Should I Buy Right Now?
Member since 2023 · 16 posts · 14 votes
Should I Buy Right Now?
Most Popular Reply
Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votesIf numbers work you should buy, if they don't move on to another property. We underwrite STR complementary for buyers, so feel free to reach out if I can help.
30 Replies
- Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes2y
Put together a proforma and determine whether the deal will cash flow to your standards. Don't wait for interest rates to drop - if they drop enough you can always refinance and improve the deal's performance.
We are continuing to buy if the deals meet our criteria - the problem is that it is tough to find deals that actually meet our requirements :)
- Property Manager · Tampa, FL · Member since 2020 · 20 posts · 15 votes2yHey Bryan,
Quote from @Bryan Keller:
Hey guys
I bought my first property in the area, made it a Short term rental and so far everything is good - the property is cash flowing and booked - thank God.
I'd like to repeat the process and purchase another one. I found a lovely 3 bedroom 2 bath in a good location and a good condition for 600k, I see a vision just like my other property and I can see it cash flowing as well after a few renovations.
The one thought that holding me back? I looked at the same market a few months ago and saw a property for the same price , however it was 5 bedrooms! didn't purchase that one because I wanted to make sure everything would be ok with my first investment.Is this still a good deal? Should I wait? maybe interest rates will go down even more? maybe Ill find a better property that can appreciate better - a 4 or 5 bedroom in Fort Lauderdale area?
Now is the time to buy! As the interest rates drop more buyers will be entering the market again. I have AirDna nationwide and would be happy to take a peak at what your market/submarket and comparable comps look like it you send me a DM - Real Estate Agent · Brooklyn, NY · Member since 2022 · 55 posts · 28 votes2yBryan, happy it is going well for you!
Quote from @Bryan Keller:
Hey guys
I bought my first property in the area, made it a Short term rental and so far everything is good - the property is cash flowing and booked - thank God.
I'd like to repeat the process and purchase another one. I found a lovely 3 bedroom 2 bath in a good location and a good condition for 600k, I see a vision just like my other property and I can see it cash flowing as well after a few renovations.
The one thought that holding me back? I looked at the same market a few months ago and saw a property for the same price , however it was 5 bedrooms! didn't purchase that one because I wanted to make sure everything would be ok with my first investment.Is this still a good deal? Should I wait? maybe interest rates will go down even more? maybe Ill find a better property that can appreciate better - a 4 or 5 bedroom in Fort Lauderdale area?
I'd say don't wait for anything. Not for lower rates, not for lower prices, and not for anything else. If now is right for you, then go ahead. The value of real estate is over the long run. Timing the market is like day trading in stocks and runs counter to the benefits and security of real estate over other investments.
It goes without saying that current prices and rates need to be factored in to your underwriting. Also, focus less on bedroom count and more on sqft. Adding a bedroom could be relatively easy in many cases. Especially for STR, you could literally put a sofa bed in the living room and accommodate extra guests (before you all scream, this is fairly common even in high end STRs and I've never heard of complaints, but feel free to cite other experiences). - Property Manager · Peoria Arizona · Member since 2019 · 39 posts · 24 votes2y
Quote from @Bryan Keller:
Hey guys
I bought my first property in the area, made it a Short term rental and so far everything is good - the property is cash flowing and booked - thank God.
I'd like to repeat the process and purchase another one. I found a lovely 3 bedroom 2 bath in a good location and a good condition for 600k, I see a vision just like my other property and I can see it cash flowing as well after a few renovations.
The one thought that holding me back? I looked at the same market a few months ago and saw a property for the same price , however it was 5 bedrooms! didn't purchase that one because I wanted to make sure everything would be ok with my first investment.Is this still a good deal? Should I wait? maybe interest rates will go down even more? maybe Ill find a better property that can appreciate better - a 4 or 5 bedroom in Fort Lauderdale area?
Lots of realestate agents in here telling you to buy. Same ones I'm sure were saying buy in 2007. If it pencils out as a long term rental then go for it. If you need it to be STR to cash flow that can be dangerous. Hard to say what the market does or if rates will event come down without a crash. I do know the market is way overpriced and certain areas are heavily saturated driving down nightly rates. I'd say invest in higher end homes and mid range seems to be saturated, at least where I am it is.
- 2ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
If numbers work you should buy, if they don't move on to another property. We underwrite STR complementary for buyers, so feel free to reach out if I can help.
- Lender · Austin, TX · Member since 2021 · 448 posts · 441 votes2y
Hey Bryan,
A lot really plays into the valuation and listing prices for properties: bed/bath count plays into it for sure, but also appraised condition, neighborhood location, neighborhood class, expected rental income, etc.
Instead of comparing beds/bath counts to listing price, I would instead figure out a good metric to measure progress with. Some people use the rent/price ratio, cash on cash return, annualized ROI, etc. I would look at a variety of ratios and make sure they meet your buy box to determine if it is a good deal.
*another point to mention is that the beds and baths could be appraised as below grade, making the appraised value equal to the 3 bed/2 bath
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes2y
I agree with @Zalman Ives. Real Estate is a long-term play. Buy and hold. Trying to find the market is fruitless. I think of real estate like the stock market and dollar cost averaging -- buying in to a market on a routine basic regardless of cost -- is shown to be best.
That's how we're operating and that's what we're trekking our Airbnb/STR investors here in Colorado.
Good luck!
- Real Estate Agent · Brooklyn, NY · Member since 2022 · 55 posts · 28 votes2y
Quote from @Curtis Porter:
Quote from @Bryan Keller:
Hey guys
I bought my first property in the area, made it a Short term rental and so far everything is good - the property is cash flowing and booked - thank God.
I'd like to repeat the process and purchase another one. I found a lovely 3 bedroom 2 bath in a good location and a good condition for 600k, I see a vision just like my other property and I can see it cash flowing as well after a few renovations.
The one thought that holding me back? I looked at the same market a few months ago and saw a property for the same price , however it was 5 bedrooms! didn't purchase that one because I wanted to make sure everything would be ok with my first investment.Is this still a good deal? Should I wait? maybe interest rates will go down even more? maybe Ill find a better property that can appreciate better - a 4 or 5 bedroom in Fort Lauderdale area?
Lots of realestate agents in here telling you to buy. Same ones I'm sure were saying buy in 2007. If it pencils out as a long term rental then go for it. If you need it to be STR to cash flow that can be dangerous. Hard to say what the market does or if rates will event come down without a crash. I do know the market is way overpriced and certain areas are heavily saturated driving down nightly rates. I'd say invest in higher end homes and mid range seems to be saturated, at least where I am it is.
Hey, no need to throw shade lol. As an agent and investor, I stand by my comments.
But you make a good point about underwriting as a long term rental. STR is not intrinsically real estate; it is a business that uses real estate. For example, many similar businesses that use real estate are owned by one person/company and operated by another. So it's higher risk and doesn't have the long term security of real estate. That's advice I would've given at the height of the 2020/1 real estate and STR market as well. Always underwrite the real estate itself (sold comps etc.), and don't rely on what you think you can do with it.
- Realtor · Fort Lauderdale, FL · Member since 2023 · 14 posts · 5 votes2y
Hi @Bryan Keller!
Congratulations on buying your first investment property! I hope you do well and learn lots. I agree with @Zalman Ives and @James Carlson. Buy and hold real estate investing is a long-term plan to building wealth. Like Warren Buffett says, his favorite holding period is forever. Of course, the deal also has to pencil out and make sense for you. Consider multiple exit strategies and use conservative numbers, not eraser math. The most successful real estate investors buy deals in all economic market conditions. I think more often when the "sky is falling," and less often when everyone is buying, but there has always been deals.
I wish you well and look forward to learning about your progress!
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
There's always a "better" deal around the corner, it's part of analysis paralysis.
Logical Property Management4.9454 Reviews - 2yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
If it's a good deal, buy it. If interest rates go down, Refinance. Not a big deal.
- Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes2y
I am an investor and realtor in south FL. To answer your question, it depends on the deal. There is no guarantee that prices will go up or down...and you can be almost sure if the Fed lowers interest rates in the middle of this year, prices will go up. I am still looking at deals all the time. I can't speak for STR as I don't specialize in that but I do have a client with a 5/3.5 STR close to downtown FTL and it is very BUSY so if you have the right type of property and location, you can do well in any market.
- 2yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
I believe (at least in my primary market of Tampa) that now is a great time buy. I mean right now. The slow period Q4 2023 was slow but hot compared to years past. Sinking interest rates and signaling from fed of rate decreases has pushed buyers back in to the market. As rates drop further and the spring/summer selling season will push values higher. It is possible to get a reasonable rate right now and make somewhat aggressive offers right now, and then refinance 1-2 years out to secure a better rate.
Vacation Rentals of Florida53 Reviews - Member since 2023 · 16 posts · 14 votes2yThanks guys! I'm gonna continue with my process and update ya'll!
- Rental Property Investor · Denver · Member since 2019 · 8 posts · 1 vote2y
Hey Bryan-did you end up buying the property?
- Member since 2023 · 16 posts · 14 votes2y
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
- Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes2y
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
- Rental Property Investor · Denver · Member since 2019 · 8 posts · 1 vote2y
Quote from @Ray Hage:
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
Hey Ray I do think that is a valid point. But I was just given 7.3% for a 2nd home rate-which really hurt the roi. Do you think there is a minimum cash on cash return before moving forward on a deal? I'm also looking at seller financing which might work better depending on the terms...
- Lender · Fort Lauderdale, FL (Lending in FL CT GA MI PA) · Member since 2022 · 470 posts · 349 votes2yGreat job Bryan! If it works at these rates, it's going to be even better when they drop!
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
- Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes2yHey there, good question. I guess it depends on what good ROI means to you. 7.3% is pretty rough and it would be hard to have a high ROI with that...but as soon as this year, you might be able to get down to 6%. Would it be a great deal at that point?...Also, is the area appreciating? Is there more and more demand to move into that area? Is there a chance to rent by the room (as in a college town situation)? That's more what I mean by great deal. If you renovate, could you increase the rents by a lot? If there is no way to push up future rents, then it may just be an ok deal with a lower than 7.3% rate.
Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
Hey Ray I do think that is a valid point. But I was just given 7.3% for a 2nd home rate-which really hurt the roi. Do you think there is a minimum cash on cash return before moving forward on a deal? I'm also looking at seller financing which might work better depending on the terms...
- Member since 2023 · 112 posts · 70 votes2y
Quote from @Bryan Keller:
Hey guys
I bought my first property in the area, made it a Short term rental and so far everything is good - the property is cash flowing and booked - thank God.
I'd like to repeat the process and purchase another one. I found a lovely 3 bedroom 2 bath in a good location and a good condition for 600k, I see a vision just like my other property and I can see it cash flowing as well after a few renovations.
The one thought that holding me back? I looked at the same market a few months ago and saw a property for the same price , however it was 5 bedrooms! didn't purchase that one because I wanted to make sure everything would be ok with my first investment.Is this still a good deal? Should I wait? maybe interest rates will go down even more? maybe Ill find a better property that can appreciate better - a 4 or 5 bedroom in Fort Lauderdale area?
Hello!
The most important thing on an STR is bedroom count and Location. As hotels can't compete with 3 beds and above and certain locations. I prefer 4-5 beds due to this. If you think it will make sense as a 3 bed based on LOCATION, LOCATION, LOCATION then you should be able to buy it. But remember the risk is incredibly high on all STRs so ensure your doing your due diligence.
L.Thomas - Rental Property Investor · Denver · Member since 2019 · 8 posts · 1 vote2y
Quote from @Ray Hage:
Hey there, good question. I guess it depends on what good ROI means to you. 7.3% is pretty rough and it would be hard to have a high ROI with that...but as soon as this year, you might be able to get down to 6%. Would it be a great deal at that point?...Also, is the area appreciating? Is there more and more demand to move into that area? Is there a chance to rent by the room (as in a college town situation)? That's more what I mean by great deal. If you renovate, could you increase the rents by a lot? If there is no way to push up future rents, then it may just be an ok deal with a lower than 7.3% rate.Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
Hey Ray I do think that is a valid point. But I was just given 7.3% for a 2nd home rate-which really hurt the roi. Do you think there is a minimum cash on cash return before moving forward on a deal? I'm also looking at seller financing which might work better depending on the terms...
I'm not sure this deal even works at 6%. If I put a large amount of cash down, like 50%, the seller might finance at 4%. I'm waiting for seller to confirm. I think the area is appreciating approx 5% annual. Regarding demand, I don't know if there is more demand to move there. Probably won't rent by the room. The house doesn't need any renovations. The positive is the area which doesn't have much in the way of hotels and no future plans for them. STRs seem to be quite acceptable to the local gov. It's in the Englewood area....
- Member since 2023 · 112 posts · 70 votes2y
Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Hey there, good question. I guess it depends on what good ROI means to you. 7.3% is pretty rough and it would be hard to have a high ROI with that...but as soon as this year, you might be able to get down to 6%. Would it be a great deal at that point?...Also, is the area appreciating? Is there more and more demand to move into that area? Is there a chance to rent by the room (as in a college town situation)? That's more what I mean by great deal. If you renovate, could you increase the rents by a lot? If there is no way to push up future rents, then it may just be an ok deal with a lower than 7.3% rate.Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
Hey Ray I do think that is a valid point. But I was just given 7.3% for a 2nd home rate-which really hurt the roi. Do you think there is a minimum cash on cash return before moving forward on a deal? I'm also looking at seller financing which might work better depending on the terms...
I'm not sure this deal even works at 6%. If I put a large amount of cash down, like 50%, the seller might finance at 4%. I'm waiting for seller to confirm. I think the area is appreciating approx 5% annual. Regarding demand, I don't know if there is more demand to move there. Probably won't rent by the room. The house doesn't need any renovations. The positive is the area which doesn't have much in the way of hotels and no future plans for them. STRs seem to be quite acceptable to the local gov. It's in the Englewood area....
What is your current expected cap rate and your current expected cash-on-cash return?
- Rental Property Investor · Denver · Member since 2019 · 8 posts · 1 vote2y
Quote from @Lucas Thomas:
Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Hey there, good question. I guess it depends on what good ROI means to you. 7.3% is pretty rough and it would be hard to have a high ROI with that...but as soon as this year, you might be able to get down to 6%. Would it be a great deal at that point?...Also, is the area appreciating? Is there more and more demand to move into that area? Is there a chance to rent by the room (as in a college town situation)? That's more what I mean by great deal. If you renovate, could you increase the rents by a lot? If there is no way to push up future rents, then it may just be an ok deal with a lower than 7.3% rate.Quote from @Ericka Sanchez:
Quote from @Ray Hage:
Quote from @Bryan Keller:
Quote from @Ericka Sanchez:
Hey Bryan-did you end up buying the property?
I did , I am under contract. Interest rates are so high rate now however i found a great deal that works so I'm happy
I wish more people understood. Find the good deal and you can always refi later!
Hey Ray I do think that is a valid point. But I was just given 7.3% for a 2nd home rate-which really hurt the roi. Do you think there is a minimum cash on cash return before moving forward on a deal? I'm also looking at seller financing which might work better depending on the terms...
I'm not sure this deal even works at 6%. If I put a large amount of cash down, like 50%, the seller might finance at 4%. I'm waiting for seller to confirm. I think the area is appreciating approx 5% annual. Regarding demand, I don't know if there is more demand to move there. Probably won't rent by the room. The house doesn't need any renovations. The positive is the area which doesn't have much in the way of hotels and no future plans for them. STRs seem to be quite acceptable to the local gov. It's in the Englewood area....
What is your current expected cap rate and your current expected cash-on-cash return?
Projected cap rate: 7.6%
Cash on cash: 1%
(16% down, 7.3% Interest Rate)
Cash on cash: 3%
(48% down, 4% Interest Rate)
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