Fourplex investing with an impending recession?

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Fourplex investing with an impending recession?

James C Norman Jr
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
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.

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  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Wy Kay

    But is there an advantage to moving in right now? I mean holding my cash and sitting like a ***** makes no sense to me. But then again it might also be smart even if it’s not the sexy thing to do. What would you do if you got cash and you just edging to do something good. Isn’t there way to deploy the cash now and get liquid again right before the impending storm.

    1Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Stephan Kraus what’s a sin city? Why would someone invest in such a place? A lot of crime etc? Is there a investment strategy I am missing?

    1Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Dennis M. Hey man can you break it down what you are saying a little more clearly???

    So rents increase for apartments. But you believe rents will depress for single family according to your logic.

    1Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Stephan Kraus real estate doesn’t seem to be your full time endeavor. You must be yanking down cash in other businesses to supply this business. So tell me. How does one do that? Are you handling that? How does one keep those other businesses competitive when they take out cash to purchase real estate.

    Please I been wanting to do similar stuff.

    1Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Sam Shueh do you believe Dallas Texas is a diverse enough marker. Say compared to Houston which feels more like an oil town.

    1Reply
  • Dennis M.
    Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
    7y

    @Shashank Paritala

    That’s not what I said . As people lose their homes and need more affordable housing they will move into apartments . Apartments are cheaper than renting a house . The other point is people will be staying somewhere regardless

    1Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    7y

    Dallas-Fort Worth, Chicago are far better than an oil town. The oil slump will impede growth of any town. Last time Midland, Houston etc I personally know investors got burned in commercial properties there.

    1Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y

    @Sam Shueh well I am in Chicago and I am actively seeking to move to Dallas. Is that move worth it? I think Dallas has more scope than Chicago.

    Both cases I don’t necessarily mean the city, like suburbs surrounding the city are more desirable to me in general.

    Dallas has more potential than Chicago? That’s what I hear everywhere. Every statistic points to that.

    And Houston is that dependent on oil??? There is a diversity there too right??

    0Reply
  • Terry Lao
    Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @James C Norman Jr

    The complex is called Parkway Villas and distance to strip is about 5 minutes. The fact that all units have a 1 car garage is unique. Most don't park their car, but rather use it as storage. Just imagine if you lived in an apartment and did not have enough storage? It's a gated community with over 100 buildings. Rarely a few become vacant, and they go quickly. It's a perfect rental for those working on the strip. It's location, location, location.

    Terry

    0Reply
  • Account Closed
    Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
    7y

    Multi unit properties are recession proof and thrive in all markets.

    1Reply
  • Stephan Kraus
    Rental Property Investor · Las Vegas, NV · Member since 2017 · 134 posts · 93 votes
    7y
    Originally posted by @Terry Lao:

    @James C Norman Jr

    The complex is called Parkway Villas and distance to strip is about 5 minutes. The fact that all units have a 1 car garage is unique. Most don't park their car, but rather use it as storage. Just imagine if you lived in an apartment and did not have enough storage? It's a gated community with over 100 buildings. Rarely a few become vacant, and they go quickly. It's a perfect rental for those working on the strip. It's location, location, location.

    Terry

    Hey Terry, are those the ones that are $660 hoa/ month? do you own a property in that community? 

    i got an offer on the table to buy three 4units in that community, starting my due diligence today - i know you are thinking about selling too if i recall correctly? 

    1Reply
  • Bart H.
    Dallas, TX · Member since 2016 · 1k+ posts · 745 votes
    7y
    Originally posted by @Sam Shueh:

    Dallas-Fort Worth, Chicago are far better than an oil town. The oil slump will impede growth of any town. Last time Midland, Houston etc I personally know investors got burned in commercial properties there.

     Houston is a lot more stable than Chicago.  Illinois is a hot mess.

    3Reply
  • Terry Lao
    Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Stephan Kraus

    Yes, those are the ones. The color of buildings is light pink, and it gets your attention quickly. The HOA is correct at $660. And you are correct about me selling.

    You have offer on table to buy (3) 4plexs, as in you represent a buyer? I can give you the history, details, and opinion on the property.

    Terry

    1Reply
  • Stephan Kraus
    Rental Property Investor · Las Vegas, NV · Member since 2017 · 134 posts · 93 votes
    7y

    @Terry Lao I'm potentially looking to buy for ourselves, if the numbers work. thx :)

    1Reply
  • Terry Lao
    Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Stephan Kraus

    Based upon 25%, 30 year loan, PITI, with HOA of $660, first year home warranty, estimate monthly repairs $200, raise rents to market, you can net $500-600. The hidden pluses, are in the HOA payment, it includes water, sewer, trash, 24 security guards, gated community with guard shack, and 5 minutes to strip (behind MGM).

    Don't believe me, run your own numbers and due diligence. 

    Terry

    2Reply
  • Stephan Kraus
    Rental Property Investor · Las Vegas, NV · Member since 2017 · 134 posts · 93 votes
    7y
    Originally posted by @Terry Lao:

    @Stephan Kraus

    Based upon 25%, 30 year loan, PITI, with HOA of $660, first year home warranty, estimate monthly repairs $200, raise rents to market, you can net $500-600. The hidden pluses, are in the HOA payment, it includes water, sewer, trash, 24 security guards, gated community with guard shack, and 5 minutes to strip (behind MGM).

    Don't believe me, run your own numbers and due diligence. 

    Terry

    Thanks for the insight, thats what i my numbers say too - im looking at a discount when buying all three and potential seller financing, going to make an offer subject-to inspection. 

    ..any of the original post starters or contributors interested in a potential joint venture here? 🤔

    1Reply
  • Scott McGuire
    Rental Property Investor · Reno, NV · Member since 2019 · 23 posts · 14 votes
    7y

    @Stephan Kraus

    I just sent you a Connect message. 

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Bart H.:
    Originally posted by @Sam Shueh:

    Dallas-Fort Worth, Chicago are far better than an oil town. The oil slump will impede growth of any town. Last time Midland, Houston etc I personally know investors got burned in commercial properties there.

     Houston is a lot more stable than Chicago.  Illinois is a hot mess.

    Guys can we get a straight consensus I am really not understanding if either Chicago or Houston are good investment vehicles.  I already know chicago is a hot mess.

    Isn't Dallas-Fortworth better than both of them. But what I hear frankly speaking is that Dallas is a bubble. Not like Toronto but still a little bit like a bubble people are saying.

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Cody Z.:

    @James C Norman Jr

    Great mindset and head on your shoulders. I would look at it from a cash flow point of view versus doors. If you bought two duplexes and after PM they netted 200 a door versus the 4 plex at $250 a door or vice versa I would choose the situation that nets a better P&L.

    Regarding the use of loans - I don't know if the $0 VA loan has PMI but if it does I would just factor that into the numbers for whatever you purchase with it.

    If it doesn’t, then I would use that for the largest unit you plan to purchase and just make sure your monthly rent numbers are spot on - talk to local agents and use Rentometer, Craigslist and local investors to confirm what they say.

    Good luck dude, Vegas is a cool area.

    What is a VA Loan?

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Don Mangiarelli:

    @James C Norman Jr The Best time to invest was 10 years ago. The second best time is now. Educate yourself, read books, listen to podcasts, analyze deals. Success comes from good decisions. Good decisions come from experience and experience comes from bad decisions. Good deals are available regardless of market conditions. If you are able to find them and make them work now, so much the better when the going gets tougher.

    Can you explain how 10 years ago was the best time to invest? You are talking post 2008 crash right? Please explain clearly.  Why is this the second best time.  People seem to have far more history than me. I want to capture and monetize all the wisdom I am reading but I am really not able to follow  even by googling a lot. 

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Steven Lowe:

    When others are greedy, be fearful.  When others are fearful, be greedy.  

     Yea I don't believe this one bit.  Everyone was saying that basically Bitconnect was a sham/scam as well as crypto.  My friend invested in Bitconnect - as did I. I got out 40 days before it collapsed, my bud didn't.  I made a bit of cash -  But it doesn't change the fact that it was the wrong decision. 

    People need to stop throwing around that Buffet line always. I can easily disprove it in so many aspects.   It gives people a false sense of confidence and makes them think they should ignore their natural sense of fear.   Yes yes.. some people go back and re-evaluate fundamentals. But most actually loose more than they gain by that advise you pasted in this thread.

    Also everyone is saying there is a recession coming soon - yet we still have bubbles. Another contradictory existence we have right now.

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Ray S.:

    People say there's going to be a recession every year. I think now I've been hearing it more than ever in recent history though. The sentiment alone may trigger one, as more people are starting to get cautions in anticipation one is coming and cut back their purchasing. For me the property prices don't make any sense anymore in my area. You can't cashflow a 4-5 cap multifamily unless you own most or all of it. And with a condo you could own it outright and still lose money if you rent it. So if a recession came along and rents stagnated or went down, and the occupancy rate went down it would perform pretty poorly, not to mention the loss of value. It's a different story in other parts of the country. For me I'm not buying right now. Even if we sidestep a recession in the short term, it's coming and I'm going to be patient and see if prices pull back so I can get in then. If it never comes, then I'll just never own in my area and start looking into places where I can make money. 

    But how is that even possible - you are in Miami. It's like easy to do real estate.  Furthermore - is cash flow always something people look for. I am happy just paying off the mortgage. I think there is too much greed in real estate these days.  People have to accept equity as a genuine gain. But of course not....   Anyways is Dallas or Phoenix a cash flow positive market?  What are the cash flow positive markets in the country right now?  Because I know California is not.

    0Reply
  • Shashi P.
    Member since 2019 · 38 posts · 8 votes
    7y
    Originally posted by @Terry Lao:

    @James C Norman Jr

    Welcome to Las Vegas..........soon to be resident. Las Vegas is my niche, as like most visitors, I decided to try something else than losing money at the casinos. Since, Mar'14, I bought 3, 4plexs, did a condo flip, and sold 1 4plex. Most on BP are correct in sense that most 4plexs are in bad areas, are older, and rarely are 4plexs newly built. However, there are certain areas better than others. Once, you moved to Las Vegas, and drive to the various areas of Las Vegas, you will know what I'm saying. The good niche areas are west of I95 (450k) Chinatown area known as Spring Valley (400k), and near strip off Maryland (350k-400k). 

    Here's one fact that no one will tell you. If you search any MLS or Redfin site, at any given point, there are available listings for SFR (5688), condo/townhome (2080), and multi's 2-4plex (98). When you do the math, 98/5688 =1.72% or roughly 2%. Or another way to view is there are 2 multi's for every 100 SFR. This unique supply will always be low compared to homes, and keep prices up.

    You mentioned that you do not like HOA's and will use property management company. No one likes HOA's, as most will run 600-700 a month. However, if you find HOA's that will include water, sewer, and trash, this is normally a $200 month expense. I suggest being open to HOA's if they include utilities. I know a 4plex complex that is about $660 a month, includes water, sewer, trash, gated community, security, pool, and 1 car garage near the strip. How do I know? Because I own 4plex in complex. Also, management company's charge 8-10%, equivalent to $300 a month. I would suggest against, as you will live in Las Vegas. I'm actually from southern California, and manage my own units.

    Terry

    You are going to manage your own plexes? Is this your full time job or what man?  Please explain it to me. What if people have other jobs.

    0Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y
    Originally posted by @Sam Shueh:

    Dallas-Fort Worth, Chicago are far better than an oil town. The oil slump will impede growth of any town. Last time Midland, Houston etc I personally know investors got burned in commercial properties there.

    Seriously you are going to compare Midland to Houston?  Come on, Sam.

    1Reply
  • Terry Lao
    Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    7y

    @Shashi P.

    Yes, I do manage my own properties, and doing it from out of state. It is not that difficult, just need the right contacts. Like handyman, general knowledge of home repair, and common sense. I currently manage (8) units, and have a full time job. All you need is cell phone to move things along. At some point, maybe 50 units that you will need a property management.

    Terry

    2Reply
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