to buy or to wait?

Multi-Family and Apartment Investing
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to buy or to wait?

Jason Thompson
Wholesaler · usa · Member since 2021 · 222 posts · 67 votes

With so much speculation about the market and its direction, are you waiting on the sidelines, ready to pounce, or are you still pushing forward with conservative underwriting regardless of what the market does? 

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Justin Hammerle
Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
3y

don't wait to buy real estate, buy real estate and wait : )

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  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Mwazomela Thurmond:

    @Jason Thompson Waiting can easily become analysis paralysis or analytical procrastinating. The deal that might be perfect for you could be on or off the market, but if you aren't ready you won't have enough time to be ready, willing, and able.

    Abraham Lincoln said if you ask him to cut a tree down in 6 hours, he's spending 4 hours sharpening his tool. Find a good lender if you need financing, a good real estate professional, and build your network. Interest rates are always changing, if that's a main concern speak with a mortgage broker or multiple lenders because they have knowledge and tools you can't find while reading an article online.

     @Mwazomela Thurmond Fantastic advice. I love the quote from Abraham Lincoln!!! I am currently building my network, my objective is to add a new contact to my database every day and nurture one existing contact. After one year, that's 365 new contacts in my database, and after 10 years, this will be more than enough to scale my business and reach my investment goals.  What are your investment goals for 2023 Mwazomela?

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:

    With so much speculation about the market and its direction, are you waiting on the sidelines, ready to pounce, or are you still pushing forward with conservative underwriting regardless of what the market does? 


     this market is extremely good for ............ high end SF primary purchase.

     @Carlos Ptriawan Can you tell me more about why High-end SF primary purchase is an excellent choice to invest in right now?


     some high end SF are priced into 2016-2018 level, way way way heavy discount. 

    Thanks,

    Carlos

    1Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Michael Gansberg:

    I use my inner barometer(thermometer?) The scarier it is to buy, the more likely that buying is the right thing to do. When you feel absolutely comfortable with buying("hey, what could go wrong, it's real estate!") then maybe the market's a bit toppy. However, I agree with the general sentiment on this thread. Buy consistently, manage well, and in the long run, the vagaries of the market will be irrelevant and you'll be happy that you bought. That's what my 20 years worth of experience has shown me, anyway.

     @Michael Gansberg I agree Warren Buffett said when everyone is scared, you should be buying, and when everyone is buying, you should be scared. Go against the masses if you're following them blindly. You're already too late. Thanks, Michael. I hope you're having a great weekend. 

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Nick Robinson:

    @Jason Thompson
    I am waiting and building my position for a future purchase. Like many have said if the numbers work out than I do not see an issue with buying a deal. If you are buying, I would run your numbers extremely conservative, and it has to be CF+. Be careful with some BP advice of buying things that do not CF and you can always refinance later. RE is location specific but the national median sales price has fallen 11% from June. If you bought a home in June even if interest rates fall you cannot refi because you would have under what the requirements are to refi. I believe the last report is 19 of 50 largest metros have negative YoY appreciation right now. If you are smart and bought for CF the value of the asset is not as important but if you are buying for appreciation you may run into trouble. 

    I do not think most people think through what the FED cutting rates actually means. The Bond and Euro$ futures curves show a very high probability that the FED will not only cut FED funds but will do it sooner rather than later. When the FED cuts rates it will be a dramatic drop. I obviously agree with the bond market, which has a 100% track record. When the Fed cuts remember they are reactive which means the economy is going to be in bad shape. If you think this is a "soft-landing" or the beginning of a new bull market, why would the FED cut rates?

    The first sign of trouble in UST which was the 10/2 spread in March historically predicts a recession in the next 6-24 months with 16months being the avg. That would put us in July/second half of 2023. Considering yields have become more inverted and economic data continues to worsen I see no reason to doubt the curve. 

     @Nick Robinson You're a well-educated man. I appreciate you sharing your data and knowledge. I agree. I am very concerned about negative leverage and negative cash flow. These investments are way too stressful for me, I never bank on appreciation alone, and I like sleeping at night. Thanks again, Nick great contribution. 

    1Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:

    With so much speculation about the market and its direction, are you waiting on the sidelines, ready to pounce, or are you still pushing forward with conservative underwriting regardless of what the market does? 


     this market is extremely good for ............ high end SF primary purchase.

     @Carlos Ptriawan Can you tell me more about why High-end SF primary purchase is an excellent choice to invest in right now?


     some high end SF are priced into 2016-2018 level, way way way heavy discount. 

    Thanks,

    Carlos

     @Carlos Ptriawan , that sounds enticing. What markets are you looking at, Carlos?

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:

    With so much speculation about the market and its direction, are you waiting on the sidelines, ready to pounce, or are you still pushing forward with conservative underwriting regardless of what the market does? 


     this market is extremely good for ............ high end SF primary purchase.

     @Carlos Ptriawan Can you tell me more about why High-end SF primary purchase is an excellent choice to invest in right now?


     some high end SF are priced into 2016-2018 level, way way way heavy discount. 

    Thanks,

    Carlos

     @Carlos Ptriawan , that sounds enticing. What markets are you looking at, Carlos?


     bay area market, we have some houses that the comps between high and low is as wide as $500 PSF !! so this is the ultimate window to buy high end property , keep it for 5-6 years and sell it again at top, and repeat.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y

    btw my home is on MLS too right now, but we sell it way above June 2022 price as we have zero inventory in our market. There's tremendous opportunity at any given time, it's just the strategy that keeps changing following the economic environment.

    Last yer we purchased also for STR in Hawaii, the rate doesn't scare me. In fact that home already appreciated again.

    0Reply
  • Mwazomela ThurmondBusiness Member
    Realtor · Newport News, VA · Member since 2022 · 32 posts · 26 votes
    3y

    @Jason Thompson Thanks, I'm glad you liked the quote. My goal for 2023 is to expand my network with quality relationships, just like you. I spent most of 2022 renovating my home after my father passed away and left my mom with a few rentals, building projects, and agricultural land in Zambia. My investment goal is to learn about what it takes to find good investment properties by working with someone who has experience and eventually follow in their footsteps by either renting out my home since we have 100% equity or buying a smaller property to rent out in Hampton Roads or Virginia Beach and stay close to work and family.

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Carlos Ptriawan:

    btw my home is on MLS too right now, but we sell it way above June 2022 price as we have zero inventory in our market. There's tremendous opportunity at any given time, it's just the strategy that keeps changing following the economic environment.

    Last yer we purchased also for STR in Hawaii, the rate doesn't scare me. In fact that home already appreciated again.

     @Carlos Ptriawan Hawaii, wow, what a dream, I would love to get there one day STR is a brilliant idea to infiltrate that market.

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:
    Quote from @Carlos Ptriawan:
    Quote from @Jason Thompson:

    With so much speculation about the market and its direction, are you waiting on the sidelines, ready to pounce, or are you still pushing forward with conservative underwriting regardless of what the market does? 


     this market is extremely good for ............ high end SF primary purchase.

     @Carlos Ptriawan Can you tell me more about why High-end SF primary purchase is an excellent choice to invest in right now?


     some high end SF are priced into 2016-2018 level, way way way heavy discount. 

    Thanks,

    Carlos

     @Carlos Ptriawan , that sounds enticing. What markets are you looking at, Carlos?


     bay area market, we have some houses that the comps between high and low is as wide as $500 PSF !! so this is the ultimate window to buy high end property , keep it for 5-6 years and sell it again at top, and repeat.

     @Carlos Ptriawan 500psf is a significant number, and you seem to have intimate knowledge of your market. I'm happy you realize such great success, Carlos!

    0Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @Mwazomela Thurmond:

    @Jason Thompson Thanks, I'm glad you liked the quote. My goal for 2023 is to expand my network with quality relationships, just like you. I spent most of 2022 renovating my home after my father passed away and left my mom with a few rentals, building projects, and agricultural land in Zambia. My investment goal is to learn about what it takes to find good investment properties by working with someone who has experience and eventually follow in their footsteps by either renting out my home since we have 100% equity or buying a smaller property to rent out in Hampton Roads or Virginia Beach and stay close to work and family.

     @Mwazomela Thurmond , I am so sorry to hear about the loss of your father; that must be extremely challenging to deal with. It sounds like you're on the right path. Having 100% equity creates a great opportunity for leverage into other investments. A mentor or coach is a great way to guide you toward success. I am currently enrolled in

    https://www.marcindrozdz.com/

    He walks the walk and talks the talk, I hope this helps you, and I hope you have a great weekend Mwazomela. 

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    3y
    Quote from @Jason Thompson:
    Quote from @John Morgan:

    I’ve bought 5 properties in the last 7 months. It’s all about “time in the market, not timing the market.” If it cash flows, then I’m interested. I don’t buy for appreciation. That will happen over time. As well as market rent. So I’m ok buying now, then holding for decades and letting my tenants pay off my properties.

     @John Morgan You're absolutely right, my friend; you have been scaling quickly over the last few months, and you must have some strong systems in place! Would you mind sharing one tip on how to scale at the rate you're currently going? I hope you're having a great weekend John. 

    My strategy is to scale up for free basically. I wait about 4 or 5 years to pull out equity in my rentals that appreciate. I like to put that equity to use by cashing out and putting 20% down on more properties. If the numbers work, I jump on it. That’s how I’ve acquired my last 6 rentals. And they didn’t cost me a cent out of pocket. So buy and wait is my strategy, as opposed to wait and buy like many on here prefer. 
    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Jason Thompson:
    Quote from @Mark Berge:

    For sfam high end purchase are you able to get rents that will pay back the piti and positive cash flow?

     @Mark Berge This is my concern as well. If the market goes down and people start losing their jobs, the higher class will fall to the middle class, thus leaving a high-end SF vacant, requiring a rent drop and hurting cash flow and reserves. 


     LOL, this market is for flip not for cash-flow, cash flow you go to indiana.

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y

    I'm looking for 200k profit at very least for targeted 3 year investment not like 200 dollar cashflow.

    1Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    3y

    Time in the market beats timing the market.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    2Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    3y

    I'm all for always being on the lookout for great deals and all (and I think @Carlos Ptriawan is onto something with his deep dive analytics), but if this is such a great time and everyone is buying, why is volume so low?

    Truth be told, these are tough times to find good deals for the average property investor that uses traditional financing because almost all of the numbers run don't make sense.

    Even in the markets that still might make sense on paper, you can't begin to tell me that the deals pencil out the way they did 2 years ago.  And, you may not wanna hear it, but there's a reason that those markets are still relatively cheap to begin with.

    3Reply
  • Jason Thompson
    OP
    Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
    3y
    Quote from @John Morgan:
    Quote from @Jason Thompson:
    Quote from @John Morgan:

    I’ve bought 5 properties in the last 7 months. It’s all about “time in the market, not timing the market.” If it cash flows, then I’m interested. I don’t buy for appreciation. That will happen over time. As well as market rent. So I’m ok buying now, then holding for decades and letting my tenants pay off my properties.

     @John Morgan You're absolutely right, my friend; you have been scaling quickly over the last few months, and you must have some strong systems in place! Would you mind sharing one tip on how to scale at the rate you're currently going? I hope you're having a great weekend John. 

    My strategy is to scale up for free basically. I wait about 4 or 5 years to pull out equity in my rentals that appreciate. I like to put that equity to use by cashing out and putting 20% down on more properties. If the numbers work, I jump on it. That’s how I’ve acquired my last 6 rentals. And they didn’t cost me a cent out of pocket. So buy and wait is my strategy, as opposed to wait and buy like many on here prefer. 

    @John Morgan great long term strategy!!!

    0Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    3y

    Ready to buy, the problem is finding something that makes sense. 

    If it does make sense, its gone within minutes. All cash. Just cant compete right now.

    Also, off market has very little activity. Ive had zero luck with mailers, cold calling, tax defaults, etc

    0Reply
  • Joseph Guzzardi Jr
    Rental Property Investor · Member since 2019 · 411 posts · 148 votes
    3y

    @Jason Thompson if you find a deal that you can cashflow today then buy. If you can find a deal where you can add a good amount of value, buy. If you plan to buy and hold for the long term and come across a property they make sense, buy. People have been waiting for a crash for years now.

    0Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    3y

    @Jason Thompson BUY.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Chris John:

    I'm all for always being on the lookout for great deals and all (and I think @Carlos Ptriawan is onto something with his deep dive analytics), but if this is such a great time and everyone is buying, why is volume so low?

    Truth be told, these are tough times to find good deals for the average property investor that uses traditional financing because almost all of the numbers run don't make sense.

    Even in the markets that still might make sense on paper, you can't begin to tell me that the deals pencil out the way they did 2 years ago.  And, you may not wanna hear it, but there's a reason that those markets are still relatively cheap to begin with.


     for cash flow it doesn't make, for a medium and long term it makes sense, I don't remember in the history that price is a pullback to 5 years pricing except in 2008. Not all the houses though, only about 10% of the houses are pullback into 5 years ago price. I think the difference compare to 2008 is that, in 2008 all houses felt the downturn, this time, only in specific market and specific house.

    As inflation going to be normalized in 3-4%, expecting 30YFRM at 5% would be quite conservative. Buy now sell in 2026/2027 is the name of the game.

    3Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    3y

    @Carlos Ptriawan

    I really like your logic, but I can't afford to buy high dollar properties and hold for appreciation.  I'm just a teacher so the properties I buy have to comfortably pay for themselves.  

    I will say that someone in my neighborhood (a small town in the central valley of California) bought a house for 800k.  That house would've probably gone for around 1.2M at the height of the recent market when rates were incredibly low.  I think that buyer did VERY well for themself. 

    I'd have love to have bought it, but the rents wouldn't come close to covering the mortgage and I'm not in a position to supplement the difference until I could cash in.  I won't be surprised at all if that house sells for over a million in the next few years and the buyer makes a nice score if they don't see it as their "forever home" for whatever reason.

    3Reply
  • Maksu Ize
    Investor · Vancouver · Member since 2021 · 165 posts · 137 votes
    3y

    Not the time to buy. The 10-2 yield says the market is in for a correction, and it has not been wrong in 50 years.

    1Reply
  • Nick Robinson
    Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes
    3y
    Quote from @Carlos Ptriawan:

    btw my home is on MLS too right now, but we sell it way above June 2022 price as we have zero inventory in our market. There's tremendous opportunity at any given time, it's just the strategy that keeps changing following the economic environment.

    Last yer we purchased also for STR in Hawaii, the rate doesn't scare me. In fact that home already appreciated again.

    Where are you looking for what your home is worth? The CAR just came out with their numbers, and it shows the median sales price in SF went from a high of $1.5m in June '22 to $1m last month. The Bay Area is also one of the metros that have seen negative YoY price appreciation. How long has your property been on the market? Reason I ask b/c based on housing data and rental data it looks like the Bay Area has already taken massive hits and we haven't even hit the fan yet. Once mainstream media and general population realize there is a problem then we will see how far we drop. 
    0Reply
  • Nick Robinson
    Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes
    3y
    Quote from @Jason Thompson:
    Quote from @Michael Gansberg:

    I use my inner barometer(thermometer?) The scarier it is to buy, the more likely that buying is the right thing to do. When you feel absolutely comfortable with buying("hey, what could go wrong, it's real estate!") then maybe the market's a bit toppy. However, I agree with the general sentiment on this thread. Buy consistently, manage well, and in the long run, the vagaries of the market will be irrelevant and you'll be happy that you bought. That's what my 20 years worth of experience has shown me, anyway.

     @Michael Gansberg I agree Warren Buffett said when everyone is scared, you should be buying, and when everyone is buying, you should be scared. Go against the masses if you're following them blindly. You're already too late. Thanks, Michael. I hope you're having a great weekend. 

     @Jason Thompson
    Right now, even though pending home sales have fallen off a cliff which would look like now is the time to buy b/c the average guy is not. The mainstream media is starting to change the message over the past 2 months to we may see a "soft" landing, or we will avoid a recession all together. The main reasons I have heard for an economic boom/start of another bull market are:
    1. US Labor Market
    2. China reopening
    3. Europe missed a recession this winter b/c of energy crisis.

    1. Us Labor market is extremely weak right now. As stated in previous post besides the 500k+ government jobs number, which uses logarithms to determine the number of jobs, the household survey report and payroll report show less job creation and most of the jobs that were created are seasonal hourly work. With labor participation so low it makes it look like the unemployment rate is at 50yr lows.

    2. China reopening will spark demand. 
    China reopening has not sparked demand and we are actually seeing demand continue to fall even as China reopened. Let's look at Japan, which goes along with Europe missing a recession, we can see that Japanese exports have fallen off a cliff by volume. We can also look at the Baltic Dry Index and see we are at lower values than much of 2020, when the global economy was shut down. If countries, specifically China in this case, are not importing raw materials to create goods and services and other countries by volume are not exporting and importing as many goods that shows a slowing global economy. 


    3. Europe
    Already way to long of post but Germany's economic numbers like Japan's are terrible with no signs of increasing anytime soon.

    A word of caution is everyone in the media sees this slowdown of global economic activity as us going into a soft landing. The problem is that every recession/depression looks like a soft landing till it isn't. Never invest in what's on the front page of the WSJ. By than it is already to late.

    2Reply
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