Is this the worst time ever to buy rental properties?

Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes

With prices back to pre-recession levels in many areas, and the lowest inventory in 50+ years, it certainly looks that way.

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Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

10y

Originally posted by @Jason Hern:

In the last six months I have watched four 100+ apartment complexes break ground all within 2 miles of each other. That tells me there is some solid confidence in the long-term rental market. I decided to convert two of my flips into rentals. I'm going to ride the wave until renters decide to be buyers again.

I think we may see a long term change in ownership v. renter ratios in the not too distant future. The Millenials are showing less interest in home ownership, for a variety of reasons. And for those that are interested we've got a student debt problem that hasn't really been faced head-on. Without some serious overall of debt ratio requirements, many young people working full-time will not qualify for mortgages. So many Americans in poverty, so many in working class jobs and and the educated ones with so much debt.......indicates long terms renters to me.

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Stone Teran
Investor · Cincinnati, OH · Member since 2015 · 374 posts · 120 votes
10y
Interesting. We might have different target acquisitions, but I think it's the ideal time to buy. Prices are still very low, inventory is high and banks are (almost) back to giving money away. I just wish I had more cash right now :(
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Even if prices are at highs, and inventory is low where you are.....interest rates are still incredibly low, which would give this current time a plus.
Also in my local market...I think that perhaps the median home price is back to the highs.....but many areas are not back to the highs. We have some areas where prices are probably up 50% over peak values, but other areas where prices are 30% below peak values. We also have a large amount of inventory currently.
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Nick Montville
Taunton, MA · Member since 2015 · 45 posts · 24 votes
10y
With the current interest rates(among other things), I would say now is one of the best times to buy rental properties, though it may not exactly be the "easiest" time to buy, if that makes sense.
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Vincent Crane
OP
Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
10y
Most people do say it's a good time to by while interest rates are low... However, would you rather have a 6% interest rate on a $150k house, or a 4% interest rate on a $250k house? With the higher prices that we have, it negates the benefits of cheaper interest. Plus, what is about to happen really soon is... High prices, and higher interest rates.
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Perry Ivy
Investor · Jonesboro, AR · Member since 2015 · 241 posts · 132 votes
10y
Vincent Crane my phone won't allow me to like your last comment, but right on!! The money always has been and always will be made in the purchase.
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Daniel Kenney
Investor · Lakewood, CO · Member since 2011 · 22 posts · 8 votes
10y
It's certainly market specific, and while I would agree that things are feeling a little bubbly in general, to say it's the worst time to buy would suggest you can somehow predict the future. If your employing a sound strategy to acquiring LT buy-and-hold properties (i.e. good to strong CF, solid locations/markets, undervalued/build-in equity at current market prices, conservative LTV, etc.) are you really that concerned? No one really knows when the cycle will peak and how significant the correction will be when it does come, and again, it will no doubt vary by market. If I were focused on flipping my perspective would certainly be different...
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Vincent Crane
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Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
10y
True, I just wish cashflowing deals were easier to find right now haha
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
@Vincent Crane If I can find cash flowing properties in the DC area where we have a median home value of $540,000, Im sure you can find them some place in the Atlanta metro area with a median home value of $179,000. You may just need to adjust your investment criteria
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Moiez Karim
Atlanta, GA · Member since 2015 · 32 posts · 6 votes
10y
The worst time to buy rental properties was in 2007
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Chris Field
Investor · Milford, CT · Member since 2015 · 200 posts · 69 votes
10y
Their is a significant amount of competition, as a result the deals are not as good as they were a few years ago.
If the trend continues I may move to the sidelines at some point and wait for the market to swing back down.
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Jason Hern
Investor, Realtor · Decatur, GA · Member since 2015 · 89 posts · 45 votes
10y
In the last six months I have watched four 100+ apartment complexes break ground all within 2 miles of each other. That tells me there is some solid confidence in the long-term rental market. I decided to convert two of my flips into rentals. I'm going to ride the wave until renters decide to be buyers again.
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Robert Lalum
Midland, TX · Member since 2015 · 9 posts · 0 votes
10y
i live in oil country, and when the boom busted, i ended up in a better paying job then i was making in the oil service company that i was a mechanic for, but the properties realy havent dropped in price yet, though i did find some excellent priced land, 50% off everywhere else around here. im new to all this and just getting my toes wet learning, and i still live paycheck to paycheck, i have never used my vet bens for RE so i'm looking into using them now because the interest is so low, rent is still high here, and hard for the natives to pay (i relocated here for the job) there's got to be a way to take advantage of this.
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Bill Florence
Investor · Boulder, CO · Member since 2015 · 137 posts · 36 votes
10y
In my area there are tens of thousands of apartment rental units recently built and under construction with more slated for next year. The trend right now, is for the generation who would normally buy a starter home, is to rent. Demand for rentals has not outrun the supply and rental prices are skyrocketing, here. But builders will overbuild, and order will be restored with supply outweighing demand, some day. Until then I plan to continue to buy rentals away from the new construction and ride the wave. When the trend balances out or reverses, I will have plenty of inventory ;)
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Bill Florence
Investor · Boulder, CO · Member since 2015 · 137 posts · 36 votes
10y
Originally posted by @Bill Florence:

In my area there are tens of thousands of apartment rental units recently built and under construction with more slated for next year. The trend right now, is for the generation who would normally buy a starter home, is to rent. Demand for rentals has not outrun the supply and rental prices are skyrocketing, here. But builders will overbuild, and order will be restored with supply outweighing demand, some day. Until then I plan to continue to buy rentals away from the new construction and ride the wave. When the trend balances out or reverses, I will have plenty of inventory ;)
Typo correction: Demand has outrun the supply ;/
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Ken Sauer
Investor · Lehigh Valley, PA · Member since 2014 · 23 posts · 7 votes
10y
Clearly some markets are more difficult than others and competition has increased, it just makes me work harder to secure deals. I'm finding now, relationships cultivated over the years are paying off more than ever. Pocket listings and word of mouth have become more important as this RE recovery continues in most markets.
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Rick Baggenstoss
Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
10y
@Vincent Crane I saw a triplex go under contract ~$350k in the City of Decatur this week. The units would have rented for $1600, $1200, and $900. Land value is also probably $330k.
As a single family, it would have sold for $550k after $80k renovation or $750k with $220k renovation.
Just got to keep your eyes peeled. This would have been a great house hack, eh?
I think you're convincing yourself it can't be done instead of motivating yourself to work hard to get it done. It's not wrong to buy now ... just hard.
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Cal C.
Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes
10y
you might want to look back at 2005-2008.
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George Wines
Investor · Denver, CO · Member since 2015 · 61 posts · 23 votes
10y
@Cal C. where would you go to find historical housing prices for specific areas or the US in general. With stocks, you can use google finance to zoom in on a time period and at least see the relative pricing. Where would something like this exist for real estate?
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Clayton Sneider
Investor, engineer · Longmont, CO · Member since 2013 · 55 posts · 36 votes
10y
If you wait, you could find yourself five years down the road, with prices slightly higher than they are now, kicking yourself for not buying in 2015 when prices were still reasonable, and interest rates were still low. Nobody can predict the future. If you can find cash flowing deals now, I think you should buy, if that is what you want to do. Even if prices drop a little bit, you will be fine as long as your rentals actually cash flow.
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Frank Jiang
Investor · San Diego, CA · Member since 2014 · 592 posts · 765 votes
10y
Originally posted by @Vincent Crane:

Plus, what is about to happen really soon is... High prices, and higher interest rates.
If this statement is true, then that actually makes right now an amazing time to buy.
Also, these two items are fundamentally inversely correlated. If these two are moving in the same direction, it will be for the short term only.
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Mark Creason
Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
10y
Money is still historically cheap. Rents are high. Credit is available. I think this is the best time to buy. With the influx of foreign money, prices are still going up.
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Vincent Crane
OP
Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
10y
@Rick Baggenstoss House hacking that triplex would be similar to what I'm looking for. I will certainly find deals, it's just surprising how difficult it's been. But I will find some, and it'll get easier as my network grows more and more.
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Melissa Gittens
Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
10y
I really believe that if you continue to tell people about what you are looking for or what you do, the deals will simply fall into your lap. Putting in the work in the beginning with networking and being one of the first to see what has just came onto the market is definitely key.
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Aristotle Kumpis
Specialist · Long Beach, CA · Member since 2011 · 877 posts · 397 votes
10y
Originally posted by @Vincent Crane:

With prices back to pre-recession levels in many areas, and the lowest inventory in 50+ years, it certainly looks that way.
It depends where. With close to 500 markets in the U.S., there are plenty of opportunities. Plus, if you are financing, its best to take advantage of the good rates while you can.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y
Now is the time to buy. Taking a line from one of my favorite instructors Steven David: "there is never a bad time to buy...only to sell". That is what he teaches and he has been buying since the 70's. With over 700 properties to his credit I avidly absorb everything he teaches. Is now a good time to buy? Absolutely! I will qualify that statement adding the following: you have to buy right! Long term investors that don't over leverage will do fine even when the market cycles IMO. I will buy today if the right opportunity presents itself.
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