What sign are you waiting for?

Question

It has to be said, the majority of investors are slowing down, especially when it comes to acquiring new properties for their investment projects.

My question is, what are you waiting for to return to business as usual? What sign or metric will tell you that it's time to start buying again?

Is lending the biggest issue? I am in the San Antonio, Texas area but answers from elsewhere are also welcome.

Synthia B. · Answer

@Stone Saathoff For myself, not waiting on the market currently, just waiting on the right property. Still willing to move forward but will be more cautious during this time regarding my calculations and risks.

David Serna · Answer

@Hank Keller Welcome to the RE world! Second-quarter stats will not be available until July. Are you saying you're gonna be on the sidelines until 2-3 months from now? Might miss some good opportunities...

Also, you mentioned you're fairly new. Do you think there's some value in the fact that investors who have been in the RE industry for the longest time, including the 2008 recession, are STILL, to this day, investing? Doing flips, owner finance, Wraps, Sub-to's, etc.

Edwin Williams · Answer

With the unemployment projections and the current numbers it's going to be a long time before we get back to normal. Investors are going to be falling out all over the country at different stages of the recovery because we all have different pain thresholds. It makes no sense waiting as @Stone Saathoff said because we are in new territory and no one can predict anything when it comes to timing. Maybe new hiring numbers could be an overall indicator but it's such a large country, what happens in Austin Texas has nothing to do with Cleveland Ohio.

With the government pumping so much money out we may not see the drama we were expecting. Everyone needs a roof over their head and if you have money you are probably going to pay the rent first.

Account Closed · Answer

I'm still buying in the great state of TX and have no plans on quitting. The whole scare is simply halloween on steroids. Costumes but no content.

Aaron Bihl · Answer

There are deals...they are just hard to find on the MLS or from wholesalers.  Learning to source my own deals has been one of the greatest investments i've made.  The house I closed today very conservatively was a 58% deal, that I should be in and out of in 60 days.  And my hard money lender was happy to lend on it.

Rick Pozos · Answer

Its a little different when you are an investor as opposed to a salesperson in the real estate field. It is easy for a salesperson to get frustrated that people are not buying your product. The reality is that the WORLD almost completely shut down for a couple of months. Sure there are puny stimulus checks for some people. Some businesses got some cash. BUT the reality is that people are scared of the unknown.

You can not run a business at 25%. You can not make money at 50%. Many businesses are NOT going to be profitable in the next several months. This is concerning for investors of all kinds. If you did not have income for a month, how long will it take to get back current with everyone?? If you only had several hundred dollars extra every month, but lost several thousand in 1 month, it will take 10 to 12 months to get back to normal.

I know my market of San Antonio and I am always ready to purchase a property or a note AT THE RIGHT PRICE. Most people dont know what the right price is. THAT is the problem. They dont know what the price will be next month or next year. It will take 6 months to a year for most investors to get back out there.

Joseph Cacciapaglia · Answer

It doesn't seem like too many people are waiting here in San Antonio. I missed out on three deals this week that had multiple offers within days of hitting the market. I know we've seen some declines in closings year over year, but it's not nearly what I would expect with the world shut down. Many of my investor clients are still out making offers, but they have decided to start lower than they may have 6 weeks ago. So far most sellers aren't biting at those lower prices. I have seen a few small multifamily properties sitting longer than I would expect, but our inventory is still very low overall.

I think the biggest decline has been in deals that need hard money to make them work. With a lot of HMLs out of the market, and the rest changing their terms, those deals will need to reprice before they'll start hitting again. I've heard from a lot of wholesalers that are feeling some pain, because of that. That segment hasn't been a large part of my business, which is probably why my perspective is a little different.

With my personal investments, I'm just waiting for sellers to start accepting my lower offers too. I think there are probably some great opportunities out there, if you can find them. Right now, sellers aren't lowering their prices for the most part, but I think there will be a few that will bite at a decent discount if you ask. I think if you're waiting for prices to drop, you are probably missing out on deals today. You may also be disappointed, unless unemployment remains high for a long time. We're certainly not guaranteed any real decline in real estate prices, just because we're in a recession.

I think we'll know a lot more next month, after we've started the process of reopening. By then, I think some of the best deals may have already been scooped up. In the last downturn, the very best deals I saw happened in the very beginning, when panic was at it's highest. Of course, this time it could all go terribly and prices crater again. On my own account, I'm willing to bet that's not the case. It's something each investor really needs to decide for themselves though. I know if I was cash strapped and inexperienced, I wouldn't be out buying.

Account Closed · Answer

@Stone Saathoff

I haven't really changed anything with my strategy, a great deal is a great deal... I've just been more focused on my reserves nowadays.

Mike Chern · Answer

@Stone Saathoff

Thank you very much. Will ask you when I need some financing in the  next few months, when market rate is stabilized

David Song · Answer

@Stone Saathoff

Wait until end of the year, November and December. Then buy.

What sign are you waiting for?

Most Popular Reply