Buy More Rentals Now or Later?

Question

My family and I are planning to upgrade our living situation in a few years but we live in a HCOL (New York City) area so it’ll probably take that time to save up the down payment. Originally, I had thought that it would be wise to hold off on buying more rentals until after I had saved the money I needed.

Yesterday my Realtor calls me with a great off market deal. I have the funds to pull the trigger but it would be with the money I was already saving. ROI on the deal would be about 9% - 10% on a duplex in a B grade area. I have 2 other properties in my portfolio where I have 100% equity. I had planned to take out loans in a cashout loan but rates accelerated too fast in 2022 and I never got that chance.

But now that everyone is talking rate cuts I’m kinda thinking I take the deal and hope I can refinance these 2 properties at 5% interest (or less) sometime before 2028?

What do you guys think?

Daniel Brown · Answer

Was curious if you ended up pulling the trigger? I would have agreed with everyone at the time to go ahead and buy. Rates are still somewhat high but are coming down and if you can make the numbers work you will most likey be one of the few buyers so you can scoop up a good deal !

Tatum Littleton · Answer

I would agree with the above responses, go for it if you are able and you and your family would still be well off after the purchase. The way the market is now and with so few buyers as well as it being an off-market property (relatively no competition) if you can swing it and will help your portfolio grow, I would do it! A lot of people are still worried because of rates and uncertainty and generally would advise against buying anything now but with REI, if you can do it and it makes sense financially make it happen now rather than later and possibly miss out on it completely.

Steven Pulla · Answer

Hey Rob, if my client or myself was in a similar situation my advice to myself and my client  would be... if the profit margins are there, you have the capital to make the deal happen, there's news everywhere about rates being cut in the near future, and it doesn't put your family in any major financial stress by you making this deal happen and more importantly your comfortable! I'd personally pull the trigger! Because if rates go down as expected, the market will have a huge influx of buyers which may result in higher sales price and greater competition for these types of deals! Good luck, rooting for you!