Should I keep buying SF rentals in today's market?

6 Replies

Hey all,

I'm sure this has been discussed but I'm curious how other investors are handling today's market.  While the interest rates remain very low and are highly beneficial for long-term rentals, property values have been increased and there has been greater discussion of an upcoming bubble.  Are other investors continuing to buy rentals now at a higher price with the lower rates or are you looking to begin purchasing once the property values come back down and more than likely look at financing at higher rates?

I currently own 2 rentals and am in a great position to purchase an additional 4-5 financed rentals in '15.  I'd like to take advantage of the low rates but don't want to find myself upside on my mortgages a couple years from now.  I plan on holding onto these properties for 5-7 years until I can look at a 1031 option so I'm not sure if I should be concerned about the lack of equity if the property values depreciate in the meantime.

Any feedback is greatly appreciated!

Thanks.

@John Delia  What kind of purchase price are we talking? Personally, if they cash flow, I wouldn't worry about it. They will still cash flow in 5 years even if house prices retract.

Hey Ron,

Thanks for the input- that's what I'm thinking as well.  I've been focusing on properties in the 80k-90k range.

I'm moving forward with more purchases in KCMO. Similar price range, ARV 80-100k. I plan on holding longer than 5-7 years though. It would be nice to have some cash on hand to use if we did have another crash but I am not ready to sit on the side lines waiting.

You buying in Indy? Prices didn't exactly collapse nor have they since inflated that much here. You should be able to find places that could be nearly paid off in 7 years, with how good cash flow is around here.

I'm looking at making my next purchase as a primary in the Indy area.  I have a couple coworkers to rent out bedrooms to until I turn it into a rental 12-18 months later.  Any suggestions on areas in Indy, @Rusty Scott?  I've been looking around Broad Ripple as that seems to be an area highly sought after by young professionals and has a strong demand for rentals.  I've only been here since Sept so I'm all ears!

@John Delia  Personally I am continuing to buy. I thought about holding off until spring (but for a different reason), but found some good deals and moved forward on them. I now am heading into the year with 3 rentals locked in a low 30-yr rates rather than 1. If the deal is right, I don't see why you wouldn't keep buying now.

As far as areas of Indy, there are several good areas in Indy, just depends on what you are looking for. Being that you plan to live in it at first, you may want to think of your work commute as well. Broad Ripple is definitely a highly desirable area, but you'd have a difficult time finding as good of returns on an investment property there, simply because the purchase price is going to be a lot higher than other desirable areas. I'd be happy to help if I can.

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