Invest now or wait to see if market tanks?

93 Replies

Do your analysis and see if the numbers work for you in the certain markets you are looking at. If it's a deal, then it's a deal. I would not try to time the market since that is so unpredictable. Will the market tank?  ....probably more likely a correction, if anything. 

@Joseph M. Those factors show up too late. Affordability is a key that people tend to ignore. When the affordability for homeowners and the value for investors dries up, prices might go down. Lower prices means you are underwater on your 3.5% DP FHA loan and you walk away, foreclosure.
@Ken Virzi Yeah affordablity is something Bruce Norris mentions “One of the telltale signs of an over-priced California market is the affordability number heading to 17%.” Link : http://thenorrisgroup.com/learning/files/media_manager/original/127.pdf Looks like we are at 26% for housing affordability now in CA for SFH .. but in SF for example it’s 18% Link https://www.car.org/marketdata/data/haitraditional/

Invest in income producing assets and don't worry about timing the market. Invest for cash flow and you will be fine. You are missing out on profit while you are waiting for an adjustment in the market. NOW is (always) the best time to invest.

New investor here. Trying to get my feet wet with wholesale assignment deals. I'm struggling with finding properties. Any tips would be welcome and appreciated.

@Shannon McCasland wholesaling is not as easy as the gurus make it out to be. You can burn A LOT of money in marketing without getting any good deals if you don't know exactly what you are doing. I would buy a rental property first. Buying your first rental is the best learning lesson ever. As you add to your portfolio you can start to market for your own deals. As your marketing machine is gaining momentum you will be able to assign the contracts for deals that you don't intent to close on to other investors -> become a wholesaler. 

Most investors that start with wholesaling spend a lot of money on marketing without making a profit. 

@Chad Jenkins Welcome to BiggerPockets Chad! The BRRRR strategy is an acronym. B. Buy R. Rehab R. Rent R. Refinance R. Repeat. The idea behind it is to buy a distressed property that you can add value to by rehabbing. If done properly, it’s possible to raise the value to the point where you can refinance all or more of your capital out of the deal. Then you can go off to repeat it to infinity.

I love investing in real estate during market changes.  Especially when markets change from Sellers Market to a Buyers Market.  When this happened last time (10 Years ago) two things happened.  First some people betting on Appreciation will go broke and others will do great as they buy solid units to build their career.  Be Picky and extra aggressive on price

@Chad Jenkins @Brandon Hicks pretty much spelled it out. It’s an alternative to buying properties the conventional way of putting 20% down. imagine a hypothetical deal..... Let’s say I buy a property that is selling for $100,000. I put $20,000 down and it cashflows $200 a month. That’s great but now I have to save another $20,000 to do it again. Here’s a hypothetical BRRRR deal. I find a beat up house in a neighborhood where comparable properties sell for $100,000 in good condition. I buy the house all cash for $60,000 (I’m able to get it for this price because it is in bad shape, and I’m offering cash) and put $20,000 worth of work into it, bringing the value to $100,000. I then go to the bank and get a mortgage on the property for $80,000. I’m now in the exact same position as I was in the first example, but now I have all my money back and can do it again. Most likely a bank won’t give you 80% LTV but I’m just trying to use round numbers.
@Chad Jenkins BRRRR very simply stands for Buy-Rehab- Rent- Refinance- and Repeat. The beauty with the strategy is that you're going to buy the house and the rehab that you have to do is a lot less risky than flipping the house because you have to get the house rental ready.
@Jonathan Hulen I think everyone should time the market till they figure out if it works for them. After 15 years I realized I couldn’t do it. Thank God I didn’t wait another year or two.

Invest now in affordable Turnkey Rental Income Properties that get you double digit ROI and wait!

You probably have some idea what sort of return you want to make. So if you find properties that will perform like that, buy them. If not, wait and look harder. 

The only things we (family business) are buying now for our own portfolio are off-market properties at prices that would have been reasonable 5 years ago, before this big run-up. We want to be able to look back after a big correction and not be sorry we bought in 2018. So, our buying has slowed way down in the last year, but it hasn't quite stopped. 

Of course, if you're looking in CA, I'm sure the situation is far more difficult. 

Real estate investing is going to have some sort of a slowdown, mainly because of the increases in interest rates.  But this is not a crash.  The last crash saw a wave of properties returned to the lenders.  And a free-fall in prices in quite a few markets.  I am not predicting a crash.  If you are long term and you think the deal is good - I would proceed.  

@Jonathan Hulen 1) Look around you and count the number of mini Warren Buffets. Yes former chefs, shoeshine boys, barbers, strippers etc who talk like they understand investing. If you see too many of them, you know the crash is round the corner 2) Go to your local bank and ask for a Zero down mortgage. If they oblige, you know the crash is just round the corner. Outside of that noting much to tell you. Good luck.

What goes up, must come down. The real estate market included. Don't be fooled, it will come back up before it comes crashing down again. 

We made an offer on a fixer in So Cal - OC for a moderate area and semi fixer. We got overbid by 28 other offers. Thats alot of capital chasing a deal where you might make $50k. Investors are not having the stock market and probably feel RE is safer and more intrinsic even if prices are high. 

@Ran L. I have a rental property under contract right now for over 20% below market value. That’s the main principle the BRRRR strategy is built on. In this case the seller just inherited it and he just wants to get rid of it quick without dealing with listing, showings and back and forth offers. I made an offer before he had a chance to list it and it’s a win win, we’re both getting what we want. Another deal I did this year was 30% below market value. That one was a foreclosure and I only had one other bidder to beat at the court house. When I refi/heloc these two in a few months I should be able to pull out more money than I even originally invested in the downpayments and just keep collecting cash flow. My point is that properties sell for 20, 30, 40, even 50% or more below market value every day. That’s how wholesalers make their livings! And flippers, and BRRRR investors, etc. But yes I agree, especially in today’s market I would want a record high sales price if I were selling. Thank God for motivated sellers!!!!!!!!

Waiting is not a bad idea and if you don't , just be sure to buy really really low.

Originally posted by @Greg Gaudet :
@Ran L.

I have a rental property under contract right now for over 20% below market value. That's the main principle the BRRRR strategy is built on. In this case the seller just inherited it and he just wants to get rid of it quick without dealing with listing, showings and back and forth offers. I made an offer before he had a chance to list it and it's a win win, we're both getting what we want.

Another deal I did this year was 30% below market value. That one was a foreclosure and I only had one other bidder to beat at the court house.

When I refi/heloc these two in a few months I should be able to pull out more money than I even originally invested in the downpayments and just keep collecting cash flow.

My point is that properties sell for 20, 30, 40, even 50% or more below market value every day. That's how wholesalers make their livings! And flippers, and BRRRR investors, etc.

But yes I agree, especially in today’s market I would want a record high sales price if I were selling.

Thank God for motivated sellers!!!!!!!

was the property you bought on Maui or another island or state.. ??

Originally posted by @Ran L. :

I would definitely not sell my properties at 20% below the market price to a buyer.  

I wonder who would want to sell it 20% below the market price.  

Thousands of people want to sell their house quickly, have no clue what it's worth or just don't care. People go through all kinds of life events that make them want to just get rid of their property. There are others that have just let their property go and don't want to hire a contractor to fix it or simply can't afford to hire someone. You also have inherited properties, obsolete properties, under rented properties and more. What makes a good RE investor is one who understands there are all kinds of people that want to sell their property for 20%+ under market value and then takes action to find those people.  

@Jonathan Hulen It is a bad time to get into housing market now. Waiting is probably better than rushing into an inflated market. Sitting on the sideline is not necessarily bad. Alternative investments are available. Interest rate is moving up, housing price is at historical high. Dangerous road ahead. SF Bay Area has already showed month to month declines in price FOR TWO MONTHS, increase in inventory. As we approach the end of 2018, we might get a better picture. Timing is the number 1 important thing in REI.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here