No buying multi-family until we hit the bottom?

Multi-Family and Apartment Investing
7yFollow

No buying multi-family until we hit the bottom?

Vlad Denisov
Glendale, CA · Member since 2018 · 60 posts · 13 votes

Everyone around seems to agree that recession's gonna come within 3 years with a high probability. If it's true, does it mean that it makes all the multifamily deals right now much worse than lets say 5 years ago? I saw a lot of people on BP saying they exiting on all the properties they have right now. Would you say it's a bad time to start this year for a beginner or not? Why?

0Reply
29 views

Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

I dont know why everyone who doesnt have the courage to invest during a booming economy believes they will have the courage to invest during a recession, or how they will access credit when credit markets tighten.

You know who buys during the depths of recessions?......the same people who continue to buy regardless of market conditions.

[email protected]301-893-4635Podcast Guest on Show #192
District Invest Group545 Reviews
WebsiteView Page
62Reply
See this reply in the discussion

39 Replies

Jump to latestLatest
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Caleb Heimsoth:

    @Vlad Denisov. Sounds good to me. More deals

    For the rest of us. If I like the deal now. I’d have also liked it in a recession.

    I started in 2017. Guess how many people were talking about recessions then? Everyone. Two years later and I’ve made thousands of dollars in real estate. Investing then was the best decision I ever made. If the market tanks, I’ll buy more. I keep low debt and my rentals are working class rentals. Those people will still pay their rent, just like they have now.

    In my reality, I think everyone forgot what it was like in the aftermath of the great recession. The BP topics were a little different back then and from a quick glimpse of the topics, you can tell it was not a fun time in real estate. I mean, literally, you couldn't sell property. 

    I'm not saying this is going to or could happen again, but it's clear to those of us who saw 2002-2003 and 2008-2011 first hand in the RTP area that as some of our real estate investor colleagues who went under weren't buying anything. 

    Bull markets are great... until they aren't. And I do remember some of the subdivisions where 110+ foreclosures occurred and there were only about 110 properties. Sad times back then. I remember so I don't get lulled into the same mindset... 

    1Reply
  • Randy Bloch
    Rental Property Investor · Minneapolis · Member since 2019 · 257 posts · 244 votes
    7y
    Originally posted by @Chris Martin:
    Originally posted by @Caleb Heimsoth:

    @Vlad Denisov. Sounds good to me. More deals

    For the rest of us. If I like the deal now. I’d have also liked it in a recession.

    I started in 2017. Guess how many people were talking about recessions then? Everyone. Two years later and I’ve made thousands of dollars in real estate. Investing then was the best decision I ever made. If the market tanks, I’ll buy more. I keep low debt and my rentals are working class rentals. Those people will still pay their rent, just like they have now.

    In my reality, I think everyone forgot what it was like in the aftermath of the great recession. The BP topics were a little different back then and from a quick glimpse of the topics, you can tell it was not a fun time in real estate. I mean, literally, you couldn't sell property. 

    I'm not saying this is going to or could happen again, but it's clear to those of us who saw 2002-2003 and 2008-2011 first hand in the RTP area that as some of our real estate investor colleagues who went under weren't buying anything. 

    Bull markets are great... until they aren't. And I do remember some of the subdivisions where 110+ foreclosures occurred and there were only about 110 properties. Sad times back then. I remember so I don't get lulled into the same mindset... 

     Well said, I am relatively new to BP, but have been investing in RE since 1994.  There does seem to be a lot of rose colored glasses on these forums.  What is the saying about the stock market...when u start getting stock tips from your taxi driver probably time to do the opposite....or start using Uber :)

    I don’t see the risk of 2008 in the RE market, but there are risk out there.

    1Reply
  • Patrick Soukup
    Rental Property Investor · Fort Collins, CO · Member since 2015 · 273 posts · 127 votes
    7y

    @Russell Brazil Great point! Thanks for putting this out there. I wish I could vote for this 100X. Stop trying to get a read on the crystal ball and follow basics of investing and decide if it’s a good purchase or not and not whether it’s a purchase during a recession or expansion. Thanks!

    2Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Manage your risk and understand how to properly leverage and you will be fine.  Those who do not understand this will get exposed and the ones who do will buy up the deals.  

    Recessions are great for those who understand opportunity this is where the big money is made.  Everything needs to be factored in.  You need to be open to everything even a black swan event.  I am certainly not waiting for that I have no idea what the markets will do.  I am playing my edge and will continue to play it and manage my risk. 

    I am always looking at risk and my exposure to the market.  My stock trading mentor always told me, you have no control what the markets will do but you always have control of your risk and exposure.  I apply that philosophy to my RE investing.  

    1Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    7y

    @Vlad Denisov

    Hi Vlad

    It takes a lot to start. It took us 18 months to close on our first deal. You need to spend months on education, followed by months on building a team, followed by months of underwriting and learning the market.

    If you start now as a beginner, it will probably take you 12 months to complete the tasks I outlined above.

    There is no better time to start something than the present.  Market cycles all have pros and cons, and learning what strategy to utilize is part of your education.

    Buy Right, Manage Right & Finance Right!

    Goodluck

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    1Reply
  • Fernando Lama
    Rental Property Investor · Newark, NJ · Member since 2018 · 13 posts · 5 votes
    7y

    @Russell Brazil very well said...

    1Reply
  • Oleg Shalumov
    Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
    7y

    @Vlad Denisov the best way to make profit is to buy at the right price. If you are buying at the right price, and  your numbers are very conservative you should not be worrying about recession. Of course it is important to have the right team in place and stay on your execution plan. 

    The biggest problem with the recession, in my opinion, is high vacancy rate - if you conservatively calculate on buying you should be covered on that. 

    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    7y

    It's much more difficult for a new investor to get started right now, as the numbers in most areas are tight. In my opinion now is a great time to be learning, observing and partnering with others that have some experience. It is also important to stay liquid and if you are doing renovation work, to move with velocity. 

    A recession has been called for the past several years. All recessions aren't created equal. This next one may not effect multifamily or could destroy it. During the dot com crash, real estate was barely effected, but the next recession had real estate dead center. 

    1Reply
  • Ben Leybovich
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    7y
    Originally posted by @Russell Brazil:

    I dont know why everyone who doesnt have the courage to invest during a booming economy believes they will have the courage to invest during a recession, or how they will access credit when credit markets tighten.

    You know who buys during the depths of recessions?......the same people who continue to buy regardless of market conditions.

    Self-evident, you'd think... 

    1Reply
  • Chase Louderback
    Real Estate Agent · Luray, VA · Member since 2016 · 460 posts · 293 votes
    7y

    Seems like there is a new thread with a similar topic every three days on here.  The real question is:  If you can find a good property that cash flows well with conservative underwriting then what else is your risk?  

    If you mitigate your other risk factors (short term loans/ARMS, borrowing capital that needs to be returned in 12 months, high interest rate loans or poor financing terms).  Then you should be able to weather the storm and come out ok

    0Reply
  • Serge S.
    Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
    7y
    Originally posted by @Russell Brazil:

    I dont know why everyone who doesnt have the courage to invest during a booming economy believes they will have the courage to invest during a recession, or how they will access credit when credit markets tighten.

    You know who buys during the depths of recessions?......the same people who continue to buy regardless of market conditions.

     Very true but what I am seeing is people that DID NOT buy anything during the recession who are now today's syndicators. Guys who were saying prices will go lower, keep waiting. Guys who called the top of the market in 2013, 2014, 2015 and now today they are suddenly bullish and able to raise money. 

    2Reply
  • Ellis HammondPro Member
    Investor · Leawood, KS · Member since 2017 · 178 posts · 108 votes
    7y
    @Vlad Denisov there is a reason $100+ million dollar work house multifamily funds are being created bc of the long term demand for this asset class. Sure the recession will cause values to dip but follow the cardinal rules and I still believe strongly in this commercial size multifamily B and C class asset 1. Invest for cash flow, then appreciation 2. Use longer term debt. 3. Have in place capital reserves from day one
    2Reply
  • Josh Oaten
    Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
    7y

    @Vlad Denisov

    Here’s the thing, I agree that there is a recession on the horizon but no one can predict when. Great investors are able to invest in all market cycles! For all you know, you could be sitting on the sidelines waiting for a recession with no property, while in the 5 years I have hit my 1000 unit goal.

    1Reply
  • Christa S Rickard
    Tampa, FL · Member since 2017 · 63 posts · 28 votes
    7y

    @Vlad Denisov 

    I understand your concern. Like you, I am new to real estate investing and I'm just starting to analyze deals and make offers now. And like others have said, I am of the mindset that if I find a deal where the number's work for me, I'm going to buy it. I do think a lot of the buildings I've seen marketed are currently over-priced. Or I guess I should rephrase that and say I don't know how people are making money on those deals. 

    With that said, I have no intention of giving up. I fully believe that there are deals out there, they're just harder to find. As long as I can buy a building that cash flows well enough with my financing, then it doesn't matter if the market goes up or down. My financing is based on fixed rates and I make sure that I have enough wiggle room in my rent assumptions that if rents freeze or need to drop a few dollars to be competitive in the future, I'll still cash flow albeit for less, which is fine. As long as the asset I purchase is covering its own expenses, and ideally putting at least a couple dollars in my pocket, I can wait out a recession. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free