First time home buyer- Wait for dip or buy now?

Culver City, CA · Member since 2016 · 6 posts · 0 votes

I'm live in Los Angeles with wife and 2 kids. Currently renting 2 bedroom and now thinking of buying 3 bedroom around Culver City area. I have 10% to put down, but question is should I buy when the rates are low or wait for market dip- which everyone is talking about- and the rates go higher but housing price go down. In 2008 LA almost dipped 35% on price but 2008 was housing bubble. Any advice?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

What if prices never dip? Or what if they rise 30% more before a 5% dip?

Don't try to be Nostradamus. Buy when it is right for you to buy, and buy with the intention of owning the property a long time.

[email protected]301-893-4635 Podcast Guest on Show #192

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Dave Bond
Las Cruces, NM · Member since 2016 · 27 posts · 7 votes
9y
Find a deal that cash flows now. If you're investing for equity, which many do in so cal, you may have a tougher time outpacing the market considering current appreciation. If you're looking for something to buy and hold long term, it shouldn't be as much of a risk. Many of the people who lost their shirt were buying for equity in the short term to flip and double down. I would say if you are willing to put the time in to try and find an off market deal, you'll have a better chance at getting a deal. As long as it cash flows now with whatever financing you get, you should be ok, considering the rental market is always pretty stable. Just be sure to look out for rent control or even areas where there is talk of local government instituting rent control. Rents are getting pretty dang high and cities may try and attempt to mitigate the evil gentrification by trying to stifle rapidly increasing rents.
Is there a reason why you're wanting Culver City? Often times, with our investors in California, we aren't looking for the neighborhoods where the cost of buying is higher than what the rental market will bear. Good luck!!!
2 Reply
Brandon Battle
Real Estate Agent · Buena Park, CA · Member since 2016 · 743 posts · 424 votes
9y
Buy your family the house they deserve now.People are making general assumptions that are never guaranteed to happen.Invest in your future today.Don't live in fear like so many people do their entire lives.They're not living,they barely exist.This is LA we're talking about.The population continues to grow quickly and that alone will help home values bounce back quickly if such an event ever occurred.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y
What if prices never dip? Or what if they rise 30% more before a 5% dip?
Don't try to be Nostradamus. Buy when it is right for you to buy, and buy with the intention of owning the property a long time.
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
4 Reply
Charlie Fitzgerald
Lender · Las Vegas, NV · Member since 2015 · 2k+ posts · 1k+ votes
9y
It's your family home? BUY now. Adjust the debt later if you want to, need to and the market conditions are such that you can. You don't try and time quality of life upgrades for you and your family. When you can make improvements affordably, you improve them. Just my $0.02 worth.
1 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
If it's a personal home find what you like and can afford now and hope for the best.
It is a life style decision not a investment but if it were me I would be looking for a nice 3 bed to rent. Renting is always going to be less expensive allowing you to rent something nicer than you can afford to buy.
1 Reply
Laine Hadnott
Real Estate Agent · Los Angeles, CA · Member since 2015 · 17 posts · 3 votes
9y
Hi Nick,
I agree w/Charlie, Greg and other posters that advise no one can say with certainty where the market is going in the near future. But what we can say is that cost of financing is still very, very low. Historically low. That's a win.
Buying your primary residence now, with a long term horizon, makes sense. Try to find a below market deal if you're concerned about an equity cushion, or inflation hedge. But buy what you can comfortably afford, no more matter what the market does, today or tomorrow.
And I disagree, renting is a better option. The rents in LA are soaring. I personally benefit from that. But do you really want to continue paying someone else's mortgage? Gaining others equity and potentially HUGE write offs? Or would you rather claim some of that for yourself?
Remember it's a marathon, not a sprint. The market is cyclical and will inevitably have highs and lows. If you have a long term goal, you should be able to ride out the storm (& dips). If you're in it for the short term, you have less guarantee. Market chasing is risky.
If you'd like to discuss it more, or would like to receive email listings in your (including fixers and below market deals, and Market Insider Info, then hit my inbox w/your email.
Good luck!
1 Reply
Rosston Smith
Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
9y
Yeah man go ahead and jump in!
1 Reply
Jeff T.
Rental Property Investor · Culver City, CA · Member since 2014 · 221 posts · 79 votes
9y
@Nick Sharma That's a tough question right now. Rates are low, prices are high. Check out the Norris Group website and Bruce Norris to help determine where we are in the market cycle.
Ask yourself what your goals are and where you want to be. I love Culver city, the schools are good, and I like the community. It depends on what you are looking for long term. I would have a hard time figuring out what to do in your situation too.
Are you talking about buying a house or maybe a condo? If you have kids, keep schools in mind for sure. I know a lot of people scrambling to figure out schools.
Feel free to reach out for more questions about Culver city. I've been here 20 years.
1 Reply
Stephany Trombello
Real Estate Agent · Downers Grove, IL · Member since 2016 · 53 posts · 19 votes
9y
Do it when the rates are low!! Don't wait for a "dip" because it will not dip significantly enough to justify waiting.
1 Reply
Dennis Canon
Specialist · Los Angeles, CA · Member since 2016 · 221 posts · 58 votes
9y
Wait until after the presidential election is over. See what happens when a new pres is elected. Economy will shift!
1 Reply
Madeline Burke
Real Estate Agent · Fort Collins, CO · Member since 2016 · 183 posts · 72 votes
9y
@Nick Sharma welcome! If the property cash-flows it doesn't matter whether you're in a dip. Do both!
As the adage goes "Don't wait to by real estate, buy real estate and wait."
1 Reply
Pamela Starnes
Rental Property Investor · Culver City, CA · Member since 2015 · 61 posts · 41 votes
9y
@Nick Sharma - I'm in agreement with most of the others so far. Do what makes the most sense for your family right now. I just made the exact same decision recently in the exact same city. A big factor for me was staying in a great school district, so that was a limitation. That being a priority, I was left to decide if there was something I would be happy renting long-term (and then have more money to invest) or if it would be better to go ahead and buy, undoubtedly at higher than I'd like prices, but knowing I would ride out any "dips" over the long term. For me, buying came out to be the best choice as a family.
Good luck to you and reach out if you have any other questions, as we are in the same neighborhood!
1 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
Originally posted by @Nick Sharma:

I'm live in Los Angeles with wife and 2 kids. Currently renting 2 bedroom and now thinking of buying 3 bedroom around Culver City area. I have 10% to put down, but question is should I buy when the rates are low or wait for market dip- which everyone is talking about- and the rates go higher but housing price go down.
In 2008 LA almost dipped 35% on price but 2008 was housing bubble.
Any advice?
2008 might have been a once in a lifetime gig for Culver City as far as going down that much that quick. I don't think it went down that much but I never checked. I know Santa Monica hardly went down 2006 - 2011. The area as a whole is blowing up all over so if you like CC and plan on staying this is a no brainer to buy. Keep in mind fixed up 3/2s I think average a million ish now. Grab whatever you can afford and fix up later if needed. Good luck!
1 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Nick Sharma:
I'm live in Los Angeles with wife and 2 kids. Currently renting 2 bedroom and now thinking of buying 3 bedroom around Culver City area. I have 10% to put down, but question is should I buy when the rates are low or wait for market dip- which everyone is talking about- and the rates go higher but housing price go down.
In 2008 LA almost dipped 35% on price but 2008 was housing bubble.
Any advice?
Depends on if you can find/negotiate a good deal. If you can locate something that's you can generate a return from strong cash flow, then I say do it...but of course negotiate the best entry price you can.
If you're investing solely for appreciation, then I'd say no...wait. Your market is in "hyper supply" phase and prices are likely to continue to soften.
2 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
Originally posted by @Jon Q.:
Originally posted by @Nick Sharma:
I'm live in Los Angeles with wife and 2 kids. Currently renting 2 bedroom and now thinking of buying 3 bedroom around Culver City area. I have 10% to put down, but question is should I buy when the rates are low or wait for market dip- which everyone is talking about- and the rates go higher but housing price go down.
In 2008 LA almost dipped 35% on price but 2008 was housing bubble.
Any advice?
Depends on if you can find/negotiate a good deal. If you can locate something that's you can generate a return from strong cash flow, then I say do it...but of course negotiate the best entry price you can.
If you're investing solely for appreciation, then I'd say no...wait. Your market is in "hyper supply" phase and prices are likely to continue to soften.
I can assure you there is no hyper supply in Culver City or anywhere near Culver City. Median days on market is 22. A year ago that was 50. Price per sqft is $600 up from $575 a year ago.
1 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
9y
Mortgage guidelines get tighter and tighter when the market isn't as strong. Plenty of people waited for the crash and, whoops, suddenly couldn't qualify for a mortgage any longer even though their financial situation was unchanged.
1 Reply
Ben McMahonPro Member
Investor · San Diego CA · Member since 2014 · 341 posts · 139 votes
9y
Agree with Dave Bond I don't buy unless it cash flows. That being said I understand the value of owning the home you live in. I just wouldn't put it in the asset catagory. If your fine paying that mortgage no matter what happens for the next 10 years go for it. Real estate is really a time game. Some investments are higher risk, and higher potential rewards. I would put The whole state of CA in that catagory.
0 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y
I may be in a different camp than others above but need additional information to help. I am not a conservative person whatsoever but I recommend a minimum of six months of cash reserves to insure against losing your livelihood and more if you own a home in a cyclical market with 10% equity, have a commission-based position or low to medium job stability. High leverage + cyclical market + low cash reserves = living in fear or unawareness. My feedback is less about where the market will go, more about traditional personal finance and nothing about REI. Good luck with your decision and future first home.
1 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
9y
Originally posted by @Ben McMahon:

Agree with Dave Bond
I don't buy unless it cash flows. That being said I understand the value of owning the home you live in. I just wouldn't put it in the asset catagory. If your fine paying that mortgage no matter what happens for the next 10 years go for it. Real estate is really a time game. Some investments are higher risk, and higher potential rewards. I would put The whole state of CA in that catagory.
I think it would impossible to put the whole state in any catagory as that would be like putting the whole nation in one catagory. So many different areas out here, some crank historically and some go nowhere historically. This location is in the cranking area historically which has been the in lowest risk arena. About as low risk as they come actually and thus the high value. Perhaps REI is a timing game short run and location game long run. Still all REI is considered high risk.
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Jay Hawthorn
Rental Property Investor · Phoenix, AZ · Member since 2016 · 19 posts · 9 votes
9y
Here's a great presentation by Phil Pustejovsky about this topic...
https://youtu.be/UQo8pcbU7_Q
Love Phil's stuff.
Enjoy
1 Reply
Jack B.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
9y
I was worried about buying another property in 2014 in case of a down turn. I'm glad I bought it. It's made me 110K in two years.
That said, it helps to understand the economic fundamentals of real estate, supply and demand, trends, etc.
I don't believe we will see a MAJOR downturn for a few years to come, but all real estate is localized. Some place are in a down turn NOW. At the end of the day, as long as you follow the golden rule and buy for cash flow primarily, you will be OK. Appreciation, if it happens, is a bonus.
0 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Best time to buy is when you find a great deal on a property that you can afford. This can happen in either a hot or cold market but will never fall into your lap in any type of market in that location without you going out and actively searching for it. Educate yourself and get busy searching ... if you find it, buy it; if you don't, don't. Once you get really good, well funded, networked, and experienced, then you don't necessarily need to always find it, you can create it and/or it comes to you, but that is likely an advanced topic for later and food for thought in the meantime ...
1 Reply
Jon Q.
Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes
9y
Originally posted by @Matt R.:
Originally posted by @Jon Q.:
Originally posted by @Nick Sharma:
I'm live in Los Angeles with wife and 2 kids. Currently renting 2 bedroom and now thinking of buying 3 bedroom around Culver City area. I have 10% to put down, but question is should I buy when the rates are low or wait for market dip- which everyone is talking about- and the rates go higher but housing price go down.
In 2008 LA almost dipped 35% on price but 2008 was housing bubble.
Any advice?
Depends on if you can find/negotiate a good deal. If you can locate something that's you can generate a return from strong cash flow, then I say do it...but of course negotiate the best entry price you can.
If you're investing solely for appreciation, then I'd say no...wait. Your market is in "hyper supply" phase and prices are likely to continue to soften.
I can assure you there is no hyper supply in Culver City or anywhere near Culver City. Median days on market is 22. A year ago that was 50. Price per sqft is $600 up from $575 a year ago.
It's the name of a phase in the real estate market cycle. Not to be taken literal.
2 Reply
Alex J.
Investor · Tarzana CA and Houston, TX · Member since 2015 · 326 posts · 130 votes
9y
http://la.curbed.com/2016/10/20/13349520/buy-vs-rent-los-angeles-prices-save-money
1 Reply
Mike Gould
Wholesaler · Round Rock, TX · Member since 2015 · 31 posts · 10 votes
9y
I look for a cap rate of 14% - that is a great deal in any market. Look for deals from private sellers first b/c most every realtor sold deal I have seen is at 10% cap rate. Beware the out-of state deals. Most lenders are picky about that, ours not so much.
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