Is now a good time to buy a multifamily?

Los Angeles County, California
General Real Estate Investing
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Is now a good time to buy a multifamily?

Lauren A.
Investor 路 Inglewood, CA 路 Member since 2016 路 23 posts 路 6 votes

Hi all,

This might sound like a silly question. I would like your input on whether you believe that now, with the skyrocketing prices, is a good time to purchase multifamily property. Here's a little background on why I am asking this question. Husband and I have been real estate investors/new developers for the last 8 years. We are pulling out money on two of our properties to buy another property. We're currently in an expensive market - Los Angeles. I honestly don't see anything on the market that seems worth it. The returns are low when you factor in legal costs, maintenance, vacancy, etc. Management doesn't even fit into the budget much of the time without going negative. When we bought in 2014 and then again in 2016 and 2017, there were still good deals out there! What are your opinions? How would you spend 300k in this market?

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Bob Okenwa
Real Estate Agent/Investor 路 Peoria, AZ 路 Member since 2016 路 2k+ posts 路 2k+ votes
4y
There's never a bad time to buy a good deal. With that being said, if the numbers aren't making sense where you live, find another market where the numbers do make sense and invest there. Too many people are beholden to only invest where they live and buy properties that they can see by driving to it. It's 2022. Airplanes exist for a reason. Cell phones take video. You don't have to live down the street from your investments, especially if you're an established investor who knows what they're doing.
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  • Laura MarksBusiness Member
    Real Estate Broker 路 Independence, MO 路 Member since 2020 路 127 posts 路 111 votes
    4y
    Come to the KC market! I will say that multifamily are hard to come by, but why do you think multi's are better? We have lots of cash flow opportunities in sfh here. 
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    2Reply
  • Bob Okenwa
    Real Estate Agent/Investor 路 Peoria, AZ 路 Member since 2016 路 2k+ posts 路 2k+ votes
    4y
    There's never a bad time to buy a good deal. With that being said, if the numbers aren't making sense where you live, find another market where the numbers do make sense and invest there. Too many people are beholden to only invest where they live and buy properties that they can see by driving to it. It's 2022. Airplanes exist for a reason. Cell phones take video. You don't have to live down the street from your investments, especially if you're an established investor who knows what they're doing.
    8Reply
  • Cory LucasPro Member
    Rental Property Investor 路 Brighton, IL 路 Member since 2019 路 431 posts 路 139 votes
    4y

    @Lauren A. man $300K, wanna be a silent partner in the Smokies on a STR 馃槵?

    I agree with the above two comments, Midwest still has good prices and while I don鈥檛 invest OOS yet, being remote nowadays looks far easier than ever before

    2Reply
  • Joshua JanusBusiness Member
    Realtor 路 Cleveland, OH 路 Member since 2021 路 1k+ posts 路 1k+ votes
    4y
    Buying an updated multi family intended for a STR is a good place to park your cash and take advantage of the high cash flow it can bring. Stay close to densely populated areas, cities, vacation spots, or even focus on marketing to young professionals and traveling nurses. 
    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
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  • Jonathan GreeneBusiness Member
    Real Estate Consultant 路 Madison, NJ 路 Member since 2016 路 6k+ posts 路 7k+ votes
    4y
    With 300k, you could go OOS and get more units than you would think which reduces the risk of one tenant who doesn't pay. There's nothing to do with 300k in LA so I would look out of state in landlord-friendly states like Ohio, but you want to do your due diligence and set up a team and pipeline. Multifamily is always wise at the right price, but investors are competing with FHA house hackers now and the house hackers can always pay more.
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  • Rick Albert
    Real Estate Agent 路 Los Angeles, CA 路 Member since 2018 路 2k+ posts 路 1k+ votes
    4y

    A couple of things:

    1. You can't do STR on multifamily in the City of Los Angeles. They are subject to LA Rent Control and not allowed.

    2. The deals are there if you know how to play the field. I'm working on a duplex deal where best case scenario the entire property will be delivered vacant and getting it for $130K below list price. I'm in communication with the listing agent about it and trying to make something work.

    3. Deals are not found in the LA market, they are made. Find properties where improvements can be made.

    4. Although I haven't tried it yet, maybe low ball MFU units and keep the tenants in place. Explain the numbers. It's free to write an offer.

    1Reply
  • Dennis Maynard
    Real Estate Broker 路 Los Angeles, CA 路 Member since 2018 路 300 posts 路 146 votes
    4y
    Quote from @Lauren A.:

    Hi all,

    This might sound like a silly question. I would like your input on whether you believe that now, with the skyrocketing prices, is a good time to purchase multifamily property. Here's a little background on why I am asking this question. Husband and I have been real estate investors/new developers for the last 8 years. We are pulling out money on two of our properties to buy another property. We're currently in an expensive market - Los Angeles. I honestly don't see anything on the market that seems worth it. The returns are low when you factor in legal costs, maintenance, vacancy, etc. Management doesn't even fit into the budget much of the time without going negative. When we bought in 2014 and then again in 2016 and 2017, there were still good deals out there! What are your opinions? How would you spend 300k in this market?

    All great questions.  First, if you decide to sell one of the properties you can always do a 1031 Exchange.  LA is a tight market, technically the 2nd least affordable market in the country.  I just did a video on this.  That said, it depends on your goals.  I'm in LA and looking out of state as well for cash flow.  I'm happy to share some of my notes if you like.  That said, I saw KC on here, that is a good option.  There are others as well.  Just depends on where you want to go.


    Dennis

    1Reply
  • Austin McClainBusiness Member
    Real Estate Agent 路 OH 路 Member since 2021 路 347 posts 路 602 votes
    4y

    I recommend looking out of state to find markets that are still growing, like Columbus. I'm watching where large companies are moving to. They bring jobs and encourage other companies to do the same. 

    [email protected]614-710-4827
    2Reply
  • Patrick DruryBusiness Member
    Real Estate Agent 路 Columbus, OH & Cleveland OH 路 Member since 2021 路 1k+ posts 路 2k+ votes
    4y

    @Lauren A.  
    I would recommend looking at investing out of state in markets that have good population growth and job opportunities. The Midwest is the best place to start. The Midwest has markets that check these boxes as well as good cash flow, and you can find deals that meet the 1% rule. I live and invest in Columbus OH and would recommend you check it out. Here is an article about the new intel chip factory they are developing in Columbus OH https://bit.ly/3rDTQtB

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  • Will BarnardPro Member
    Moderator
    Developer 路 Santa Clarita, CA 路 Member since 2008 路 15k+ posts 路 10k+ votes
    4y

    You could also park that capital into a syndicated deal with a proven sponsor and get better returns passively on your money without the headaches of management or LA/CA laws (which are horrible towards landlords).

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  • Mike D'ArrigoPro Member
    Turn key provider 路 San Jose, CA 路 Member since 2010 路 4k+ posts 路 3k+ votes
    4y

    @Lauren A. It depends on what your objective is and whether you're  willing to invest out of state. I'm a lifelong Californian so I understand your situation. You're not going to find anything that will cash flow in CA but if you're willing to invest in more affordable markets in the Midwest, you can still do very well. Personally, I like Kansas City and the Quad Cities and Davenport, IA in particular for multi family. We're active in both markets. I'd be happy to share my insights and experience with you if you want to connect.

    3Reply
  • Justin R.Pro Member
    Rental Property Investor 路 San Anselmo 路 Member since 2015 路 659 posts 路 600 votes
    4y

    Ill let you know if this is a good time to buy, in three years ;)

    2Reply
  • Simcha Davidman
    Rental Property Investor 路 Baltimore, MD 路 Member since 2014 路 408 posts 路 209 votes
    4y

    @Lauren A. it's always a good time to buy a solid deal. If you find a good deal - doesn't matter if it's multifamily or office, doesn't matter if it's in Cali or Maine - buy it. On the other hand, no deal is much better than a bad deal.

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