Are you selling, holding or buying?
Property Manager · Orlando, FL · Member since 2020 · 200 posts · 194 votes
Hi Everyone,
I was wondering what is everyone doing right now with the crazy market we are in! What is the right thing to do when deals are so hard to come by? If you have properties that have appreciated, is it a good time to consider cashing out or keep holding on to them?
I am based in Orlando and I am also operating in Miami and both markets are currently on fire. Especially the SFH! We are a property management company in Orlando and Central Florida and most of our investors are currently sitting on cash because they cannot find anything that makes sense. Others are offloading properties and chasing out due to the hot market.
What is your strategy as an investor? If you are a realtor, what are you advising your clients?
Have your criteria for purchasing properties changed due to the new market we are in? If yes, how so?
I have my own opinion but I always like hearing from others in regards to their thoughts and markets!
Thanks for your input!
I was wondering what is everyone doing right now with the crazy market we are in! What is the right thing to do when deals are so hard to come by? If you have properties that have appreciated, is it a good time to consider cashing out or keep holding on to them?
This will depend largely on which phase of the financial journey one is in. The sellers market that made deals so hard to come by and corresponding rises in value and rents pushed me into the preservation phase early.
I have been more of a seller than buyer since 2017, but have purchased easy off-market deals. My criteria has not changed much, but I was never a 70% minus repairs buyer. If looking actively today, I would expect an effort/reward ratio of about 200:1. Too high for me. I'm a buyer at more like 50:1 or less as an unmotivated preserver.
I may be more of a seller moving forward. I just saw a duplex I thought would be a stretch for me at $360k ($395 retail) get listed for $525k. I know this seller. He said it had 2 offers over asking right away. WTH? I have a bunch of plexes in that market. Depending how it plays out, I may be forced to the selling table again.
What to do if you suddenly realize your assets could be worth 45% more than you thought? If you're in the preservation (last) phase of your journey, you evaluate the tax and re--deploymemt options available to you and make hopefully the best decision for you and your family.
Never be afraid to sell or buy if the right circumstances present themselves. Be willing to pivot.
I'm very new to this. I'm stuck in the education phase simply because the market is too hot right now. I'm hoping prices will drop in the spring so I can buy my first investment property. Meanwhile, I did refinance my primary residence to lower my payments in order to begin saving more for my downpayments on my future investment properties. I'm caught between this idea that the market is too hot and overvalued at present and the desire to just hurry and get started but I'm afraid I'll pay too high because of FOMO. If I had somewhere for my family to stay, I'd consider selling my primary since its gone up in value considerably since I bought it 9 years ago. Another consideration was the possibility of just building new specifically as a rental or building a multi to move into and house hack while renting out my current house. I'm going to do some research to ascertain whether due to the current prices it might be cheaper to just build new.
Currently "holding" until smoke clears on eviction process
@Jason High I'm also looking for a property to househack but those are hard to come by here in Florida as well. I'm based in Orlando and there are less than 10 small MF on the market at a time! In my opinion the key is to keep building, keep putting money aside and if you decide to purchase, make sure is a great deal and even if everything goes South you can still hold on to the property because you didn't rush in and overpay!
@Mike Mosee It seems like we may be looking at another extension of the restrictions! We all hope this is not the case!
Just flying around in a holding pattern. Super hot market and the eviction moratoriums have me being extra cautious. My properties have also appreciated by a lot so I am sitting on underleveraged equity as well.
I have one vacancy I am just sitting on until after the CDC moratorium ends. I figure there are a lot of "about to be evicted" people running around trying to move before they get the eviction on their record.
I am also really curious to find out what the new administration is going to do. If Biden comes out saying he totally supports "cancel rent" and institutes bad housing policy, I may have to rethink the entire business plan.
@Account Closed
We are a property management company in Orlando/Central Florida and we rent between 5-15 properties a month. What we find very useful is always requesting the tenant's current address info and contact details of their landlord. Collections and reports do take a while to go on someone's record. Best thing to do is call their previous landlord and see if they recommend this tenants. Good renters will provide you with the information without hesitation, bad tenants will leave blank or put invalid number. This is a red flag right away! Even when they provide a number, make sure you search the property records and verify you are talking to the actual landlord or Property Management company. We had people putting info of relatives pretending to be the landlord.
There are also few other things I recommend doing during the screening process. I will be happy to share in a personal message as this is out of topic. Our delinquency and eviction rates have remained low do to the intense screening process! My advice is: Take your time and check everything! This is the most crucial part of managing your rental properties! You can never be too careful!
@Account Closed
We are a property management company in Orlando/Central Florida and we rent between 5-15 properties a month. What we find very useful is always requesting the tenant's current address info and contact details of their landlord. Collections and reports do take a while to go on someone's record. Best thing to do is call their previous landlord and see if they recommend this tenants. Good renters will provide you with the information without hesitation, bad tenants will leave blank or put invalid number. This is a red flag right away! Even when they provide a number, make sure you search the property records and verify you are talking to the actual landlord or Property Management company. We had people putting info of relatives pretending to be the landlord.
There are also few other things I recommend doing during the screening process. I will be happy to share in a personal message as this is out of topic. Our delinquency and eviction rates have remained low do to the intense screening process! My advice is: Take your time and check everything! This is the most crucial part of managing your rental properties! You can never be too careful!
All good advice! I will add a few superstitions I've built up over my time doing this: One is you can't totally trust the current landlord reference, especially now where there are landlords stuck with bad tenants they can't (yet) evict until January and are desperate to get rid of. The previous landlord is a great resource, but unfortunately was an experience likely from "the before times" .. before all the economic stress was put on everyone.
I also have learned that the background check services don't pick up all evictions or eviction filings, and I use the county courts online records to help round out the picture, they seem to appear within 24h here. Once January 1st comes I think there will be a bunch.
The only tenants I've ever had to evict were inherited, thankfully. I have rejected plenty of applicants though!
We’re a military family. We recently got orders and had planned on renting out our house however after taking into consideration that age of the home, we decided selling would be in our best interest. Otherwise we’d be looking at spending anywhere between 20-30k in the next few years for capex. In 4 years, our property has appreciated about 44%, so we’re walking away with a good chunk of money.
On the flip side, rather than buying the nicest house on the block at our destination we’ve decided to downsize from 2900 sq ft, 4 bed/2.5 bath, loft, den and a pool to an 1100 sq ft, 3bed/2 bath cozy home with a small backyard (no more yard work!). In addition to our mortgage expenses going down so will our maintenance costs as well as the time it takes to Keep the house clean. :) We plan on saving as much as possible in the next year and potentially move out of this house, rent it out and hopefully find a multiplex to hack.
We have another rental in FL that I really need to look at refinancing but just haven’t had time to look into it but I’m hoping to increase the cash flow from that rental.
We’re very excited for what’s to come in 2021. Happy Holidays to all! Thank you for this post.
@Pearl Cook Good Luck with everything Pearl and Happy Holidays!
@Account Closed Great Advice! Let's see how everything goes in 2021!
@Alberto Nikodimov, holding what we have and continuing to buy when we find the right deals. Due to the heat of the market, the last deal I did was a BRRRR with smaller than usual margins, but it works. Just being cautious with what we buy. Bottom line is the market is really hot right now, but I am not a fortune teller, so I have no idea what is going to happen next. It may continue up, it may plateau, it may decline. As long as you buy right, there is not much you can do about the future.
Great advice @Kevin Hunter ! Seems like we are on the same page!
Sold one SFH rental with 170k in equity, holding all MF, and still wholesaling/wholetailing. Just finished one flip which will be listed next week. Keeping rentals owned free and clear until I have a better picture of what the potential recession in Orlando/Florida is going to look like.
I am still currently buying and actually had a closing yesterday. My strategy focuses on section 8/ DCA housing so not to concerned with eviction moratoriums.
Trying to take advantage of these low rate environments and refinance to increase cash flow and continue to grow. As I have a full time job and my investing is on the side, I am being a little more aggressive as all my cash flow is being poured back into my business. Don’t take any draws right now.
I am full steam ahead my friend!
I sold all my flips early this year and with COVID its been tremendous. I thought I was going to get stuck carrying some serious properties and the mark completely showed me that my investment strategy of investing in the suburbs of New Jersey outside of NYC was a gold mine.
I recently closed on 2 separate sweet BRRRR duplex deals and I'm setting up to close on another a third duplex before the end of the year. All these properties are total fixers with huge value add componte
1st Duplex I have demoed down down to the existing foundation. I will be adding 3 coarse of block to get larger ceiling and then add 3 additional floors. The new duplex units will be 2 floor luxury units with UNIT 1 being the basement, 1st floor and UNIT 2 being 2nd, 3rd floors. UNIT 1 will have access to the yard and the UNIT 2 will have a roof top deck.
2nd Duplex is all ready a large existing 2 family approx 3500 sq ft. This house has been gutted down to the studs and exterior stripped to the sheathing. This home is all being converted to 2 floor units making UNIT1 the basement/1st floor and UNIT 2 will be 2nd floor/ Attic. These home will all new everything
The 3rd property in works is a existing duplex that sits on a lot large enough lot for me to subdivide an build a additional duplex unit. The existing duplex will be fully gut renovated with brand new everything and the new house will be a ground up duplex which basically gives me a QUADPLEX out of this property for the ultimate home run.
My investment strategy is the focus heavy on the construction, value-add and making all my property brand to new. The market that I am in is very expensive but the upside if the properties are done right your get incredible ARV's, sold appreciation and big rent with amazing NET cash flow. So for me its all about new everything which keeps the capex down to almost zero for the 1st 5-7 years and the tenants want to stay long term because the units all killer lifestyle pads.
So I'm still looking for deals because I'm showing my lending partners there are still amazing opportunities out there and whether there is a crash or not the properties I am purchasing will more demand in a crash and killer cash flow no matter what.
So if anyone is sitting on the sidelines waiting for the meltdown of 2021 I think your making a huge mistake. Its not going to HAPPEN. or shall I say the correction is going to HAPPEN but your not going to feel it because all the large institutional money is going to be there buying up everything from the banks. So the ECO system at large will not feel it.
By the way these institutional investors will be paying retail for these assets because cash flow is king and the largest payer in the world will be printing loads of money for housing and that player is the US GOVERNMENT! UBI (Universal Basic Income) is coming and it will be used for food and shelter only. Do some research and look into it. So double down if you can
I agree with you it is almost certain this market on fire is going to cool down if not stall out but remember rents do not go down when the mark slows down
For me, depends on the asset (location; potential for further appreciation; opportunity cost of holding; ease of rental to excellent tenants, etc.) So, I am selling one where I am comfortable with appreciation (and don't care to manage remotely) AND, holding others, that I know will keep going up. I'll take the cash from the sale & reinvest locally (probably higher end value add longer term flip where we might live for a while).
@Joe Edwards
It’s the second time I heard about institutional Investors on sidelines waiting to scoop up any foreclosures at banks asking price therefore eliminating any discount deals for the average investor. Also, these institutional investors already made contact with banks and have agreements in place for these coming foreclosures.
Same here, carrying on the same as always. I'm not in the Cult of the Covidians (Covid-19) so nothing has changed.
Good for you my friend!. COVID is like anything else in the past. Something we have to deal with and adjust accordingly but like everything else in the past the show must go on.
Stay getting after it!
@Joe Edwards
It’s the second time I heard about institutional Investors on sidelines waiting to scoop up any foreclosures at banks asking price therefore eliminating any discount deals for the average investor. Also, these institutional investors already made contact with banks and have agreements in place for these coming foreclosures.
Terry its most certainly a fact. I have friends here in NYC in investment banking and they have there wr rooms up for over a year now. They know the 6 million+ homes owners who have taken forbearance what percentage of them will not be able to make there obligation and what percentage of that group has the most equity in the assets. As my buddy quote to me "Thank god for the extension" they have there lawyers on standby to move swiftly on these high equity assets and unlike 2008 they have all the physical paper work to execute the foreclosure. so there will be no delayed stays in homes that people are paying and this investors have teams put together of contractors, property management and realtors.
Things are going to get very very interesting. So i am aligning my relationships with these groups to pick up properties they may not want to tackle but they will take the quick wholesale fee. This going to be the future of things for the foreseeable future.
Good luck in your deal finding
I think that 95% of people do not know this little bit of information. Also, this sounds like a plan copied from what Blackrock did after the 2008 recession, which came in and scooped up as many properties at bargain basement prices. Then put into a real estate portfolio, created a investment fund, went public IPO, and sold their shares at phenomenal gains.
For those investors on sidelines with cash and waiting for the tidal wave of foreclosures, will not materialize.
I hope those investors will read this post, and have a backup plan.
You are SPOT ON and very well informed. The market move in 2008 and then the IPO was a game changer for the financial investor class and a huge torn in the side of the individual small real estate investor
I was wondering what is everyone doing right now with the crazy market we are in! What is the right thing to do when deals are so hard to come by? If you have properties that have appreciated, is it a good time to consider cashing out or keep holding on to them?
This will depend largely on which phase of the financial journey one is in. The sellers market that made deals so hard to come by and corresponding rises in value and rents pushed me into the preservation phase early.
I have been more of a seller than buyer since 2017, but have purchased easy off-market deals. My criteria has not changed much, but I was never a 70% minus repairs buyer. If looking actively today, I would expect an effort/reward ratio of about 200:1. Too high for me. I'm a buyer at more like 50:1 or less as an unmotivated preserver.
I may be more of a seller moving forward. I just saw a duplex I thought would be a stretch for me at $360k ($395 retail) get listed for $525k. I know this seller. He said it had 2 offers over asking right away. WTH? I have a bunch of plexes in that market. Depending how it plays out, I may be forced to the selling table again.
What to do if you suddenly realize your assets could be worth 45% more than you thought? If you're in the preservation (last) phase of your journey, you evaluate the tax and re--deploymemt options available to you and make hopefully the best decision for you and your family.
Never be afraid to sell or buy if the right circumstances present themselves. Be willing to pivot.
Great advice @Steve Vaughan! This is a wonderful perspective! I constantly see people debating/arguing over investment strategies accusing each other for being too passive or too aggressive. I definitely agree with you! The risk tolerance of a person in his 20s may be much higher than someone who is much further ahead in their investment journey. At the end of the day, the person who have been building his/hers portfolio for years have much more to lose than a younger investor! Each investor should evaluate their personal situation and plan their actions based on where they currently are and where they want to get.
It's all about mapping out your investment journey and keep going towards that goal while "Never be afraid to sell or buy if the right circumstances present themselves. Be willing to pivot."