Fourplex investing with an impending recession?

Tukwila, WA · Member since 2019 · 70 posts · 88 votes

When is the optimal time to purchase multi-family residential property? With the impending recession, what are some considerations for aspiring investors? What echelons of property should be honed in on? Which should be avoided? New member here, so if my post is in the wrong location or structured incorrectly, please let me know. Thanks!

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Wy Kay

Specialist · New York City, NY · Member since 2019 · 34 posts · 111 votes

@James C Norman Jr

Ideally, the optimal time to buy is when everyone is selling and running for the hills, when it's a buyers market. Right now, the markets across the country are overheating and it's a sellers market. Sellers can demand all cash, a fast closing and get offers above asking price too. It doesn't mean you shouldn't be a buyer, only that it's significantly more difficult to find a good deal.

In addition, unless someone has a crystal ball, there isn't a surefire way to know when the next downturn will come about. It can be in a month or 2-3 years from now, no matter the dire predictions we constantly hear.

If an investor is savvy enough and has the means and patience to wait, potentially another 2-3 years or more, properties will be selling for steep discounts to what they are going for now and will put some of the best deals you can find now to shame. Warren Buffett is sitting on $122 billion in cash just waiting for the next opportunity. Buffett is very savvy, patient and disciplined to do so.

There are still deals out there and plenty of profit to be made with the current market conditions, just depends on your investment profile.

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Aaron K.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
7y
@James C Norman Jr you can't time the market especially in re. Unless you plan on selling during the recession or expect the location where you're buying to be abandoned there isn't much to worry about. As less people can afford to buy they rent instead this is why during the last recession while prices went down rents only stagnated.
33 Reply
Wy Kay
Specialist · New York City, NY · Member since 2019 · 34 posts · 111 votes
7y
@James C Norman Jr
Ideally, the optimal time to buy is when everyone is selling and running for the hills, when it's a buyers market. Right now, the markets across the country are overheating and it's a sellers market. Sellers can demand all cash, a fast closing and get offers above asking price too. It doesn't mean you shouldn't be a buyer, only that it's significantly more difficult to find a good deal.
In addition, unless someone has a crystal ball, there isn't a surefire way to know when the next downturn will come about. It can be in a month or 2-3 years from now, no matter the dire predictions we constantly hear.
If an investor is savvy enough and has the means and patience to wait, potentially another 2-3 years or more, properties will be selling for steep discounts to what they are going for now and will put some of the best deals you can find now to shame. Warren Buffett is sitting on $122 billion in cash just waiting for the next opportunity. Buffett is very savvy, patient and disciplined to do so.
There are still deals out there and plenty of profit to be made with the current market conditions, just depends on your investment profile.
49 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Aaron K. Thanks for your input! I will be make a general response to my original post, if you care to chime in...
1 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Wy Kay. Thanks for your input! I will be make a general response to my original post, if you care to chime in...
3 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
keep in mind once you purchase and if its a rental most likely during a recession your rental continues to perform and well you would not sell during a recession right ??
so for rental buyers I think recessions are non events.. and keep in mind with BP so many started after the GFC that's their only experience with a recession and the GFC is more of a great depression than a recession.. you can have a recession that does not TANK the entire worlds economy like the GFC did.
and they don't last for ever.. next one could last a few quarters or maybe a year.. Also keep in mind if it is a deep deep recession and really bad times.. many buy and hold investors if they don't have cash will be locked out of the market as lenders will pull in their horns.. Like in the GFC you could not get an investor loan for 3 years or so.. at least the average investor could not. that's why prices fell so bad and only those with cash were able to buy.. that's why foreigners with cash cleaned up if they choose right and did not buy ghetto dogs.
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James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@James C Norman Jr. I will be relocating to the Las Vegas Metropolitan Area within the next month or two and will be looking to purchase around January. I have about $50k cash for a down payment right now, but I'm looking to have about $65k-$75k cash by January, but I'd rather use a $0 down V.A. loan for my initial purchase, and save my down payment for a second property with a conventional loan sometime later in 2020. I'm still working full time so I'm looking to finance around $400k or less, which for fourplexes, will put me in less desirable areas unless I opt for properties that have HOA's which I'm trying to avoid, since I'll be using a property manager. What do you all think about my likelihood of still getting timely rent payments in those less than desirable areas during an economic downturn? Would it make more sense to pursue a duplex or single family home in a more desirable locale with the potential to attract tenants with more stable incomes? My thinking as far as location: $400k 1family > $400k 2family > $400k 4family. A penny for your thoughts?
23 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Jay Hinrichs. Thanks for your insight Jay! I’ve also posted an addendum, if you have any additional feedback.
1 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
7y
Search the forums for "recession". There have been weekly posts on this topic since 2014.
42 Reply
Stephan Kraus
Rental Property Investor · Las Vegas, NV · Member since 2017 · 134 posts · 93 votes
7y
Hey James, welcome from a fellow Sin City investor! there are still deals to be had out here, some better, and some not so good, especially if your'e worried about a looming recession. Make sure to spend enough time on your due diligence, get to know the areas that you consider buying in if you're not familiar already - this alone can break your neck if you dont know 100% what you are getting into. Happy to talk about local do's and don'ts and my experience over a drink sometime! 🤙🏼
6 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Mike Dymski. Thanks Mike!
0 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Stephan Kraus Thanks Stephen! Meal and drinks on me when I touch down in the city! Looking forward to picking your brain.
2 Reply
Jeff Callicutt
Rental Property Investor · Asheboro, NC · Member since 2019 · 4 posts · 5 votes
7y
@James C Norman Jr I'm in manufacturing. I don't see a recession coming any time soon. Everyone I talk to is very busy.
5 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Stephan Kraus:
Hey James, welcome from a fellow Sin City investor! there are still deals to be had out here, some better, and some not so good, especially if your'e worried about a looming recession. Make sure to spend enough time on your due diligence, get to know the areas that you consider buying in if you're not familiar already - this alone can break your neck if you dont know 100% what you are getting into. Happy to talk about local do's and don'ts and my experience over a drink sometime! 🤙🏼
Stephan don't forget about me when I get to Vegas end of Oct I am going to take you up on the Track offer !!!!

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2 Reply
Chris Hooshmand
Las Vegas, NV · Member since 2019 · 1 post · 7 votes
7y
@James C Norman Jr I'm in a similar position as you are and I also just moved to Vegas. Make sure you do your research because while it is possible to use your VA loan to buy a fourplex (as long as you live in one of the units) it was hard for me to find a lender. Both Navyfed and USAA would only do a duplex with the VA loan and the numbers didn't work for me with a 2-unit. Nobody told me that so I wanted to make you aware of it just incase.
7 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Well Weve been on the verge of a recession for about ten years now . Chill out and do it anyway . Be like Nike and just do it ! We are real estate investors bro we stay calm and make calculated decisions based on logic . We don’t sit on our laurels running for cover every time the Dow Jones dips down a few hundred points . Think this over . If people lose their good job and that nice house what are they going to do ? Jump off a cliff ? Live under a bridge ? They are going to downsize and become renters . So how do you think that affects you being you own apartments? This is why sometimes rents can actually increase in an economic crisis . Everyone needs a place to stay and real estate is local
19 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Jeff Callicutt. Thanks for your input Jeff!
0 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Chris Hooshmand. Hmm. Thanks for that input. Any specific reasons why there is an aversion? Was this your first purchase? Even duplex numbers may work, since with a V.A. you leverage so little capital, plus you can factor in appreciation. Your thoughts?
0 Reply
Stephan Kraus
Rental Property Investor · Las Vegas, NV · Member since 2017 · 134 posts · 93 votes
7y
@Jay Hinrichs
absolutely! i just got back from 2 months in europe including a Nürburgring trackday, super motivated now to buy the next property in the next 90 days and work on the other businesses, but im always down for some seat time! 🤙🏼
4 Reply
James C Norman Jr
OP
Tukwila, WA · Member since 2019 · 70 posts · 88 votes
7y
@Dennis M. Thanks Dennis! My concern with Vegas is the entertainment-centric economy. I’d imagine conspicuous consumption and recreation would be the first cutbacks from someone’s budget in a crunch. Potential ripples through the ecosystem.
3 Reply
Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
I will only invest in towns where there is a diversity of employers. If one is out of work you got perhaps 3 rents come in. A town like Motor City when layoff starts all tenants are out of work. You need to factor in vacancy and or no rent collected to protect landlord from default. Do you have means to last 6 months, 12 months etc in your business model?
10 Reply
Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
Impending what now?
Best time to buy was yesterday.
Second best time is today.
I’m straight up small time with a day job, and I’ve purchased three duplexes in last 18 months. I’ll be cashing checks while others are waiting for the crash.
21 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Originally posted by @James C Norman Jr:
@Dennis M. Thanks Dennis! My concern with Vegas is the entertainment-centric economy. I’d imagine conspicuous consumption and recreation would be the first cutbacks from someone’s budget in a crunch. Potential ripples through the ecosystem.
Yeah in that city you have a legitimate concern . During the last recession that area got absolutely pummeled to dust so be careful and do your research

2 Reply
Edward Mendez
Real Estate Agent · New York City · Member since 2019 · 14 posts · 9 votes
7y
@James C Norman Jr go for it, get that 4 plex. You will learn more through having a bad tenant and chasing the money then not having done so at all. That VA loan is blessing, you'll be getting paid good cash flow while not having spent no money 😁 only good things will happen from taking action💪🏽
1 Reply
Lee Bell
Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
7y
@Stephan Kraus

a Nürburgring trackday

Ooh lala. I love dangerous fun. On 2 wheels? ;>)
2 Reply
Edward Mendez
Real Estate Agent · New York City · Member since 2019 · 14 posts · 9 votes
7y
@Mike Dymski people love a sale right 😁
the time to invest is always now and better yet when things are cheap
3 Reply

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