Investment Advise - do it now or wait ?

6 Replies

Hello Fellow Investors,

I just have a 15 unit deal locked down at 6% CAP in Yuba City before COVID-19 havoc struck this week. What would you advise if this good time to buy or wait till more till economy comes down further, if it will ?

Thanks,  Gary

@Gary B. A 14 unit came on in my area Sunday, it went under contract yesterday; on the market one day. It was a dog in my estimation; 97 years old and looked all of 150 someone else saw it differently. So people are definitely buying. If something came on in that size range that met my criteria I would go for it.

Hard to say if next month, or next July, is better than today. Do your due diligence and if it still meets your goals you'll have to decide. One thing I would say is definitely don't compromise. All the best!

@Gary B.

Make sure this is not an emotional decision. Go in with a healthy reserve fund and do some analysis to see how much vacancy you can withstand and still pay your bills. If you have a safe margin and a good rainy-day fund, I'd say go for it.

I'm not familiar with Yuba City, if the economy and rental market there were otherwise strong before COVID-19, they'll likely be strong after.  Definitely look at major employers in the area... if it's dominated by industries affected most by COVID, then it may take a little longer to bounce back.

@Gary B. In my personal opinion, I think you need to evaluate the deal separately from the what the market is doing. A good deal is a good deal and if you are buying for value you can't go wrong. That means you need to be buying at a higher cap rate than market value. Of course you need to also be investing where people want to live, good neighborhoods, close to jobs, etc but I think this is all part of the value. Warren Buffett buys companies for value whether the stock market is going up or down and that is why he gets richer and richer. I think it is the same in real estate- you are basically hedging your bets during a down turn by buying low.

@Gary B. , I agree with @Colby Fryar .  I am not changing my investment criteria or direction.  Like past pandemics, this one too will pass.  I believe the major pain will be short lived, and things will start coming back around.  The current fear is due to the unknown more so than the virus itself, not to downplay the true risks of the virus which I am self quarantining to help mitigate the spread.

Trying to time the market very rarely works in the investors.  As mentioned, if it makes sense now, it will make sense in 6 months, 12 months and 36 months.  If the market rebounds quickly, you will be glad you got it.  If the market continues to slump, but you are still cashflowing, it doesn't matter that much.

Thanks you all for your devise. 

I evaluated this deal with a normal 3 weeks ago,  and it had good cashflow out of inventory available in market in my range. It's a 1960 property and needs rehab (not immediate) but over the years, sits on a septic and own water well.

World has changed in 3 weeks, and US in last week. My Delima is should I rather sit on cash for few more months and I might be able to see similar returns with newer properties. All signs are alluding to deeper recession, and this pandemic can be deeper that we see right now.