Do people actually buy when a multifamily property is overpriced?

[Vance Foster]

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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?

[Bill B.]

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. :-)