How is everyone feeling on buying now?

New to Real Estate · Member since 2020 · 39 posts · 14 votes

I am just getting my feet wet in real estate and I am curious to know what is everyone thinking regarding purchasing multi family investment properties now during a pandemic?

I’ve been reading and watching videos and it seems like many are leaning towards waiting to see what the markets do. I feel like market can be a bit difficult to time, and seems like many are selling properties to avoid a loss.

Would love to hear from more experienced investors on your opinion: Do you think now is a good time to invest for someone new to real estate or wait it out until 2021?

Thanks

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Robin Consor

Member since 2019 · 1 post · 16 votes

If you have run the numbers and it appears to be a good deal, then I would go for it. Desirable properties do not come up every day, and when they do, I always want to be ready. If I worried about timing the market, I would have never invested in real estate. Do your due diligence on the cash flow and expenses and analyze deals. Wishing you great success!

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Cody Barna
Real Estate Agent · Member since 2019 · 285 posts · 149 votes
6y
@Kendrique Coats if you have the financial means and you come across a great deal I would take advantage of it regardless of the current economic circumstances. That being said the current pandemic could effect a properties performance based on outside factors that you can't determine solely by running the numbers in a calculator. (Ex. a lot of people are working remotely which has reduced the demand for apartments in the heart of expensive cities.) These are my thoughts on the topic, good luck with everything!
11 Reply
Gerry Logan
Accountant · Chicago · Member since 2020 · 14 posts · 21 votes
6y
Hi Kendrique - I'm also new to investing in Multi-Unit properties but not new to economic forecasting as I work as a Sales Forecasting Analyst for a multinational corporation within the Automotive space. I follow the economy very closely.
I have a 10-unit scheduled to close at the end of September.
Our forecast for real estate was that residential property will take a hit next year. However, this could be good for the Multi-Family space. If we start seeing mass foreclosures and people losing their homes they still need somewhere to live. Which would direct them to the rental market.
There was a couple things that my partner and I considered before purchasing our building.
1) We wanted to know the legal side of the rental market in our target area. We went after a building in a lower class area. How long does it take to evict someone?
2) We wanted a property that had some upside. You can find this if the property has deferred maintenance and/or rents lower then market rates.
3) We located a solid management company.
4) We wanted to ensure our lender understood our plan and was on board with it. We used a local bank.

Our strategy was to perform any major deferred maintenance, remodel all units and raise rents. Additionally, the area the building is located at was also going through a slight class change to the good. Our lender understood this and agreed if we could execute our plan and show the higher rents for 12 months we could then do a cash out refinance using our new cap rate. This strategy will create forced appreciate which we will then pull out of the property and use to invest in our next property.

14 Reply
Robin Consor
Member since 2019 · 1 post · 16 votes
6y
If you have run the numbers and it appears to be a good deal, then I would go for it. Desirable properties do not come up every day, and when they do, I always want to be ready. If I worried about timing the market, I would have never invested in real estate. Do your due diligence on the cash flow and expenses and analyze deals. Wishing you great success!
16 Reply
Linda S.
Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Kendrique Coats,
If it's a good deal, I don't see why not? Personally, I wouldn't buy for appreciation now just because I personally think we're in a bit of a bubble, but for cash flow, if the numbers work-- Everyone needs a home!
10 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
6y
@Kendrique Coats If you find a good deal, in a great area, have a margin of safety, and can weather vacancy/repairs then I would consider investing. But I certainly would not over-leverage at this time.
7 Reply
Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Kendrique Coats most of the buyers I know are moving forward. A lot of people are taking comfort in section 8 properties. Some are doing cash so less federal restriction can be placed on the properties as far as eviction. They're all investing in the OKC market that's pretty insulated to recession and I haven't personally seen a lot a lot of late or non payments due to corona. The market in general is pretty hot since corona. Inventory is low and buyers are snatching up anything with decent returns (6-8% cap rates) pretty quickly.
6 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Cody Barna Great insight and thank you for your thoughts.
2 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Gerry Logan Thank you for the in depth response and congrats on the 10 unit!
I like point number one. Definitely useful to know especially if you are in a tough position with a tenant. Do you think we are in similar territory of the crisis 10-12 years ago?
0 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Robin Consor Thanks for the advice! "If I worried about timing the market, I would have never invested in real estate" Is such a great point. Reminds me of a quote, " If you wait for perfect timing you will end up with nothing."
0 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Linda S. Thank you!
0 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Michael Robbins Thank you for your thoughts!
0 Reply
Kendrique Coats
OP
New to Real Estate · Member since 2020 · 39 posts · 14 votes
6y
@Kiera Underwood Thank you!
0 Reply
Gerry Logan
Accountant · Chicago · Member since 2020 · 14 posts · 21 votes
6y
Originally posted by @Kendrique Coats:
@Gerry Logan Thank you for the in depth response and congrats on the 10 unit!
I like point number one. Definitely useful to know especially if you are in a tough position with a tenant. Do you think we are in similar territory of the crisis 10-12 years ago?

Funny you should ask that question. My real estate partner and I were discussing this topic today.
The short answer is that the similarities of the current recession are very different. The reason, the government response,.etc.
the one thing that we think are similar is the volume of mortgages in trouble. Back in 2008 there were thousands of mortgages going bad which contributed the meltdown in prices. Today we have 9% of all mortgages in forbearance. if a large percentage of these mortgages go bad we could see a similar meltdown in prices.
there are still a lot.of variables that need to play out. One big one is who will be our next President. If Donald Trump gets re-elected we could continue to see low interest rates and favourable real estate legislation. However, if Joe Biden is elected he will most likely raise taxes and interest rates.
Although I'm not a fan of the Donald from a real estate investing perspective he would be more favourable.

2 Reply
Marlen Weber
Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
6y
I would have to say I haven't seen a slow down in multifamily investments, but of course, be sure to know your market well before you invest in any type of property.
1 Reply
Cody Barna
Real Estate Agent · Member since 2019 · 285 posts · 149 votes
6y
@Kendrique Coats no worries!
0 Reply
Josephine Wilson
Tucson, AZ · Member since 2020 · 64 posts · 53 votes
6y
@Gerry Logan If Biden wins, interest rates will stay low. The Fed will still be propping up the economy because the coronavirus crisis will still be going on. The Fed is largely politically independent. The Dems want to raise taxes on the Jeff Bezoses (Bezi?) of the world, not on people making under $50 million. Those of us on BP don't have to worry, in spite of the fear-mongering from the right. But I agree Dems could make moves favoring tenants over landlords, like a continuing eviction moratorium. Overall, a Biden presidency would be better for us because he may actually do something to help out the middle and working classes, which would mean more people able to pay more rent. Higher unemployment payments, higher direct stimulus payments. It all puts money in people's pockets. Sure some will blow it on big screen TVs, but many will use it wisely. Trump's 2017 tax bill largely rewarded his rich friends.
9 Reply
Blake Weldon
Rental Property Investor · Livonia, MI · Member since 2020 · 15 posts · 33 votes
6y
@Josephine Wilson
Ha ha ha ha ha, funny stuff.
5 Reply
John Fish
Rental Property Investor · Philadelphia, PA · Member since 2020 · 37 posts · 21 votes
6y
@Josephine Wilson you clearly don’t understand economics.
9 Reply
Todd Pultz
Rental Property Investor · Dayton, OH · Member since 2019 · 293 posts · 440 votes
6y
@Josephine Wilson I think I’ll leave this alone, but you should really take a few minutes and have someone teach you how the economy works and affects each of us especially if your in real estate. Good luck to you
12 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Every market type is a good time to buy if you buy at the right price.
3 Reply
Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@Kendrique Coats. There's a pandemic happening? In my area, I'm seeing absolutely no changes in the market. It is strong as ever. A little too strong really. I've been looking for a 4-8 plex for months, but everything seems to be overpriced. Very hard to cash flow much, especially if you realize the upgrades a person needs to do asap. Luckily, real estate is just a part time gig for me, so I don't "have" to buy anything, ever. And that may very well be what happens if the interest rates stay low and the market stays strong.

3 Reply
Zachary Ray
Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes
6y
I believe the majority is still out purchasing profitable real estate. If it makes sense and you have a built in cushion why not. Fingers crossed this lets up in 2021.
2 Reply
Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 716 posts · 555 votes
6y
My opinion is that its always a good time to invest as long as you buy right. If you can take down a multi-family with strong cash flow then whether the value goes up or down in the short term won't really matter. Obviously factor in pandemic considerations by allowing for longer vacancy rates and ensure you have reserves to be able to weather a storm. If you are nervous about the market just negotiate harder and only buy at a discount. When you get that discount though don't be afraid to jump on it.
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3 Reply
Anthony Simboli
Investor · Londonderry, NH · Member since 2015 · 163 posts · 59 votes
6y
I think anytime is a good time to invest in real estate you just need to think differently about how and why you're buying.
If you're concerned about the market, don't buy with the assumption of short - mid term appreciation. You can always wait for the "perfect" market, but you'll likely never find it.
1 Reply
Brian Ellwood
Rental Property Investor · Denver, CO · Member since 2018 · 191 posts · 247 votes
6y
You need to go into cheaper, more linear markets to find cashflow properties now, there's no point in trying to fight for deals in appreciating competitive markets.
5 Reply

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