Is it a good time to invest in a multifamily [2 or 4plex]?

7 Replies

Hello BiggerPockets,

I'm planing to start with 2plex or 4plex in Sacramento area [buy&hold].
The only concern is that I hear rumors  of potential crisis upcoming year.

I'm planing to buy multi-family in with FHA , so that leaves me with very minimal cashflow ($0-100 whole building with all expenses considered), house price range 250-350K

should I buy now? or wait for lower prices? (which no one knows when to expect)

thx

Originally posted by @Elijah Artman :

Hello BiggerPockets,

I'm planing to start with 2plex or 4plex in Sacramento area [buy&hold].
The only concern is that I hear rumors  of potential crisis upcoming year.

I'm planing to buy multi-family in with FHA , so that leaves me with very minimal cashflow ($0-100 whole building with all expenses considered), house price range 250-350K

should I buy now? or wait for lower prices? (which no one knows when to expect)

thx

 What crisis? Link?

@Minka Sha  

I think what Elijah is referring to is the forecasted (by so-called "analyst") upcoming recession. There's really no good evidence/link anyone can provide as these are merely speculations - given the long bull market run coupled with "circumstances" they deemed reminiscent of what happened prior to 2009 dip. Though most investors (eg stock/bond), dismiss & even brand this as market timing practice, it's somewhat evident in other blogs, even seasoned investors there have been prepping/adjusting quite a bit to this. 

I'm not an investment guru, not even close to a seasoned investor, so take my word as a grain of salt. Just a happen to frequent those blogs, and recently just joined BP. But am interested too to know from a REI perspective regarding this potential upcoming crisis.

@Elijah Artman

@Kennex M.   It is very easy to find a talking head or article that will speak of different economic events which are imminent! You will find 

  1. 1. The "gloom and doomers" who tell you there will be a run on banks and you should only buy gold!  
  2. 2. Then there are those who talk about global economic crises which are driving us all to deflationary times and interest rates will continue to drop. 
  3. 3. The inflationary pressures being set up as the US economy continues to build up steam and wage pressures return driving interest rates upward.
  4. 4. The strong dollar will cause S&P 500 type stocks to drop precipitously because of a drop in foreign earnings minus exchange rates.
  5. 5. Drop in oil is good for the consumer driven economy.
  6. 6. Drop in oil is bad for job growth and resultant spending in the consumer driven economy
  7. 7. Etc..etc...

I could go on and on. The bottom line is that there are always good and bad reasons to consider investing. Fear and greed are the biggest drivers of action. As long as you make a sound economic decision for investing...you should be fine. Just make sure you do your homework for your specific sub-market...and the numbers support your decision.  Best of luck!

Thanks @Bob Dreher, good advise.

Well put @Kennex M.



@Elijah Artman  

A deal is a deal is a deal.  As Bob said; do your homework, be conservative and you'll do good in nearly any market.  Appreciation (or decline) doesn't matter if you purchased conservatively for cash flow because your financing is locked up.  Will rent rates change?  Sure, but they always will and you - sound like - will be house hacking which brings up all other kinds of benefits.

Rates are good now, just find a good solid deal with positive cash flow per door and do your homework conservatively.

One of my favorite sayings I've heard speaks to the timing to buy real estate:

"The best time to buy real estate is 30 years ago."

@Elijah Artman  as others have said, if you like the numbers go for it.  I'm sure there are many here would be happy to (discretely) provide input on your deal.  Househacking is a great was to get started, a little easier to provide a net benefit, even if it doesn't have incredible cash flow.

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