Do people actually buy when a multifamily property is overpriced?

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This triplex recently came on the market in Billings, MT.  The few multifamily homes I have seen come on the market here do not seem to pencil out anywhere close to being a good investment property.  Do people actually buy these properties when the prices are jacked up.  This is priced as as if it's a single family home in this crazy real estate market in Billings.  However, the rent rates are not going up nearly as fast as the single family home prices.  It's just crazy to me to think someone will actually buy this property.

Thoughts?

@Vance Foster definitely, some of the multifamily is a bit overpriced, but those are usually the ones that have been on the market awhile. If the listing agent isn't knowledgeable about investment property, they tend to use a per sq ft price comparable to SFR in lieu of an investment model to price the property. Properties, that do pencil out, are usually grabbed pretty fast OR they don't even hit the MLS. You can still get some good buys off market. Also, alot of the property in Billings that goes on the market is being underrented. When you do your calculations, if the tenant is on a month to month, definitely use potential rents, not current rents. Real Estate's a long game, and you can't expect it to cash flow in year 1, not in this market. The client investors I work with are always thinking outside the box, for ways to do a value add, to get those rents higher. There are currently alot of investors in Billings, which is making it hard to get those good deals. It takes some digging but you will find property that works, hang in there.

Overpriced for who? You never know how someone is underwriting their deals. There's a dude down the street that is married to a surgeon, so he can write off his passive losses against his husband's income. He does not follow the 1% rule when buying... because he doesn't have to in order to make money.

Maybe they’re house hacking? Maybe they need student housing for their kid to go to college and breaking even is a big win over paying someone else rent. Maybe their borrowing costs are lower. Maybe they’re better at being a landlord and have lower operating costs. Maybe they own identical buildings in town and know the true costs of ownership instead of plugging in random percents as costs. Maybe they have a ton of money sitting in the bank earning 0.01% and this is a win. Maybe they have a 1031 exchange to complete and only have a couple days left. Maybe they are handier and could do more work themselves. Maybe they own a property manager,ent company or a remodeling company and want more work. I would bet there are at least 50 reasons someone could pay more than you, probably 100.

But saying they are obviously wrong is only one of them…

So I’m saying there’s a chance. :-)