Who's Selling in this incredibly Hot market?

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
4y

This is the new normal. Expect prices to keep going up for next decade.  I am still buying super deals. I'm working on one rehab right now and have 3 more in the pipeline.

The last house I bought cost 12k and is now fixed up and rented for $1100/month.

Rinse and repeat.

24Reply
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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Anand S.:

    This market is on overdrive. Who is taking chips off the table? 

    I've taken some of mine off. I'm hoarding cash for the correction. I'll be the only "fool" buying at the collapse.

    I've been though this before, several times. The pundits always say "it's different this time", as everybody tumbles to the ground.

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    3Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    This is the new normal. Expect prices to keep going up for next decade.  I am still buying super deals. I'm working on one rehab right now and have 3 more in the pipeline.

    The last house I bought cost 12k and is now fixed up and rented for $1100/month.

    Rinse and repeat.

    24Reply
  • Joshua Strickland
    Investor · Flowery Branch, GA · Member since 2019 · 413 posts · 412 votes
    4y

    I sold one property in Fall last year and have another for sale now. I also purchased another and am building another cabin all while keeping a cushy pile of reserves on hand just in case. 
    Invest responsibly without over leveraging and you’ll profit in any market.

    6Reply
  • Jeff Gold
    Member since 2018 · 72 posts · 59 votes
    4y

    @John Underwood no homes where I live for 12k. Good for you! What area?

    2Reply
  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 993 posts · 1k+ votes
    4y

    I'm not selling, but I will admit it is tempting.  Plenty of people were saying "this is the new normal" for the equities market as well and now I'm sitting here starting at quite a few stocks in my portfolio down 50-80% from the highs and a lot of money off the table.

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    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    I would GUESS 80-90% of the sellers are either downsizing or upgrading their housing and buying a replacement. (No additional inventory created.) who else can be selling?

    Married people eliminating one home (requires 2 single people who both home their own home, 1% of sales max?)

    People getting divorced and can’t afford their current house? (Probably reduces inventory as they each need separate housing now, but again 1% max?)

    Death of the sole owner (otherwise remaining owner stays or moves in to another property creating no inventory) (again, 1%? Max?)

    People moving because of high taxes, bad government policies or a new job? (No inventory created.)

    Living landlords selling? (30% of the homes but does anyone really believe more than 10% of landlords with one property or landlords with multiple properties selling 10% of their properties? (This would make 3%)

    Maybe 2% of landlords die every year? (Didn’t like the answer on this math, but average landlord is older and 2% is 50 years). So that could be 1% if inheritors don’t want the properties to live in or rent out. 

    I just don’t see inventory climbing from sales.

    Ps. Question to anyone who does sell AND doesn’t buy a replacement.

    (1)What is your expected “cost” (or loss) form selling instead of holding? Assuming you didn’t lose 20% in the stock market but just 5% to inflation plus the lost rental income plus the lost appreciation, plus the 20-30% tax hit)  Are you hoping to lose only 30% hoping that for the second time in history housing prices drop more than 20% so you can get back in at even?

    (2) if prices are still higher in a year or two are you simply done being a real estate investor? I mean you can’t take a 20-30% tax hit, and lose the rental income, and buy back in at prices that are 10-20% higher while borrowing at a higher interest rate than you had. Is plan B Bitcoin and stocks or just biting the bullet and buying back in at an even higher price which might very well be “today’s bubble” just 15 years after it was predicted back in 2010. 

    Good luck with your choice but realize it affects future you waaay more than present you. While everyone is loss=averse. Selling may cause a larger “loss” than even a price stabilization or dip. 

    I know national housing prices dropped more than 5% once already in 100 years, and “everything is cyclical” but 100 years is a long time to wait. (Which reminds me of people who used “cycle theory” to explain why the crash was going to happen in 2018, 2019, 2020 and 2021. I guess the cycle theory is cyclical in its length. :-)

    6Reply
  • Wayne Alexander Jr
    Wholesaler · Denver, CO · Member since 2022 · 5 posts · 0 votes
    4y

    @Anand S. Definitely Taking Advantage Of Flipping Homes In This Booming Market

    2Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    I don't think this is the market to sit and wait on the sidelines quite yet, but that may be coming. In Columbus it is still extremely competitive and appreciation occurs on a daily basis. 

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    2Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Originally posted by @Jeff Gold:

    @John Underwood no homes where I live for 12k. Good for you! What area?

     South Carolina. 

    It was condemned. I made it all new again for 50k.

    7Reply
  • Jeff Gold
    Member since 2018 · 72 posts · 59 votes
    4y

    @John Underwood love it. It’s great to hear stories like this. 

    1Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Originally posted by @John Underwood:
    Originally posted by @Jeff Gold:

    @John Underwood no homes where I live for 12k. Good for you! What area?

     South Carolina. 

    It was condemned. I made it all new again for 50k.

    Did you do the work yourself?

    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    4y

    Considering maybe selling one or two, just because we keep getting ridiculous unsolicited offers on them (double what we paid a few years ago). On the other hand, RE remains a safe asset class and many investors are moving from stocks and crypto back into RE right now for that reason. Plus the supply and demand issue seems to be 10 years away from finding balance (if ever). It's also hard to sell when the average property here is appreciating by $1,000's PER DAY. Plus I regret everything I've ever sold greatly. Yesterday I drove by a property I sold a few years ago that is worth way, way more now, and that stings. So probably not going to sell. Keep adequate reserves on hand to ride out and invest during a potential downturn.

    6Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y

    Sell/exchange 3, buy 2 has been my avg over the last 3 years. 

    Since 2020 I've dropped from 35 to 25, but some were consolidating up in area and quality. 

    5Reply
  • Jim Spatzenfeld
    Investor · NorCal · Member since 2015 · 282 posts · 240 votes
    4y

    Never, ever sell. You can always take the money out via cash-out refinance. I regret every house I sold in the past.

    3Reply
  • Account Closed
    San Francisco, CA · Member since 2018 · 72 posts · 30 votes
    4y

    @John Underwood damn nice!

    1Reply
  • Account Closed
    San Francisco, CA · Member since 2018 · 72 posts · 30 votes
    4y

    @Anand S.

    Selling in California, allocating funds to out of state super discounted deals

    3Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
    4y

    I've sold the majority of my single families and have jumped up to commercial multifamily. This is a great opportunity for people to cash out and upgrade. 

    1Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    4y

    Well, if you take your money out of assets that have already seen significant appreciation and you believe are unlikely to see much more, and then put that money into still-undervalued assets that you believe have a lot of appreciation potential, you end up well ahead of where you would be otherwise. That's what we've done in two instances here. I sold a single-family and put the money into a duplex last Christmas, and I recently sold another single family and am putting the money into large, value-raising jobs elsewhere on the portfolio (as well as finishing a flip).

    5Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Originally posted by @John Carbone:
    Originally posted by @John Underwood:
    Originally posted by @Jeff Gold:

    @John Underwood no homes where I live for 12k. Good for you! What area?

     South Carolina. 

    It was condemned. I made it all new again for 50k.

    Did you do the work yourself?

    No. I just write checks.

    2Reply
  • Jeremy Komer
    Rental Property Investor · Cincinnati, OH · Member since 2020 · 84 posts · 81 votes
    4y

    @Anand S.

    Buying less but I still see deals beating the 1% rule 10% cocroi, 7%+ cap rate, etc

    An interesting fact, the market goes up allot more often then it goes down. Black Rock can't time a crash, but you think you can?

    We have a tight labor market, the most qualified home buyers ever, high inflation, etc but because prices are high they should come down? I think there is some regret from missing the boat over the last few years...

    1Reply
  • Account Closed
    Rental Property Investor · Denver, CO · Member since 2019 · 78 posts · 66 votes
    4y

    @Anand S. We’ve trimmed our least favorite assets in order to buy more and bigger properties. Hard to say what the market will do, so I’d rather start making money now and if I’m able to buy more during a pullback then that’s great too. We have enough equity that we won’t be in a bind. Keep in mind that when the market cools off it might very well be that the interest rates are higher and it’ll all balance out your costs. All that said, it is hard to buy a property now that costs nearly twice as much as it did 2-3 years ago. That’s the problem with getting older. You remember how much things used to cost.

    4Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y
    Originally posted by @Jim K.:

    Well, if you take your money out of assets that have already seen significant appreciation and you believe are unlikely to see much more, and then put that money into still-undervalued assets that you believe have a lot of appreciation potential, you end up well ahead of where you would be otherwise. That's what we've done.

     This.  Some say 'never sell' but sometimes that specific neighborhood or asset class has had its run. There may be an off the radar asset type or neighborhood. Pivot, change, grow, tap out...  We need to be fluid and aware.

    We had a couple rural used-to-be something else apartment buildings for 17 years.  The perfect buyer came 'back home' when his father passed.   Exchange out of the funky and into 'normal.'

    Sometimes the headaches and indigestion just aren't worth it or your 5 year value-add projection hits early.  Sell or seller finance to greener pastures.   The music will stop someday.  Don't be scrambling for a chair. 

    3Reply
  • Joseph Young
    Investor · Portland, OR · Member since 2014 · 26 posts · 11 votes
    4y

    Selling seems like a good idea, but I just can't get myself to do it.

    2Reply
  • Chris I.
    Gilbert, AZ · Member since 2018 · 93 posts · 42 votes
    4y
    Originally posted by @Steve K.:

    Plus I regret everything I've ever sold greatly. 

     I hear this from pretty much every established investor I meet at local real estate meet-ups.  I wouldn't sell right now

    2Reply
  • Dave G.
    Investor · Phoenix, AZ · Member since 2016 · 349 posts · 418 votes
    4y

    @Anand S. Sold 2 of our 7 properties in Phoenix late last year. I am largely on the fence about selling, but the tipping factor was retiring in 2021 and wanting more liquidity.

    1Reply
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