Is now a good time to start investing?

34 Replies

Hey everybody! I’m new to REI and am planning on purchasing my first deal in the next couple monthes I have been talking to investors in my area of southeast Wisconsin and a lot of people have told me we are at the top of the market and it’s not a good time to buy. Just wanted to hear some opinions from some experienced investors! any advice is greatly appreciated thank you in advanced!
Originally posted by @Nicholas Mullens :
Hey everybody! I’m new to REI and am planning on purchasing my first deal in the next couple monthes I have been talking to investors in my area of southeast Wisconsin and a lot of people have told me we are at the top of the market and it’s not a good time to buy. Just wanted to hear some opinions from some experienced investors! any advice is greatly appreciated thank you in advanced!

 That's a bit of a loaded question. Are you doing a Fix & Flip or a Buy & Hold? Is your goal long term cash flow or quick cash? Do you know anything about financing, or are you paying cash? Can you swing a hammer or are you going to hire people to do the work? Have you put together a rehab budget before? Are you committed to SE Wisconsin or will you look at other areas? 

@Mike M. Sorry about being so vague I plan on purchasing small multi family to hold long term for cash flow. I plan on using financing, I have a family member who works at a local bank who is helping me with financing. I have been working doing exterior home improvement for the last 3 years and also know how to do basic plumbing and electric so was planning on doing a lot of the work myself. I’m mostly considering South east Wisconsin but would consider anything within a couple hours of my home town of Burlington! I’ve just had a lot of people telling me not to buy right now and wanted to hear some more opinions before I purchase my first deal!

The ever present question of "is the market good right now" may always haunt you, and prevent you from entering the market ever at all. We may be a week away from a crash, we may be a decade away from it, its always hard to say. I remember my friend telling me it was going to crash in '13 '14 '15 '16 etc, but it still hasn't happened. 

What you should do now is find a deal that has potential, and then make it a good deal.  Try to find what has been overlooked by others and fix it easily.  Right now I would recommend not buying on appreciation alone and rather focus on properties that can cash flow with room to spare. Real estate can be forgiving to bad timing, but only if you hold a property long enough.  

Good luck, hope this helps!

-Andrew

@Andrew Angerer I have also heard many people over the years tell me not to start but I don’t want a skeptics advice to stop me from investing. I plan on holding long term for cash flow. Just wanted some advice from experienced investors thank you for the advice!! It’s greatly appreciated!

Anytime is a great time to start as long as the numbers make sense.  Waiting for the market to come down may take years.  By getting started now you will then have more experience to take down the bigger deals when the market does come down.

@Brock Mogensen thank you for the advice that is what I was told by my grandfather who has been investing for years! Just need to not listen to the skeptics and non believers.

@Nicholas Mullens Like @Brock Mogensen  said, make sure you know how to calculate the numbers. It may not be a bad idea to check out a local REIA club and find someone doing the same or a mentor. Also, as long as you make sure it's a long term investment, you should be fine. Also, don't forget to include CapEx and Maintenance!

If you ever want to learn about note investing, you can always contact me and I can give you the main concept.  There's alot of good training out there, but I can at least get you the main idea.  

Good Luck!

- Saki - 

@Masaki Maeda thank you for the advice! I have been going to local meet ups and have partnered with my grandfather who has been doing REI for a long time! I also spend every day at work listening to the BP podcast!
@Nicholas Mullens analyze the deal, try to find one under market value, or at a fair price. If you can check rates now do it. Rates are expected to go up which I believe is a fair assessment of the future. That said, with rates going up home sales may slow, meaning future prices may be lower (you lose equity if you buy now) but there will also be more renters. I read on CNBC today there are 22% less home mortgages happening than same time last year. This is likely due to rate hikes, so I assume more renters are out there. If you plan to hold the home til retirement get one now maybe that cash flows. Otherwise stock pile cash and risk rates going higher and higher over time. I am in the same scenario, pick your poison kind of situation.
Originally posted by @Nicholas Mullens :
@Mike M. Sorry about being so vague I plan on purchasing small multi family to hold long term for cash flow. I plan on using financing, I have a family member who works at a local bank who is helping me with financing. I have been working doing exterior home improvement for the last 3 years and also know how to do basic plumbing and electric so was planning on doing a lot of the work myself. I’m mostly considering South east Wisconsin but would consider anything within a couple hours of my home town of Burlington! I’ve just had a lot of people telling me not to buy right now and wanted to hear some more opinions before I purchase my first deal!

 You have a lot more flexibility if you can do the repairs yourself. I'd certainly get started and I'd look for a property that isn't well kept and buy it for below market, then fix it up over time, raising rents. It's called "forced appreciation" and is a great way to go for someone handy with a hammer. In fact, you should be looking "off market" (not listed properties) and buying the property using "Subject To" or a Wrap to optimize your investing.

multi family generally sells for a cap rate.. figure out your cap rate your good with.. and if you find it pull the trigger.

its all about rents and quality of tenants at that point..  

finding quality property with quality tenants is as important as timing the market.. 

timing the market is more important if your going to flip .. but for long term buy and hold  your not going to sell if the market retreats alittle becuse your a long term buy and holder.. market flucuations should not concern you.

its all about rent.. and stablity of tenants as i said..

@Mike M. Thank you! Is getting in contact with an agent the best way to find off market deals?
The Best time to plant a tree is forty years ago , the second best time is right now . Sometimes the most expensive advIse you get will be free advise because it can cost you a great deal of potential money . Stop lIstenIng to chIcken littles . Do your homework ,find the right property ,and take action ! Look ...The tree will never become reality if you don’t plant the seed .
@Dennis M. Thank you!! I love that saying! I’ve been doing a lot of research and analyzing alot of deals but like you said I just need to stop listening to chicken littles

When your getting started in RE you’ll have no shortage of negative people and chicken littles in your life telling you 857 reasons why it’s a bad idea ,why it’s risky ,why it won’t work ,why you’ll lose money ..etc instead surround yourself with wise counsel and don’t allow your fear of losing money to overpower your desire to be an investor. You will never be 100% sure of something but that should not stop you from moving forward and taking action . Millions of would be investors missed their chance because the chicken littles won the battle . Okay I’m done with the sage advise lol 

You should start today. Buy & hold is a very forgiving business model and as long as you buy a quality asset that cash flows you will be fine, no matter what the market does. Could you have bought the house a few years later for 20k less? Possibly. But it could also be 50k more. The most important thing for you is to get started and learn as much as possible; if you don't learn it now, you will not be able to take advantage of the next down turn.

I had the same doubts back in the 80's when % int. rates were double digits. I had a great JOB so I could borrow the down payments (@ 18%) & get a mortgage for about the same % rates.

But I kept plugging away buying homes & renting rooms just to get by. My 'worst' investment according to my colleagues was a run down hermit abode I got for $62,000. My (RE agent) friend at the time gave me a heads up on the owner needing to go to a nursing home. My wife walked through the place rushed out the back door & threw up. It was a classic good sized Cape Cod, (a design I still hate). It had food exploded all over the kitchen walls & ceilings as the owner would simply heat cans of food on the decrepit gas stove. Got him to accept an owner hold (@18%) that out-lived him, but once renovated I immediately refinanced it. 

2 years ago we turned down $495K & earlier this year the much smaller untouched 1940's 2 bedroom bungalow next door went for $499K!!! They tear them down & build homes that literally fill the max allowable lot footprint so I can't wait to see the monstrosity they build on it.

Case in point one block away...another one going up

Originally posted by @Pat L. :

I had the same doubts back in the 80's when % int. rates were double digits. I had a great JOB so I could borrow the down payments (@ 18%) & get a mortgage for about the same % rates.

But I kept plugging away buying homes & renting rooms just to get by. My 'worst' investment according to my colleagues was a run down hermit abode I got for $62,000. My (RE agent) friend at the time gave me a heads up on the owner needing to go to a nursing home. My wife walked through the place rushed out the back door & threw up. It was a classic good sized Cape Cod, (a design I still hate). It had food exploded all over the kitchen walls & ceilings as the owner would simply heat cans of food on the decrepit gas stove. Got him to accept an owner hold (@18%) that out-lived him, but once renovated I immediately refinanced it. 

2 years ago we turned down $495K & earlier this year the much smaller untouched 1940's 2 bedroom bungalow next door went for $499K!!! They tear them down & build homes that literally fill the max allowable lot footprint so I can't wait to see the monstrosity they build on it.

Case in point one block away...another one going up

that's the sand box we play in  transformation real estate..  I have the more would have should have stories I owned a number of properties in the bay area that I bought some for under 100k and one for as low at 12k in East Palo Alto :) Oh well if I kept those I would never have found bigger pockets.. 

@Jay Hinrichs

another reason I sacrificed some to barely cling onto the many we still have. The years of touch & go helped me grow a big set, but it has certainly paid off. 

Originally posted by @Pat L. :

@Jay Hinrichs

another reason I sacrificed some to barely cling onto the many we still have. The years of touch & go helped me grow a big set, but it has certainly paid off. 

its cool to see these areas were your at.. we all know it can go the other way.. IE never gentrify and values never changed from the peak of the 80s.. 

its picking those path of progress that is were the real money Is made in real estate you get your cash flow and MASSIVE appreciation . or you need 100s of doors if your only going to count on 100 or 200 a month for cash flow for decades.. 

I do run into older investors usually 70 and above who own big size portfolios and that was there business for decades running rentals. and by then they are all free and clear.. cash flow very large with no debt.. and monster equity of course even if the props never went up.

as long as cap ex and turn over did not kill them along the way.. its the back bone of being a landlord..  

As a newbie investor starting in wholesaling I'm interested in Banked owned homes. So my question is how does the process work? Do i need an LLC? Can i Wholesale with no money down? Do i need a EMD and what if i don't have it? i here so many different steps that its making the process confusing just need to get pointed in the right direction

It all depends on your purchase price, financing, and cash flow. Pay too much  and it's never a good time to invest. If you think there will be a decline in prices, then bid accordingly. You might not get the property, but that has nothing to do with whether it is a "good time" to invest.

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