Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes
Ok, so I know that none of us have a crystal ball. However, I want to get opinions on purchasing in the next 3 months. This isn't tied to any specific scenario, let's talk in the general sense of purchasing real estate. We're seeing the rates go up, but in general inventory is still very low. Do you think there is going to be a crash? or maybe a collapse of the economy, or perhaps the dollar collapses and is replaced by some other currency? How about WW3, nuclear war? Hyperinflation? Or is it a great time to buy? Would love to hear your opinion.
Investor · Topeka, KS · Member since 2020 · 669 posts · 488 votes
4y
@Greg R. personally, I've been less concerned with interest rates and finding deals then I have with rising materials prices. For context though, I'm still finding deals in my market, but I do value add. Which means my spot on construction budget might not be so spot on when the price of a 2x4 jumps from $4 to $8 in the span of 6 weeks! That can eat up my overage budget pretty quick. Something to think on if you are planning value add.
Specialist · Charlotte, NC · Member since 2021 · 185 posts · 106 votes
4y
@Greg R.
It’s the old supply and demand deal. As supply of homes continue to stay low like they are the demand and prices will continue to go up. Also there are less homes on the market in 2022 then there were in 2021. People should be buying and not waiting.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
4y
@Rolly Weaver How are you marketing for deals in 2022? I've been targeting distressed off market properties with letters and had little success (expected). I've revised my letter a few times and know what to look for when driving for dollars. We passed on a flip opportunity last year because I didn't want to work for free. Upon meeting the seller I was getting a bad vibe and after making a strong CASH offer the seller refused to negotiate. I've had success with off market deals in the past and don't want to make this mistake in 2022.
Investor · Atlanta, GA · Member since 2016 · 241 posts · 86 votes
4y
As an investor, not the best time to buy as prices are over-inflated. The market will correct eventually but no way to tell when. That said finding a very motivated seller offers the best chance to get the best deals.
I would say that real estate is always in season. Sure there are crashes and economic issues but if you buy intelligently then you should be fine. This means don't purchase property based on what you think that it will appreciate for in the future but rather what cashflow you can generate. Understand important metrics like debt service coverage ratio, break even ratio, etc. This will help you understand if your investment can stand up to a worst case scenario. It also helps if you have more properties because if one starts to do badly you can use the rest to carry it forward.
Thanks Jason. If we look historically, we see times that were great to buy, and others that were bad. I agree that it's possible to make a good/ descent buy in an unfavorable market. However, buying in 2007 vs 2011 were very different markets. That's just one example. Was it possible to find a deal at the top of the bubble and make money? Sure.
Let me clarify, I'm not saying that we're reliving 2008, I know we're not.
I see the consensus that anytime can be a good time to buy if you find the right deal, do research, etc. That's not what I'm asking. I want us to acknowledge that there are good markets to buy in, and bad markets. Why do you think that this market is either a good market to buy in or a bad market? What specifically about this market makes you think that?
There is a misunderstanding about the housing crash. There were indicators that people ignored, specifically inventory. We reached record low inventory levels in 2005 with around 4 months inventory on the market. By 2007-2008 we were near 10 months inventory. So people who bought in 2007 had plenty of warning signs, they just ignored them. Inventory wasn't considerably higher in 2011, but it takes time for inventory build to affect prices. That is great news, because today we have lower inventory levels than 2005. That means even if the market starts shifting, there will be time to react.
As far as currency collapse or nuclear war, those are catastrophic events that will not be a buying opportunity. If you believe those events will happen, buying food or bullets is a better investment. In that situation, nobody will care about real estate, but they will shoot you for your food when they are starving.
Nobody can predict the future and crowd sourcing advice from strangers is even less predictable. Most people follow a herd mentality. When a market is going up, everyone will tell you it will go up forever. When it is going down, everyone will tell you it will keep going down. This is literally why markets flow up and down.
Helen, GA · Member since 2015 · 96 posts · 68 votes
4y
@Jaron Walling, We're all in the same boat of difficulty in finding deals right now. But they're out there. There is no silver bullet. Some of my properties come from mailings and others from driving for dollars...You never know. I'm finishing up a flip in the mountains of North Georgia that was purchased the day before foreclosure auction. You can imagine how much the owner wanted to make the deal work.
Advice for negotiating with sellers: There are good books out there for negotiating, but I just try to be myself. You're not going to convince someone into owner financing with some fancy NLP if they don't want to.
But owner financing could be exactly what some one else wants. Regardless, in every owner I speak with, I ask if they'd be interested in holding the paper. You just never know.