Market Cycle VS. A Great Deal Partner Arguement

5 Replies

Hi Everyone, I live on the seacoast of NH and am a student at the University of New Hampshire. The seacoast market is hot right now and I'm looking to owner occupy a small multifamily home, with the help of my partner who graduated last year, near UNH as I finish up school. We are both very eager to get our first property however I don't feel as though it's the right time especially for our first purchase. My question is does the timing of the purchase matter if you find a really great deal? Or is the point of the cycle the markets in equally or more important? I understand the need for patience and future opportunities as I've learned through the stock market however we've come across a few great deals that would have cash flowed nicely but I was hesitant to pull the trigger on due to the hot market we live in and where I think it's headed. Any advice is greatly appreciated! Thanks for reading! -Charlie Lehoux

@Charlie Lehoux It all depends on your investment criteria, goals/objectives, budget and holding period. 

E.g. if you plan on holding on to this property for 10 years and this property cash flows (with decent capital appreciation potential), then buy it. But if you plan on holding for 2-3 years and are unsure how things are going to pan out, then avoid it. 

There are no right and wrong answers because we all have different needs from our portfolio. 

Hey Charlie,

I live in Portsmouth, am 23, and graduated from UNH last year. I started buying property in Manchester towards the end of college but did so utilizing mostly private lending as I certainly didn't qualify for traditional financing. With that being said, if you and your friend/partner can qualify for FHA financing and are content with living in the seacoast for at least a year after graduation, it is a great way to get started. As for the market timing, it all depends on what you want to do with the property. Yes, prices are high, but I am personally still buying as I know I'll be holding on to them for 15-20+ years and that in that timeframe, I'll see some appreciation. If you are looking to sell in 5-10, then you may want to be more careful. You should have an honest discussion with yourself and your partner about your long-term goals and then decide how you want to proceed.

Hi @Charlie Lehoux

It sounds like you, @Axel Ragnarsson , and I are all in similar positions - I’m 26 living in Dover and have been in real estate since graduating.

What both the previous posters said is on point, your decision making on properties has to match the goals you have laid out. For instance, My first purchase was a duplex in a nice neighborhood of Dover at foreclosure; now that it is newly refurbished and fully rented, it’s a great asset, but selling at current numbers may not be enough of a return to warrant it (I perhaps over renovated) However, positioning it for a longer term hold is very suitable because of its great cashflow.

If you wouldn’t mind sharing, what are your goals with regards to real estate?

If I can ever be of assistance please do no hesitate to reach out.

Best,

Jon

If you're looking for short term property appreciation, it may not be the ideal time to look.  Alternatively, rents are pretty consistent if you're a buy and hold investor.  

My business partner and I are in buying mode and we're closing on a 3 family tomorrow because the deal is so good and the property will cash flow like a fire hose after we've made a few improvements/secured tenants.  We're buy and hold investors and will purchase in any market if the deal is financially sound, the rehab isn't too extensive, and the cash flow is immediate and significant.  These deals are needles in a haystack, but apparently can be found.  

Best of luck to you two and congrats on being aware of the financial opportunities of REI at such an early time in life...you guys will benefit in a huge way!

Thanks for the insight! It is all greatly appreciated and makes sense. My partner and I plan on using buy and hold so a property with great cashflow that will appreciate is the path we are taking. 

Our goals are tailored to how much we will give away as opposed to how much we want to make. Within 15 years of investing we plan to be able to donate 5,000 a month using the rental income from our goal of 20 multi-family properties. 

Recently, I had an accident that caused me to lose two fingers on my right hand. I had planned to study abroad this upcoming semester but had to cancel to focus on a recovery and graduating. So my shorter term goals have changed to include making enough rental income, along with my savings, on our first two properties to spend a month exploring Europe within a year after graduation. Ultimately I will make real estate my career as it's one of my biggest areas of enjoyment! The utmost goal is to make enough to give it all away! Again, thanks for your insight I appreciate it and let's all connect or meetup soon!

Best Regards,

Charlie  

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you