House Hacking a multifamily in San Diego

Encinitas, CA · Member since 2016 · 6 posts · 2 votes

Hello BP!

I am a newbie investor, and long time BP Lurker.

I have been interested in real estate for years, and thanks to a random influx of cash I am now finally ready to get started with my first property. My plan is to buy a duplex via FHA loan, and live in one unit with my girlfriend while renting out the other. Ideally it would be a property with some sort of value add, and I would fix it up while I live in it. Then hopefully a couple years down the line I will refinance, and try the whole process again. Essentially, house hacking a multi family / duplex with a touch of delayed BRRR.

Realistically, it looks like I can afford something in the 500k - 600k range for a duplex 4br/2ba. I know the 1% rule is impossible here, so I have calculated that a .07% (at minimum) would work for me ( 0.7% is calculated assuming I no longer live there, and both units are rented out). I know there are cheaper options in other parts of SD county, but since I have to live there I would prefer not to be in south or east SD. Clairemont area is ideal.

The issue I am having is finding any deals. I have been monitoring the MLS, loopnet, craigslist, ect for months and have made a few offers only to be outbid by cash offers. Maybe I am looking in the wrong places? I have driven all over and built a list, now I am now working on building a very targeted direct mail campaign.

Any help would be greatly appreciated here.

Max

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John Arendsen

Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes

It's definitely a sellers market in SD right now almost everywhere in the county. I just looked at a property in Oceanside on North Tremont. It's in a rather new (10 years old +-) and gentrifying area where the average price point is in the 800k to 1m & up range. So when I saw a new listing hit the street for 690-729k I got a cold shiver running up my spine and couldn't wait to beat a path to the property and check it out.

It was built in the '90's and had been rode hard and put away wet. Probably (and I say this as a general contractor) needed at least 100k in deferred maintenance. However, the average unwary buyer wouldn't have noticed a lot of the things I spotted almost immediately.

The RE agent was as good a strategist I've seen in the game as they get. He scheduled all the appointments in a 15 minute cluster so lookie lous were stepping on each others heels to preview the property.

I informed the agent that we were cash buyers and would be willing to make a full price offer and close in 17 days with the proviso that the offer would be withdrawn in 24 hours. We are leaving early Saturday morning and will be out of the country and did not want to get caught up in any bidding wars.

He, unlike a lot of RE professionals came right out and said that they would be accepting all offers until Sunday evening at 6pm. They would then evaluate all offers and go back out for final offers. That's tantamount to an auction without being an official auction.

Needless to say we were not the least bit interested. Especially in view of the fact that there would be the deferred maintenance issue looming within a short period of time. Bottom line? This is the first sign that you as a buyer should be cooling your jets for awhile and sitting on the sidelines.

It's only been a decade since our last RE correction. Or should I say total collapse. It took 5-6 years for us to start inching our way back from that debacle. Will we ever learn our lesson. I'm not liking what I'm seeing in the RE market right now and I've been an investor for decades. I can see the writing on the wall and it's not saying buy, buy, buy.

That's not to say there aren't other creative ways to invest in RE because they surely are and @Lee Ripma hit on it. It's a perfect time for folks to look at RE investing from a completely different perspective. At least for awhile until this buying hysteria starts cooling its jets a bit.

That's my 3 cents/sense worth adjusted for inflation.

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Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
Hi Max, One thing you could consider is buying a SFH and adding an accessory dwelling unit to the back of it. I just went to a presentation on this today in Carlsbad and learned a lot. Check out AVAVA. There are three new bills that are paving the way for doing this. The Clairemont area is mostly SFH so would be perfect. John Arendsen
Podcast Guest on Show #373
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Max May
OP
Encinitas, CA · Member since 2016 · 6 posts · 2 votes
9y
@Lee Ripma Thanks for the suggestion I will look into that. I have also been looking at SFH with an ADU as an option. Adding my own is a new idea.
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Fabio Salas
Investor · Champaign-Urbana, IL · Member since 2014 · 84 posts · 49 votes
9y
The above idea is a good idea, but make sure you check the zoning laws ahead of time before you try to follow this strategy. I own a duplex in Imperial Beach that used to be a SFH and was converted to a duplex; but much of IB is zoned for duplexes. Food for thought.
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Barry O.Pro Member
Investor · Imperial Beach, CA · Member since 2008 · 52 posts · 14 votes
9y
Just talking to a person that is listing her house in IB. The property is zoned for a duplex at R2. I used to own the duplex next door. The listing price is going to be between 525-550. Access to the back yard for an addition would be via the RV pad on the side of the house.
The house address is 1096 Grove ave, IB, ca 91932. It is not currently listed as the are waiting for the tenants to leave, so they can get in and clean up.
The zoning map for IB is also available online. Like Fabio said a lot of the city is zoned R2.
Good Luck!
1 Reply
Account Closed
Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes
9y
Hi Max,
I grew up in Encinitas. It was a different place in the 80's. These days, the retail cost of RE just doesn't result in much ROI for buy and hold property there.
Listen to episode 222 with Jay Hinrichs. He talks about using the right strategy in different markets. Your market may not be ideal for the strategy you describe. I'm not saying don't do it, but you may get a much better ROI with a different strategy, and/or your current strategy but at a future time.
You can try fitting a square peg in a round hole, but that won't get you far. Find what your market wants, uncover your competitive advantage, and fill an underexplored niche. . . . is what I'd do in your situation.
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Max May
OP
Encinitas, CA · Member since 2016 · 6 posts · 2 votes
9y
@Barry O. Thank you for the lead. I really do like the IB area however I think it is just too far for me to commute to Poway every day.
@Account Closed I'll listen to the that episode this evening. I have definitely had my mind set on finding a buy and hold, do you have any suggestions on what other strategies may work for the San Diego market?
1 Reply
Bruce May
Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
9y
Hi Max and welcome to BP. There's a lot of great resources here as I think you have already figured out.
0 Reply
Alex ShaughnessyPro Member
Real Estate Investor · Spring Valley, CA · Member since 2016 · 288 posts · 98 votes
9y
As someone who lives and has lived in Southeast my whole life I understand. However, most on market deals are going to be here for that price range. Sounds like you need to focus on getting off market deals
0 Reply
Max May
OP
Encinitas, CA · Member since 2016 · 6 posts · 2 votes
9y
@Alex Shaughnessy I completely agree I need to find some off market deals. I am working on my first property list and am preparing for a targeted direct mailing campaign.
Another point someone told me which has been eye opening was to look for sale prices as comps rather than listing prices. As most duplexes and multi's are bought by investors, it seems like the recent sale prices are much more reasonable than listing prices. I am assuming most of those sale prices were bought off market.
0 Reply
Lee RipmaPro Member
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
@Max May
Could be fun little project to add your own. There are a lot of cool ones on the market! The best might be adding one and living in that while renting out your front house. Or you could airbnb the ADU. I have a friend who does that in LA and it meets the "house-hack" model, his airbnb income more than pays for his mortgage and expenses in his SFH in Highland Park (LA neighborhood).
http://www.avavasystems.com/PrefabHomes/
http://kithaus.com/
@John Arendsen
Podcast Guest on Show #373
0 Reply
John Arendsen
Homeowner · VISTA, CA · Member since 2015 · 727 posts · 340 votes
9y
It's definitely a sellers market in SD right now almost everywhere in the county. I just looked at a property in Oceanside on North Tremont. It's in a rather new (10 years old +-) and gentrifying area where the average price point is in the 800k to 1m & up range. So when I saw a new listing hit the street for 690-729k I got a cold shiver running up my spine and couldn't wait to beat a path to the property and check it out.
It was built in the '90's and had been rode hard and put away wet. Probably (and I say this as a general contractor) needed at least 100k in deferred maintenance. However, the average unwary buyer wouldn't have noticed a lot of the things I spotted almost immediately.
The RE agent was as good a strategist I've seen in the game as they get. He scheduled all the appointments in a 15 minute cluster so lookie lous were stepping on each others heels to preview the property.
I informed the agent that we were cash buyers and would be willing to make a full price offer and close in 17 days with the proviso that the offer would be withdrawn in 24 hours. We are leaving early Saturday morning and will be out of the country and did not want to get caught up in any bidding wars.
He, unlike a lot of RE professionals came right out and said that they would be accepting all offers until Sunday evening at 6pm. They would then evaluate all offers and go back out for final offers. That's tantamount to an auction without being an official auction.
Needless to say we were not the least bit interested. Especially in view of the fact that there would be the deferred maintenance issue looming within a short period of time. Bottom line? This is the first sign that you as a buyer should be cooling your jets for awhile and sitting on the sidelines.
It's only been a decade since our last RE correction. Or should I say total collapse. It took 5-6 years for us to start inching our way back from that debacle. Will we ever learn our lesson. I'm not liking what I'm seeing in the RE market right now and I've been an investor for decades. I can see the writing on the wall and it's not saying buy, buy, buy.
That's not to say there aren't other creative ways to invest in RE because they surely are and @Lee Ripma hit on it. It's a perfect time for folks to look at RE investing from a completely different perspective. At least for awhile until this buying hysteria starts cooling its jets a bit.
That's my 3 cents/sense worth adjusted for inflation.
2 Reply
Kevin FoxPro Member
Real Estate Agent · San Diego, CA · Member since 2014 · 1k+ posts · 635 votes
9y
Hey @Max May
I think house hacking a multi family is a fantastic idea. While I know it's not easy to find the right property, it's certainly possible. I'd be happy to chat and see if I can assist you with your deal hunt.
Feel free to shoot me a message. Best of luck!
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Greg Rollins
Investor · Oceanside, CA · Member since 2017 · 36 posts · 20 votes
9y
@Max May I am in almost in the exact same position. Currently deployed and will be returning to San Diego in the fall. I also did a deep dive into real estate over the last year and love everything that I've learned. I can't get enough of it. I'm at the point where I just want to get the ball rolling but want to make sure that I am executing properly so I don't become one of those REI horror stories people read about. I am also looking to buy either a SFR with roommates or multifamily and house hack. I also want to take this time and execute the renovations myself so that as I expand my business I have that baseline knowledge to move forward (more for my personal education/growth than cost saving). I am also having a heck of a time finding a deal that meets some good numbers and I feel like I'm constantly behind the power curve being over here with limited internet access. If you could please share any success stories or let me know how you find a solution to this, I would love to hear about it. Hopefully everything works out for both of us and we can work together on a deal one day. Best of luck, and welcome to REI. Lets crush it.
1 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
Originally posted by @Account Closed:

Hi Max,
I grew up in Encinitas. It was a different place in the 80's. These days, the retail cost of RE just doesn't result in much ROI for buy and hold property there....
According to Trulia San Diego RE has appreciated 10% in the last year. This follows quite a few similar or better appreciation years. If you purchased a cash neutral property a year ago with 20% down the ROI is close to 50% (discounting selling fees). Add in that San Diego is projected to have the 6th highest rent increase increase in the next year of large cities and the cash neutral property is projected to soon be cash positive. The increase in the last year is verifiable fact. The rent increase is speculation by supposed experts. To imply that San Diego does not have good ROI for financed buy n hold is verifiably incorrect. It has had very good ROI over every virtually any amount of time going backwards from today's date (1 year, 3 year, 5 year, ..., 50 year).
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
Originally posted by @Max May:

@Alex Shaughnessy I completely agree I need to find some off market deals. I am working on my first property list and am preparing for a targeted direct mailing campaign.
Another point someone told me which has been eye opening was to look for sale prices as comps rather than listing prices. As most duplexes and multi's are bought by investors, it seems like the recent sale prices are much more reasonable than listing prices. I am assuming most of those sale prices were bought off market.
I am unsure if you got this from one of my posts but in my San Diego market this is definitely true. Average list price on a duplex in my market is ~$600K but average sold price is closer to $450K. The $450K sold RE mostly have come from the MLS (not off market properties). They were either priced to sell initially, after minimal interest the owner took a lot less than asking price, or a lot of issues were found in the inspection (I have reduced one price $47K on inspection).
Unfortunately with the current interest rates a $450K duplex (2/1 or 2/2: $1400 to $1500 rent each) without significant value add does not really cash flow much after subtracting for cap expense, maintenance, vacancy, misc expenses. So I am only looking for value add of at least $40K and ideally more (duh!) that can have similar cash flow.
Good luck
0 Reply
Sarah D.
San Diego, CA · Member since 2015 · 273 posts · 226 votes
9y
@Max May I'd definitely consider house hacking as a first strategy, though I'm biased because we are doing that in SD right now. I think the risk is lower than other strategies because of loan options and the significant reduction in your living costs. It is very competitive, but I've never seen a time in SD that wasn't (though I only go back to 2009). This is a fabulous place to live, and there are lots of people willing to pay for the privilege.
Two pieces of advice: Don't jump into a 'bad' deal and don't let other's define what a good or bad deal is for you. Figure out your goals with this first purchase and stick to them. Other people's property metrics won't necessarily apply.
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Account Closed
Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes
9y
Originally posted by @Dan H.:

Dan, when one calculates the ROI on a buy and hold, one takes the sales price of the property + initial CapEx and compares that to the NOI before debt service. (Whether or not the property is financed has nothing to do with cap rate or GRM. Once you factor in debt service, you're talking about COCR, which applies to any type of investment.) Paying today's retail RE prices in a place like Encinitas CA and then renting out that property won't yield a high annual percentage/capitalization rate on that investment (relative to a lot of other investments/RE markets--especially given the return on time invested in landlording).
It doesn't matter where your market--if you bought 20 years ago and are renting out your property at today's rents, then of course you're going to have a decent ROI. But this isn't what the OP is talking about. The OP wants to buy a property at today's prices and rent it out at today's rents.
You're talking about appreciation. The OP is talking about buy and hold, which is cashflow. The reality is, you won't get much initial cashflow buying retail RE and then renting out your property in a place like Encinitas.
Appreciation is completely different. If you're a flipper and know your market really well, or if your hold strategy is speculative (i.e. based on a need for appreciation), then Encinitas could potentially be a great place for that, no question. It's more risky. To reduce that risk, and if the OP is interested in this type of strategy, the OP could find out what his market wants, uncover his competitive advantage, and fill an underexplored niche. Maybe this is what you're suggesting as well, but in different language?
Regardless--as a strategy for housing yourself--no matter where you live, I 200% support "house hacking." Changed the trajectory of my life, for sure.
2 Reply
Jose Guevarra
Real Estate Agent · Mira Mesa, CA · Member since 2014 · 218 posts · 49 votes
9y
@Max May Let me know if you want some help looking at the MLS for some properties in SD area. We can nail down some criteria and look at what's out there and been sold in the last 12 months.
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
Originally posted by @Account Closed:

Originally posted by @Dan H.:
Dan, when one calculates the ROI on a buy and hold, one takes the sales price of the property + initial CapEx and compares that to the NOI before debt service. (Whether or not the property is financed has nothing to do with cap rate or GRM. Once you factor in debt service, you're talking about COCR, which applies to any type of investment.) Paying today's retail RE prices in a place like Encinitas CA and then renting out that property won't yield a high annual percentage/capitalization rate on that investment (relative to a lot of other investments/RE markets--especially given the return on time invested in landlording).
It doesn't matter where your market--if you bought 20 years ago and are renting out your property at today's rents, then of course you're going to have a decent ROI. But this isn't what the OP is talking about. The OP wants to buy a property at today's prices and rent it out at today's rents.
You're talking about appreciation. The OP is talking about buy and hold, which is cashflow. The reality is, you won't get much initial cashflow buying retail RE and then renting out your property in a place like Encinitas.
Appreciation is completely different. If you're a flipper and know your market really well, or if your hold strategy is speculative (i.e. based on a need for appreciation), then Encinitas could potentially be a great place for that, no question. It's more risky. To reduce that risk, and if the OP is interested in this type of strategy, the OP could find out what his market wants, uncover his competitive advantage, and fill an underexplored niche. Maybe this is what you're suggesting as well, but in different language?
Regardless--as a strategy for housing yourself--no matter where you live, I 200% support "house hacking." Changed the trajectory of my life, for sure.
The profit percentage is based on what you paid for the property (or cost of investment) and not the actual selling cost. If you use full selling price in your ROI calculation rather than what the invest cost then you are not taking into account leverage or actual return on your investment as the investment only cost the down payment + the closing costs (assuming cash neutral - if cash negative any of the cash negative would be included in holding costs).
If I purchase a cash neutral duplex at $400K but only put 20% down then I have invested $80K + closing costs. If the property goes up 10% then I on paper have $40K or profit on my $80K+closing investment for a return of near 50%. How is that not ~50% not Return on Investment? The cost of the investment in this example is $80K + closing and not the $400K that the property is sold for. If it is cash neutral there are no holding costs.
Buy n hold in San Diego is less about cash flow than it is about appreciation. Due to property and rent appreciation, buy n hold return (what I refer to as projected ROI) in San Diego is traditionally very high. You indicate that non cash flow investing is speculative and to some degree it is, as is all investments, but San Diego RE has always risen in price long-term (There are short-term cycles but long-term it has always risen). So historically any speculation would have produced good returns.
You can look up San Diego's RE buy n hold return for virtually any duration and determine that San Diego RE investment return has been near the top in the nation.
The actual ROI is determined when exiting the investment, until then it is only projected ROI.
1 Reply
Max May
OP
Encinitas, CA · Member since 2016 · 6 posts · 2 votes
9y
@John Arendsen Thanks for your input, much appreciated.
@Greg Rollins Good luck to you as well! I have met a few people who are in our boat, ready to invest but unsure if now is the right time. I have also heard the only way to play is get in the game. i just do not want to make a bad decision! I will keep you updated as to what I end up doing. Last but certainly not least, thank you for your service!
@Dan H. Do you think the market can continue on like this? My worry is that I make a buy and hold investment, with rents barely covering costs then the market drops. I think I may have found that information about listing vs. sale price in one of your posts. Where are you finding duplexes in the 450k range? Those numbers would work for me. I would love to speak with you to learn more about what you have been able to do in the SD market.
0 Reply
Max May
OP
Encinitas, CA · Member since 2016 · 6 posts · 2 votes
9y
@Sarah D. Thanks for the advice. I have found that two be very true regarding other people's metrics. Curious what did your SD deal look like?
0 Reply
Fabio Salas
Investor · Champaign-Urbana, IL · Member since 2014 · 84 posts · 49 votes
9y
Max May I own a duplex in Imperial Beach that I purchased a little less than a year and a half ago. Purchase price was $510,000. I lived in one side and rented out the other side through Air BnB. Renting in this manner was a much more active form of investing (I spent a lot of time doing cleanings, buying supplies, talking to guests, etc), but it made me more money than long term renting. For three months last year (June-August) I made enough through Air BnB rentals to completely cover the mortgage (which includes taxes and insurance; $3,030/month). At the end of the year I deployed with the Marines and after crunching the numbers I realized that a vacation rental property manager would eat up too much of my profits to make it feasible to maintain as an Air BnB rental (Vacation rental PMs charge much more than long term rental PMs; generally around 15% in SD; a company named Pillow is in my mind the best PMs for these sorts of investments, and they're the only ones to offer a set monthly rent). So I turned both units into long term rentals. I put all my things in storage so while deployed I'm saving money not paying rent or a mortgage. When I return from deployment this summer I plan to buy another property to live in, which will eventually become a rental as well. All of that said, achieving positive cash flow from a long term rental in SD is difficult, and almost impossible. However, I'm investing in SD because I believe in the staying power of this major city. Many people have warned me that we're at the top of the market and I should wait a year or two before buying so that I can buy a property for much less. Although I understand their viewpoint, my viewpoint is: why not buy one now AND another later when the market drops? Then I have two rental properties vice just one. The thing to be careful of is buying at the top of the market (like we probably are right now) and not being financially prepared to weather the storm when the market drops. In other words, if rents drop below your monthly mortgage, you need to have enough money saved up to cover the difference for a few years until the housing market in SD recovers. And if you believe in SD like I do, the marker WILL recover. Of course, many will say investing with appreciation as the goal is speculative. And they would be right. It's a gamble, but with SD's history I'm willing to take that gamble and invest in long term rentals that 15 years from now will provide me a huge equity and possibly some positive cash flow by that point due to higher rents. In the end, it all comes down to your own individual investments goals and risk aversion to REI. Food for thought...hope it helps.
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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
Originally posted by @Max May:

@John Arendsen Thanks for your input, much appreciated.
@Greg Rollins Good luck to you as well! I have met a few people who are in our boat, ready to invest but unsure if now is the right time. I have also heard the only way to play is get in the game. i just do not want to make a bad decision! I will keep you updated as to what I end up doing. Last but certainly not least, thank you for your service!
@Dan H. Do you think the market can continue on like this? My worry is that I make a buy and hold investment, with rents barely covering costs then the market drops. I think I may have found that information about listing vs. sale price in one of your posts. Where are you finding duplexes in the 450k range? Those numbers would work for me. I would love to speak with you to learn more about what you have been able to do in the SD market.
Do I think the market will continue like it has for the last 5 years? No I do not. I believe the lowest year to year appreciation in the last 5 years was 8% and the highest was over 20%. That seems unsustainable. However, I am confident in the long-term San Diego will continue to appreciation more than other RE markets. It historically has but historically there have also been short periods where the market declines. Trying to time the RE market is like trying to time the stock market meaning it is tough to do and most people would be better off not trying to time the market.
As for where? Read my profile and you will likely be able to determine my number 1 area I invest in San Diego (it may outright be spelled out). Then get a listing of completed 2 to 4 plex in that area and determine average cost per unit on those that have not already had forced appreciation (i.e. not being sold by flippers). You will see the $225K/unit for 2/1 or 2/2 is about selling market (list is much different). Does your realtor or broker provide you access to all sales information? BTW those numbers are tight for cash flow when legitimate expenses (especially cap expense) are used with the current interest rates. In other words, they are not cash flowing enough to be worth the work and require appreciation to be worth the effort. I did a recent cash flow analysis of my properties and without principle pay down I was at ~$150/door with one property significantly less than 70% LTV (my cash flow would be less if all properties were at 70% LTV). Principle pay down adds ~$150/unit for a total of $300/unit per month of cash flow if including principle pay down. So you would be relying on appreciation (property and rent) for decent return. Fortunately just this week I saw that San Diego is expected to have the 6th highest rent increase of large cities in the coming year (if they are correct then there will at least be good rent appreciation in the next year).
I virtually always look for properties with forced appreciation opportunities. Also refi appraisers are both conservative and inept. If you add 25% value, your refi appraisal will likely show about half the added value for refi purposes (I recently had the most inept appraiser of my RE investing career: He actually showed a 3rd detached 2/2 1300' unit on his initial appraisal as a $10K upper (on top of the footage upper). I appealed and got a $60K increase on the appraisal which was still low. So it is challenging to get initial investment out of a property with only forced appreciation (i.e. it helps to have forced appreciation and market appreciation). The same property that is significantly less than 70% LTV (It is a duplex) is the only RE asset that I own that initial investment has not been pulled out of the investment and that property has an insane low interest rate (which is why I have not refinanced it even though one unit had a partial rehab and it is worth close to double the purchase price).
I mostly only go to the Bigger Pockets San Diego Meetup and even those I only get to about 50% of them (so I am not that easy to get a chance to talk with).
Good luck.
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
9y
Originally posted by @Fabio Salas:

..., if rents drop below your monthly mortgage, you need to have enough money saved up to cover the difference for a few years until the housing market in SD recovers. ...
Food for thought...hope it helps.
My family and I owned properties through the RE meltdown. Our rents in San Diego did not go down. I think more people grouped up with family and friends reducing demand but the banks were holding so many properties that the supply was also reduced.
This was the second market decline that I have owned RE investments and the family has had at least twice as many market declines. In both of the two market declines that I have owned the rents on my units did not decline.
This is not to say that the next decline will not result in reduced rents in San Diego and it is best to be prepared for reduced rents (better to be prepared than not prepared).
I like your positive attitude about acquiring additional properties but IF there is a decline after you purchased you would be able to have purchased bigger or more if you had waited. The issue is timing the market could just end up with you owning nothing.
Good luck
1 Reply
Fabio Salas
Investor · Champaign-Urbana, IL · Member since 2014 · 84 posts · 49 votes
9y
Dan Heuschele I totally understand. That's the dilemma, trying to time the market. In the latest podcast they talked about that very same thing. I liked how Scott Trench addressed the fears of buying during market peaks and how his strategy is to win regardless of whether he buys at the top of the market or the bottom. To be honest, I don't feel I know enough about the housing market to try and time it so I rather purchase a property now knowing I'm probably at the top of the market than wait a year or two for it to drop. At the same time, in continuing to build up my cash reserves because when the next market drop comes around I want to be able to buy up as many properties as possible. Although even then, how will I know when we're at the bottom? I can make an educated guess, but I'll never know for sure. I'm really excited about you sharing the fact your rents didn't drop though. If that holds true during the next market drop it'll help me out a lot. In any case, I'm preparing for the worst. The last thing I want is to over leverage myself to a point where I lose all I've accumulated during a 2 year downturn. Thanks for the tips and advice. I'm soaking it all up.
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