to buy or to wait?
Wholesaler · usa · Member since 2021 · 222 posts · 67 votes
to buy or to wait?
Most Popular Reply
Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
3ydon't wait to buy real estate, buy real estate and wait : )
96 Replies
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
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.
@Chris John thanks for commenting. I agree it is challenging to make the numbers work, find good deals in this market and figure out how to make them great. Negative leverage and negative cash flow seem to be the common proforma results as of late.
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Brian Ellis:
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
@Brian Ellis deal flow is a major problem at the moment, are there any creative strategies you've had success with lately that are a little less conventional?
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Joseph Guzzardi Jr:
@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.
@Joseph Guzzardi Jr Value adds assets in the multifamily sector are what we are looking at for some forced appreciation and stabilized cash flow in year 2. What are your investment goals for 2023, Joseph?
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Nick Robinson:
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.
@Nick Robinson Your contribution and knowledge are outstanding Nick, thank you. Warren Buffet said it best; 'you should be buying when everyone is scared, and when everyone is buying you should be scared' I hope you enjoy the rest of your weekend Nick.
- Member since 2019 · 7k+ posts · 4k+ votes3yIf you follow media narrative you will be in false impression. this is the actual sold mls listing in one zip code with 3/2 SF configuration, if you follow the high comp , the price is actually flat line from 2021. This is the actual real time data.
Quote from @Nick Robinson:
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.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.
- Member since 2019 · 7k+ posts · 4k+ votes3y
what really happened is statistical issue, what happen in Q1-Q2 2022, you can see from the chart above, there are only 5 (FIVE) buyer that overbid the house but they actually DO NOT move the market,hence in Q3 2022 , max comp moved back again to high.comp of Q4 2021.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Here is my summary to what really happened ?
IS THERE CRASH?
yes there's , in bay area market there's crash for 25-30% for Single Family above 4BR configuration with listing price of $1.6mil and above.
because their price is high, it moves the median market to lower number.
but to average joe houses, no, there's no crash, price is just flat with deviation of 5% from median comp, which is normal, and can be shown from the dot chart that I've shown above.If I change the chart to more expensive zip code, you would see more downtrend.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Nick Robinson:
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 areyou are very headline narrative guy, for me I just need to see what Fed Repo action in the back to make me confident we already past the worst lol
- Member since 2019 · 7k+ posts · 4k+ votes3y
also there's new major trend from third wek of Jan 2023, 90% of listing price is now way way above the desktop valuation software for given houses, this is major signal indicating we're in forceful uptrend because seller is confident to make higher price lol
- Rental Property Investor · Raleigh, NC · Member since 2016 · 396 posts · 995 votes3y
Quote from @Dan H.:
In many markets the prices have not declined enough to compensate for the rate increases for financed purchases. From below 3% to 6.5% results in ~50% increase to the mortgage payment. The effect of this is that for buy and hold, it is harder to find properties that provide a return that is better than more passive returns.
Real estate prices always are slow to react to market conditions. While price/interest rates are causing monthly payments to be higher than a year or two ago that isn't necessarily a bad thing. The reason is that interest rates change and refinancing is always possible, however the price at which you bought the property at stays the same.
I don't know of anyone who thinks that interest rates will remain this high beyond maybe 1-3 years at most before starting to trend downward. When interest rates begin to fall, the price of those homes will once again shoot upwards. So while immediate cash flow might be relatively slim, its relatively likely that in the short-medium term you can triple your initial down payment investment once rates begin to drop. Then after a simple refinance you are all set.
Yes, I realize that "long term historical interest rates have averaged between 5-8%"
However that is only meaningful if we live in the same overall economic conditions that were prevalent when 5-8% was actually average. Looking at the chart you can clearly see that mortgage interest rates have been steadily falling since 1980. This isn't a coincidence as that is the exact same time that the national debt began to spike upwards.
30Yr interest rates: https://fred.stlouisfed.org/se...US Debt to GDP ratio: https://fred.stlouisfed.org/se...
The entire financial system is interconnected, stocks, bonds, interest rates, whatever. There is often not a direct correlation between some of these systems because investors think that conditions are only temporary and thus they factor that temporary status into account when determining what is a 'fair' price. However the longer that interest rates stay high, the more the systems enter equilibrium pricing. If mortgage interest rates remain high, that is going to force other changes such as rising bond rates.
However the government can not afford a situation with high bond rates. With 31 Trillion dollars worth of debt, a 1% change in the bond rate equals an additional 310 Billion in additional interest rate payments each year. We already can't afford our current debt load, let alone afford it when rates start jumping multiple percentage points.
As such I feel like the government will actively start pushing to lower interest rates as soon as inflation has been squashed and we will return to something much closer to the 2-3% interest rates we were paying a few years ago as opposed to the "long term historical 5-8%".
If you believe that rates will fall in the next few years, then this is the perfect buying opportunity to cash in on the inevitable price appreciation. - Member since 2019 · 7k+ posts · 4k+ votes3y
so @Jason Thompson , rather than speculating , let me know your zip code and house configuration that you are looking for and lets debug and analyze together, every market is hyper local and can not be generalized, I've shown how in my zip code the price is actually flat and never drop unlike what they said in newspaper haha LOL the problem with housing is actual sold price is not like stock price where everyone is seeing the same chart, this is actually I think the benefit of real estate investing whre sometimes people oversell or overbid their houses due to inaccuracies or lousy realtor.
I made >100k in 2021 alone for 4 months studying the price discrepancy lol - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Ben Zimmerman:
Quote from @Dan H.:
In many markets the prices have not declined enough to compensate for the rate increases for financed purchases. From below 3% to 6.5% results in ~50% increase to the mortgage payment. The effect of this is that for buy and hold, it is harder to find properties that provide a return that is better than more passive returns.
Real estate prices always are slow to react to market conditions. While price/interest rates are causing monthly payments to be higher than a year or two ago that isn't necessarily a bad thing. The reason is that interest rates change and refinancing is always possible, however the price at which you bought the property at stays the same.
I don't know of anyone who thinks that interest rates will remain this high beyond maybe 1-3 years at most before starting to trend downward. When interest rates begin to fall, the price of those homes will once again shoot upwards. So while immediate cash flow might be relatively slim, its relatively likely that in the short-medium term you can triple your initial down payment investment once rates begin to drop. Then after a simple refinance you are all set.
Yes, I realize that "long term historical interest rates have averaged between 5-8%"
However that is only meaningful if we live in the same overall economic conditions that were prevalent when 5-8% was actually average. Looking at the chart you can clearly see that mortgage interest rates have been steadily falling since 1980. This isn't a coincidence as that is the exact same time that the national debt began to spike upwards.
30Yr interest rates: https://fred.stlouisfed.org/se...US Debt to GDP ratio: https://fred.stlouisfed.org/se...
The entire financial system is interconnected, stocks, bonds, interest rates, whatever. There is often not a direct correlation between some of these systems because investors think that conditions are only temporary and thus they factor that temporary status into account when determining what is a 'fair' price. However the longer that interest rates stay high, the more the systems enter equilibrium pricing. If mortgage interest rates remain high, that is going to force other changes such as rising bond rates.
However the government can not afford a situation with high bond rates. With 31 Trillion dollars worth of debt, a 1% change in the bond rate equals an additional 310 Billion in additional interest rate payments each year. We already can't afford our current debt load, let alone afford it when rates start jumping multiple percentage points.
As such I feel like the government will actively start pushing to lower interest rates as soon as inflation has been squashed and we will return to something much closer to the 2-3% interest rates we were paying a few years ago as opposed to the "long term historical 5-8%".
If you believe that rates will fall in the next few years, then this is the perfect buying opportunity to cash in on the inevitable price appreciation.yes yes yes yes :-) this is smart analysis.
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Carlos Ptriawan:
so @Jason Thompson , rather than speculating , let me know your zip code and house configuration that you are looking for and lets debug and analyze together, every market is hyper local and can not be generalized, I've shown how in my zip code the price is actually flat and never drop unlike what they said in newspaper haha LOL the problem with housing is actual sold price is not like stock price where everyone is seeing the same chart, this is actually I think the benefit of real estate investing whre sometimes people oversell or overbid their houses due to inaccuracies or lousy realtor.
I made >100k in 2021 alone for 4 months studying the price discrepancy lol@Carlos Ptriawan that would be a great help Carlos, my criteria is as follows;
Asset Class
Garden Style
Price: $10M-$50M
Units: 50+
Vintage: 1980-2000
Class: C to B+
Business Plan: Value Add assets with deferred maintenance that are underperforming the market on rent, occupancy, and or expense ratio
Market
Everything North of Houston
Kingwood
Katy
Conroe
The Woodlands
Sugar LandAny modifications and recommendations would be greatly appreciated. Thanks Carlos.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Jason Thompson:
Quote from @Carlos Ptriawan:
so @Jason Thompson , rather than speculating , let me know your zip code and house configuration that you are looking for and lets debug and analyze together, every market is hyper local and can not be generalized, I've shown how in my zip code the price is actually flat and never drop unlike what they said in newspaper haha LOL the problem with housing is actual sold price is not like stock price where everyone is seeing the same chart, this is actually I think the benefit of real estate investing whre sometimes people oversell or overbid their houses due to inaccuracies or lousy realtor.
I made >100k in 2021 alone for 4 months studying the price discrepancy lol@Carlos Ptriawan that would be a great help Carlos, my criteria is as follows;
Asset Class
Garden Style
Price: $10M-$50M
Units: 50+
Vintage: 1980-2000
Class: C to B+
Business Plan: Value Add assets with deferred maintenance that are underperforming the market on rent, occupancy, and or expense ratio
Market
Everything North of Houston
Kingwood
Katy
Conroe
The Woodlands
Sugar LandAny modifications and recommendations would be greatly appreciated. Thanks Carlos.
Oooh, you are looking for Apt. I am looking for SF to flip, we're in different business target then, good luck :)
You may want to use Crexi Intel for that purpose, btw... - Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Carlos Ptriawan:
Quote from @Jason Thompson:
Quote from @Carlos Ptriawan:
so @Jason Thompson , rather than speculating , let me know your zip code and house configuration that you are looking for and lets debug and analyze together, every market is hyper local and can not be generalized, I've shown how in my zip code the price is actually flat and never drop unlike what they said in newspaper haha LOL the problem with housing is actual sold price is not like stock price where everyone is seeing the same chart, this is actually I think the benefit of real estate investing whre sometimes people oversell or overbid their houses due to inaccuracies or lousy realtor.
I made >100k in 2021 alone for 4 months studying the price discrepancy lol@Carlos Ptriawan that would be a great help Carlos, my criteria is as follows;
Asset Class
Garden Style
Price: $10M-$50M
Units: 50+
Vintage: 1980-2000
Class: C to B+
Business Plan: Value Add assets with deferred maintenance that are underperforming the market on rent, occupancy, and or expense ratio
Market
Everything North of Houston
Kingwood
Katy
Conroe
The Woodlands
Sugar LandAny modifications and recommendations would be greatly appreciated. Thanks Carlos.
Oooh, you are looking for Apt. I am looking for SF to flip, we're in different business target then, good luck :)
You may want to use Crexi Intel for that purpose, btw@Carlos Ptriawan what about the Canadian market do you have any intel for SF up here?
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Jason Thompson:
Quote from @Carlos Ptriawan:
Quote from @Jason Thompson:
Quote from @Carlos Ptriawan:
so @Jason Thompson , rather than speculating , let me know your zip code and house configuration that you are looking for and lets debug and analyze together, every market is hyper local and can not be generalized, I've shown how in my zip code the price is actually flat and never drop unlike what they said in newspaper haha LOL the problem with housing is actual sold price is not like stock price where everyone is seeing the same chart, this is actually I think the benefit of real estate investing whre sometimes people oversell or overbid their houses due to inaccuracies or lousy realtor.
I made >100k in 2021 alone for 4 months studying the price discrepancy lol@Carlos Ptriawan that would be a great help Carlos, my criteria is as follows;
Asset Class
Garden Style
Price: $10M-$50M
Units: 50+
Vintage: 1980-2000
Class: C to B+
Business Plan: Value Add assets with deferred maintenance that are underperforming the market on rent, occupancy, and or expense ratio
Market
Everything North of Houston
Kingwood
Katy
Conroe
The Woodlands
Sugar LandAny modifications and recommendations would be greatly appreciated. Thanks Carlos.
Oooh, you are looking for Apt. I am looking for SF to flip, we're in different business target then, good luck :)
You may want to use Crexi Intel for that purpose, btw@Carlos Ptriawan what about the Canadian market do you have any intel for SF up here?
I don't have insight access to Canada's equivalent MLS system.
- Member since 2020 · 671 posts · 937 votes3y
I know it doesn't really mean anything, but @Carlos Ptriawan has a shockingly low "Vote" count for the value he brings to these boards in my opinion.
Carlos, thank you for sharing all that you do. Your focus on locales, various price points, and the tightness/looseness of the monetary supply have been a paradigm shift for me and given me a LOT to think about!
- Member since 2020 · 671 posts · 937 votes3y
"The problem is that every recession/depression looks like a soft landing till it isn't."
So simple, yet so true! If they were obvious to everyone, we'd never have one. haha.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chris John:
"The problem is that every recession/depression looks like a soft landing till it isn't."
So simple, yet so true! If they were obvious to everyone, we'd never have one. haha.
this is so called recession is actually happened because fed is stupid enough to add 40% of more us dollar in circulation, but they already burning half of that thru repo project, i can see we are at inflection point, thus this thread is very meaningful, there's correlation between rate,repo and action in real estate, these are the window where you can make heck ton of money by having forward looking thoughtful mindset.
- Investor · Member since 2021 · 591 posts · 695 votes3y
@Jason Thompson if the numbers on the deal work right now, I'm buying it right now.
Most of my portfolio was acquired during one of the worst buyer's markets of all time...but, I worked hard and found deals that made sense. If I had sat around saying "this is a seller's market, I'll wait until it cools off", I wouldn't have a portfolio.
Nobody knows what the market will do in the future, but I know how to make a property cashflow today--so I stick with what I know.
Good luck out there!
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Leo R.:
@Jason Thompson if the numbers on the deal work right now, I'm buying it right now.
Most of my portfolio was acquired during one of the worst buyer's markets of all time...but, I worked hard and found deals that made sense. If I had sat around saying "this is a seller's market, I'll wait until it cools off", I wouldn't have a portfolio.
Nobody knows what the market will do in the future, but I know how to make a property cashflow today--so I stick with what I know.
Good luck out there!
@Leo R. Solid advice Leo, very inspiring, thank you!
- Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes3y
Quote from @Jason Thompson:
Quote from @Brian Ellis:
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
@Brian Ellis deal flow is a major problem at the moment, are there any creative strategies you've had success with lately that are a little less conventional?
What has brought me sales is social media marketing through videos. Building up the trust with your followers goes a long way.
Also, ive had some luck with email marketing believe it or not.
- Rental Property Investor · Murrieta, CA · Member since 2020 · 338 posts · 344 votes3y
@Carlos Ptriawan
I do not see how I am a headline narrative guy when I gave points why I think the mainstream narrative is wrong. Wish you the best flipping houses in the Bay Area. If you read my initial post it said I am being conservative making 5% return on UST waiting to see what happens in the next 6-12 months. Based on yield curves worldwide there is a high probability of lower economic activity and in my opinion is not the time to be risk-on.In my opinion I do not see upward pressure on US housing prices. In the last 2 weeks there has been an 81bps increase in 30yr mortgages. Another big reason I am waiting is because I invest in apartments and there have been a lot of syndicators/operators that used bridge debt and very liberal underwriting standards. Which I assume will play out sometime this year.
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Brian Ellis:
Quote from @Jason Thompson:
Quote from @Brian Ellis:
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
@Brian Ellis deal flow is a major problem at the moment, are there any creative strategies you've had success with lately that are a little less conventional?
What has brought me sales is social media marketing through videos. Building up the trust with your followers goes a long way.
Also, ive had some luck with email marketing believe it or not.
@Brian Ellis Having a solid online presence is one of the best ways to build credibility as an investor. I think due to the competitiveness of the market, we will be seeing more creative ways to generate deal flow and opportunities. Congratulations on your success with your email marketing Brian!
- Wholesaler · usa · Member since 2021 · 222 posts · 67 votes3y
Quote from @Nick Robinson:
@Carlos Ptriawan
I do not see how I am a headline narrative guy when I gave points why I think the mainstream narrative is wrong. Wish you the best flipping houses in the Bay Area. If you read my initial post it said I am being conservative making 5% return on UST waiting to see what happens in the next 6-12 months. Based on yield curves worldwide there is a high probability of lower economic activity and in my opinion is not the time to be risk-on.In my opinion I do not see upward pressure on US housing prices. In the last 2 weeks there has been an 81bps increase in 30yr mortgages. Another big reason I am waiting is because I invest in apartments and there have been a lot of syndicators/operators that used bridge debt and very liberal underwriting standards. Which I assume will play out sometime this year.
@Nick Robinson have you succeeded in using bridge debt as a syndicator? I see many creative financing options as I am also a syndicator. We are looking for assumptions of existing loans because they typically have better terms than what is currently being offered. We also see some sellers deferring tax by doing seller financing or holding a partial second mortgage. What asset class are you looking for in Murrieta, CA?
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