Is anyone making a major strategy change for 2019?

Question

I am curious to see who is making major changes for their real estate investment strategies and businesses in 2019, and why.

Are you exiting the BRRRR or flip world for notes? Leaving notes for multifamily syndications or vacation rentals, etc?

If you are making a major change in your investment strategy for 2019 - what is driving it? Rates? Economy expectations? Local market dynamics? Better opportunities emerging in other sectors?

Chris Seveney · Answer

@Nick Knowlton

1. Stockpiling cash

2. Researching new markets

3. Buying notes and contract for deeds

4. Hold off on rentals and fix and flips

Interest rates are rising, home prices stabilizing definitely a softening coming. When I start seeing people again posting stuff like buying a house but not caring about its value because it’s a long term hold or rental then that is scary. I know many people who did that a decade ago and ask them how they made out. Too many people who got invoked past five years and you had to have a major screwup to lose $ in a deal. Let’s see how those people manage under duress. I will wait with my cash and when it softens and time is right - I will buy buy buy.

Steve Vaughan · Answer

Yes, hoping to make a strategy change from commercial mixed-use and multifamily to either industrial warehouse or NNN commercial I can repurpose somehow.

CAP rates in my area are half or less than when I bought and values are approaching rebuild cost, which was always my make me move price to exit. Never thought it would get there.

That and I'm bored with apt rentals.  I want to repurpose cool large buildings like white elephants into shared workspaces or loft spaces, tiny apts or something cool.

Lance Langenhoven · Answer

I like your idea to move toward industrial..... I don't think I could ever stomach having to deal with multifamily rentals. My boat & rv storage facility has a residential house on one side and I have more issues from the one residential tenant than from my 99 boat & rv storage tenants combined!!!!

Another angle I'm exploring in two new developments I'm working on is to incorporate small-office warehouse into the projects. So, basically, what I'm doing is multi-family without the family! :) The beauty is no people living on the property which means almost zero issues to deal with.

If anyone in the Houston region would like to discuss, I'm a commercial broker based out of The Woodlands - www.TheCommercialProfessionals.com.

Russell Brazil · Answer

Worked out pretty well for me ;)

JD Gunter · Answer

I'm getting more involved in commercial investing. The small numbers in residential can mean a lot of work for a little money. I would like to do a lot of work for a lot of money.

Timothy Howdeshell · Answer

I am still very early in my investing career (1 rental property), but I am looking at making a strategy change in 2019. My plan was to simply save money from the 9-5 (non-real estate), use as down-payment for house hacks. I live in the Denver market, and finding a good deal here has been tough. I've also set up a partnership to do some fix-n-flip projects, but again, finding a good deal has prevented moving forward. We have the financing set up, but no deals coming in.

Therefore, I've spent Dec. getting my license to increase margins on potential fix/flip deals in Denver (wrap commissions on sales into the projects to increase margins). I'm looking to house-hack/BRRRR my next primary in Colorado Springs this year (secondary market to Denver).

The most major shift is going to be looking for deals by marketing directly to sellers. Aka., cut out the middleman wholesaler. I only need one deal for the fix/flip at this point. Due to the toppy-ness of the market, trying to find ways to increase margins on deals here in the expensive Denver market!

Frank Wong · Answer

I am staying neutral with a slight lean towards being defensive.   I am with Chris on stacking cash.  I have no idea what the housing market will be like but I have some reliable indicators that I look at for the stock market that gives me a glimpse of what things could be.  I will adjust my game plan as I get more data and digest it.  I am a buyer still just gotta be a no-brainer type deal for me.

Marisa R. · Answer

Selling and buying and continue reducing debt....

Jay Hinrichs · Answer

Steve i was a guest at a self storage event in NOV in Vegas.   there was some pretty cool ideas that came out of that event.. I would think you could be ahead of the curve there in East side

Jack Seiden · Answer

Definitely being much more careful with what I buy in 2019 for flipping because if the project overruns costs i cannot just count on 5-7% appreciation to cover that anymore. Relatedly trying to find more off market deals because right now the houses on the open market aren't adjusting to the slower market and are just sitting at too high a price point.

Is anyone making a major strategy change for 2019?

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