winter time is the hardest time to find tenants. I've had hundreds of applicants. None have met the screening criteria. Seattle has become a dump.

Not saying anything you haven't heard already but why stay? I left all my NYC investments for similar reasons and never looked back. Unless Seattle changes dramatically, not the least of which is political, it will remain just like NYC, a dump.

Buy in the path of progress. Don't hold in a place of decline. Just my thoughts.

Oh trust me, I intend to. I've been looking for a new home for some time. In fact I wish I had moved to TN in 2021 when I had the chance. Low rates made it a great time to move, and rental properties in Nashville would have retired me already.
2 Reply
Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
You should be looking to buy at all times, there is opportunity in this climate.
7 Reply
Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
3y
I look at the numbers and if they work, they work! If rates go down in the future, great, I can refi the property and have more equity because the prices will jump. If prices dip, I will buy more properties because the value is there. Can never time the market, just make have to make the numbers work.
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
3y
You have 6+ million reasons to trust your own judgment...nice work.
9 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
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Andrzej Lipski
Investor · CT · Member since 2022 · 50 posts · 24 votes
3y
Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
That kind of behavior was when rates were on the way down after the recovery from the 2008 crisis.

During the crisis few people could actually capitalize on the buying opportunities because lenders were not lending, home owners were foreclosed on, portfolios were collapsing like houses of cards. Most money was frozen in assets because they were upside down. Only those who has cash on hand were able to deploy it.
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Bernard Joseph S.
Investor · NJ · Member since 2022 · 154 posts · 223 votes
3y
Quote from @Andrzej Lipski:

Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
That kind of behavior was when rates were on the way down after the recovery from the 2008 crisis.

During the crisis few people could actually capitalize on the buying opportunities because lenders were not lending, home owners were foreclosed on, portfolios were collapsing like houses of cards. Most money was frozen in assets because they were upside down. Only those who has cash on hand were able to deploy it.
Incorrect. He’s talking the past couple years when rates hit the 3s. Over bidding everywhere to lock in. We all lived it, wild times.
1 Reply
Andrzej Lipski
Investor · CT · Member since 2022 · 50 posts · 24 votes
3y
Quote from @Bernard Joseph S.:

Quote from @Andrzej Lipski:

Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
That kind of behavior was when rates were on the way down after the recovery from the 2008 crisis.

During the crisis few people could actually capitalize on the buying opportunities because lenders were not lending, home owners were foreclosed on, portfolios were collapsing like houses of cards. Most money was frozen in assets because they were upside down. Only those who has cash on hand were able to deploy it.
Incorrect. He’s talking the past couple years when rates hit the 3s. Over bidding everywhere to lock in. We all lived it, wild times.
Go check history. Mortgage rates were trending down for a few decades already. As rates go down asset value go up because it takes less money to gain more leverage. So more buyer demand and hence increased over bidding. Same thing happened around 2005 to 2008. Its happening again but yhus time we're going to opposite direction. Rates are going up significantly
1 Reply
AJ Cihla
Member since 2023 · 9 posts · 5 votes
3y
Quote from @Eliott Elias:

You should be looking to buy at all times, there is opportunity in this climate.
Agreed! Do you a mell the fear? That should be an indicator of opportunity. Don’t throw money at just anything but also don’t ignore the fact that LOTS OF PEOPLE ARE SCARED. Don’t be emotional and review deals just like you always would.

maybe it’s easier for me because values could plummet 30% and I’d still be making same decent CoC I get out of my deals.

“Don’t follow the crowds”
”Be bold when others are fearful”
”don’t try to time the market”
”don’t buy what you can’t afford” - ie stay tf away from hard money

3 Reply
Chris John
Member since 2020 · 671 posts · 937 votes
3y
I keep seeing people say that when nobody is buying, it's a great time to buy. That's such fallacious reasoning, it's ridiculous. Nobody's buying stock in companies that produce VCRs. Is it a great time for me to buy there too?
5 Reply
Henry T.
Member since 2022 · 1k+ posts · 1k+ votes
3y
It's always a good time to buy, just not Seattle. Though there's still opportunity here, its become a "progressive" dump for my tastes. Anywhere else, go for it, don't wait.
1 Reply
Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
3y
Quote from @Dustin Allen:

@Jack B.
People have been “waiting” for all of time.
Why wouldn’t you keep looking for good deals? Buying a good deal at a lower price means you can refinance if/when rates ever come down. Waiting until rates come down means you’ll likely pay more and you don’t get a redo on the purchase price.
Of course, a bad deal is a bad deal and rates are killing a lot of them right now but we’re still seeing good ones occasionally even with the higher rates.
Rates and costs don't go down, they simply devalue the dollar. Pretty sneaky.
1 Reply
Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
3y
Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
Yeah, I just bought a $750,000 value in Phoenix for $525,000 and a $350,000 value in Phoenix for $210,000 why do I care what interest rates are? So, I'm turning the $750,000 value into an STR and selling the $350,000 Near Grand Canyon Univ. for $245,000. Any takers. ;-) Quit worrying about interest rates and prosper.
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Account Closed:

Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
Yeah, I just bought a $750,000 value in Phoenix for $525,000 and a $350,000 value in Phoenix for $210,000 why do I care what interest rates are? So, I'm turning the $750,000 value into an STR and selling the $350,000 Near Grand Canyon Univ. for $245,000. Any takers. ;-) Quit worrying about interest rates and prosper.

Even with those discounts, purchasing at value in beginning of 2022 with high LTV would have resulted in the higher price but lower rate having the lower monthly payment. I would also claim that the value is not the value of early 2022 but what the value is today which is likely close to what you paid.
Good luck
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Account Closed
Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
3y
Quote from @Dan H.:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
Yeah, I just bought a $750,000 value in Phoenix for $525,000 and a $350,000 value in Phoenix for $210,000 why do I care what interest rates are? So, I'm turning the $750,000 value into an STR and selling the $350,000 Near Grand Canyon Univ. for $245,000. Any takers. ;-) Quit worrying about interest rates and prosper.

Even with those discounts, purchasing at value in beginning of 2022 with high LTV would have resulted in the higher price but lower rate having the lower monthly payment. I would also claim that the value is not the value of early 2022 but what the value is today which is likely close to what you paid.
Good luck
I'm sorry you haven't been able to match the discounts, but keep trying, you might be able to do as well, (probably not) LOL
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
3y
Quote from @Account Closed:

Quote from @Dan H.:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

think about this.
when rates were super slow how much over bidding was going on 50k 100k 200k over ask or market value all to capture that 3% rate.
now you can buy down a 15 year and get about 4 to 4.2 but pay way less.. why wait.
Yeah, I just bought a $750,000 value in Phoenix for $525,000 and a $350,000 value in Phoenix for $210,000 why do I care what interest rates are? So, I'm turning the $750,000 value into an STR and selling the $350,000 Near Grand Canyon Univ. for $245,000. Any takers. ;-) Quit worrying about interest rates and prosper.

Even with those discounts, purchasing at value in beginning of 2022 with high LTV would have resulted in the higher price but lower rate having the lower monthly payment. I would also claim that the value is not the value of early 2022 but what the value is today which is likely close to what you paid.
Good luck
I'm sorry you haven't been able to match the discounts, but keep trying, you might be able to do as well, (probably not) LOL

I am saying even with the discount you quoted, the monthly P&I is higher than it would have been for high LTV than if purchased at your stated value price at the beginning of 2022. The interest rates have more than doubled, but your stated discount is only 30% on one property and 40% on the other. Can you not see the math? I purchased $4M in Dec 2021 at high LTV with rates far less than 50% of what I could obtain today. My monthly P&I is significantly less than if I purchased those same properties today at the type of discount you indicated you got on your two "deals". Granted rates can drop, but I am not forecasting that in my underwriting.

Plus, as I indicated, if RE is being purchased at that price does it not imply that the previous high value is no longer the current value? I lean towards the property is worth less than the value you attributed (even though that may have been the market high value).

The reality is I am not finding properties that meet my buying criteria because I like to leverage my properties. I am not going to purchase something as much effort and risk as residential RE unless the return is significantly higher than I can obtain with more passive options.  I am not finding RE that meets my buy criteria in spite of getting many (dozens) off market offerings in my mailbox daily. It is because the P&I has doubled since early last year. This diminishes the return and I expect outstanding return for residential RE (typically I have achieved the infinite return via value add/refi). Maybe my expectation on residential RE return is too high; apparently my expectation is higher than current market is providing.
From 2012 through early 2022 was an incredible time for RE investing. Finding infinite return properties was more an issue of how to finance than difficulty of finding. Double digit annual appreciation in many markets. High rent growth in many markets.  Few investment options provided better returns. Not every period in time is going to have RE be the best investment option available.

I am happy for you that you like those discounts and are happy with those purchases.

Good luck
3 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Conner Olsen:

Quote from @Jack B.:

Own a 6+ million dollar portfolio currently. Was more until recent price declines. Waiting to buy more once things settle, rates go back down, etc.

A lot of investors I talk to are waiting for prices and and rates to go down. Unfortunately prices and rates work inversely of each other.

price already going up.
rates already going down.

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