Who is buying in this market?

Buying & Selling Real Estate
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Who is buying in this market?

Arthur P.
Real Estate Broker · Pinellas County · Member since 2016 · 166 posts · 114 votes

Who is buying these multi family properties with 5/6/7 % returns?? Are people buying for appreciation?

What happened to 10% and over.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
Originally posted by @Arthur P.:

@Russell Brazil I understand the concept but who is buying at these low returns? You can get into stocks with these returns

 Well Im certainly buying and continue to grow rich in doing so. However I wouldnt be buying in all cash.  The greatest aspect of real estate investing is using leverage to purchase it.  Your return is artificially low in purchasing in all cash.

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Arthur P. Real estate pays 5 ways: Cash flow, appreciation, loan paydown, tax benefits, inflation hedge. And people invest for very different reasons. Are the 5% returns you mention only COC of REO? In the market I live in, people invest for appreciation and don't care as much about cashflow. So they may make 15%+ return still without the cashflow piece due to leverage. We have foreign investors too who just want the tax write off. So a 5% COC or even REO would appeal to a certain group of people.

    For me, I like a balanced approach between cashflow and appreciation... and love the value-add model.  Therefore, I've moved my investing out of state.  In this market, I'm making way more offers where the numbers make sense to me and it's taking a bit longer to get things under contract.  Keep making offers... it will come :)

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  • Arthur P.
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    Real Estate Broker · Pinellas County · Member since 2016 · 166 posts · 114 votes
    6y

    @Whitney Hutten great points! Investing with appreciation in mind could be dangerous.

    Lots of offers going out but I’m surprised at the selling prices. Successful 2020!

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