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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Sam Lewis
Real Estate Agent · Baltimore, MD · Member since 2018 · 283 posts · 228 votes
6y
Always a good time to buy, just tighter criteria in today's crazy market : )
1 Reply
Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
6y
I am not big on multifamily right now. I feel it is heavily overvalued for what it is. I have been through a few cycles and there have been times you couldn't give apartments away.
Historically over decades of time on average apartments have 10% vacancy, 50 to 60% opex (depending on tenant paid utilities and age of the building), 1% rent growth.
They have been in a bubble the last few years where sellers are touting ( 4% rent growth, 3% vacancy, 35% opex). It's just not realistic or sustainable over time for those numbers.
If you buy a 5 cap for instance on the sellers pro-forma comparing to decades of data you are buying really a 4 cap. Then these syndicators with 7 to 10 year holds are saying if all these 20 steps happen for rent growth and value add with interest only financing THEN the numbers might look like this.
If property taxes, insurance, and utilities go up they can eat the investor alive on a multifamily property especially if rent increases top out or stagnate.
Having said all of that there can still be deals in multifamily. A beginner doesn't want to buy a deal based on future underwriting perfection to make the property viable. That is a recipe for disaster. Pay attention to the capex needed on a property not the cheap bells and whistles the seller put on it to make it appear in better shape than it is.
I love commercial retail. People are running and I am buying but I understand the space on a deep level and know how to extract value. The danger in multifamily is most investors believe even without experience they can still make money with it easily with little downside risk and that's simply not the case.
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6 Reply
Rachel S.
Investor · Los Angeles, CA · Member since 2019 · 127 posts · 63 votes
6y
I only have one property aside from my primary residence. I am definitely not selling it. It was a good investment at the time and it still is. Panic is not a strategy.

With that said, I am not buying under the current market conditions. There is so much uncertainly and I couldn't evict for non payment of rent, even if I needed to... I don't know what is going to happen with the market over the next year or so. I have a few speculative ideas, but I don't have a crystal ball. What I am pretty certain of, is that I am not missing any opportunities by being patient. By that, I mean I am not seeing any deals in my local market. Just a lot of FOMO buying due to low inventory.
3 Reply
Alexander Churchill
Williamsport, PA · Member since 2017 · 42 posts · 20 votes
6y
@Kendrique Coats
Covid Discount deals only
1 Reply
Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
6y
@Joel Owens you are right on with this statement,

The danger in multifamily is most investors believe even without experience they can still make money with it easily with little downside risk and that's simply not the case.

1 Reply
George Munoz
Real Estate Agent · Fort Lauderdale, FL · Member since 2018 · 360 posts · 213 votes
6y
Feeling good, as long as the purchase is under market value... and fits your strategy or criteria, you should be good..
1 Reply
Jason Ho
Member since 2018 · 5 posts · 4 votes
6y
@Josephine Wilson
Sadly your statement is utterly false.
1 Reply
Brian Tunnell
Rental Property Investor · Birmingham, AL · Member since 2019 · 76 posts · 43 votes
6y
Like most, my team and I are waiting for the deluge that's coming. We estimate it will be hot 6 to 9 months from now. Of course, nobody really knows right now. Our plan is to keep the powder dry and be ready to jump on opportunities as they start to become more abundant.
0 Reply
Ken NyczajPro Member
Investor · Grasonville, MD · Member since 2017 · 453 posts · 415 votes
6y
@Kendrique Coats nothing wrong with buying a multifamily deal such as a house hack four unit to start your investing career off on the right foot. Do your diligence on screening tenants. Buy the property and factor in worse case scenario where you can still afford the mortgage.
0 Reply
Sabrina Sanchez
Real Estate Agent · Worcester Ma · Member since 2019 · 118 posts · 117 votes
6y
Hi @Kendrique Coats !
I also agree with many people here if you have the finances and you come across a great deal why not take advantage. If anything it may be more important to choose the right type of investment within the market. Wish you the best!
0 Reply
Patrice Boenzi
Real Estate Agent · Geneva, IL · Member since 2015 · 403 posts · 172 votes
6y
@Kendrique Coats a good deal is a good deal! I would do extra due diligence on screening applicants with the eviction moratorium in place. We purchased a duplex and turned it over to a property management company that filled the unit fast back in July. Then our tenant lost their job and applied for unemployment. We were just contacted by our property manager that our tenant cannot pay rent and wants to be released from her lease and move out. He already has another applicant being screened, BUT it does not always work out like that. We are hearing that FHA loans are in default and expecting to see foreclosures and short sales increase in a few months.
0 Reply
Aaron Ross
Contractor · Williamsburg, VA · Member since 2020 · 24 posts · 4 votes
6y
@Kendrique Coats
Hello I feel like right now is not a good time to buy any multi family. Due to Covid and the fact that we can’t expel any tenants through the December of this year you could to get stuck with rent
0 Reply
Damarius Gilbert
Specialist · El Paso, TX · Member since 2016 · 105 posts · 84 votes
6y
Im buying right now, I wholesale, so i run across deeply discounted properties. If its a duplex or triplex, Im buying them at a minimum 60% ARV. If it cashflows at what ever financing you are able to obtain. I would say still take it down. Stick to multifamily. If its an SFR, you relying on that one tenant to make payments and not take advantage of the system of not being evicted right now. Multiple door you are safer. The days of buying off MLS are over by the way if you looking for deals that way. Link with wholesalers or do your own marketing. Buy great deals you dont mind holding on to for a while. The key to success is cash flow, awesome financing terms and great tenants who will continue to pay.
0 Reply
Brandt BaizePro Member
Investor · St. Petersburg · Member since 2020 · 25 posts · 12 votes
6y
I am selling here in Hawaii and using a
1 Reply
Brandt BaizePro Member
Investor · St. Petersburg · Member since 2020 · 25 posts · 12 votes
6y
I am selling here in Hawaii and using a 1031 exchange to buy in Florida. I am in escrow now on my property looking to close early October. I think as long as you find a good deal buy. I am in the buy and hold mindset and I have a good W2 that can help weather a storm along with my reserves. You have to be smart when you buy even in a good market cause a bad deal can be like investing at the worst time. Run your numbers and worst case scenario
0 Reply
Isaac Green
Los Angeles, CA · Member since 2020 · 7 posts · 0 votes
6y
It’s NEVER a bad time for a good deal...if the deal is good enough, go for it!
@Kendrique Coats
0 Reply
Alyssa Dyer
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
6y
@Kendrique Coats I'm generally of the mind that you can win in any market, as long as you understand the market and build the right team. I'll echo @Gerry Logan here too. There's certainly a ton of variables/risk and each market is so different. Make sure you've got a buffer for a dip in rent rates and/or increased vacancy. Pay special attention when you're screening/leasing. If going through a 2-3 month eviction + paying for a makeready will break your financial security it might be worth holding off. If you can stomach the risk and you find the right deal, go for it!

0 Reply
Gail W.
Investor · IL · Member since 2019 · 151 posts · 135 votes
6y
I closed in July on a foreclosure. I am all in at a little less than 60% of ARV. I will jump on if I find another one like it. That being said I also am carrying 6 months of reserves on all my properties and working toward 12. I feel like keeping reserves high in this time we are living in, is the most important thing to consider.
0 Reply
Jackson Liautaud
Member since 2020 · 1 post · 0 votes
6y
@Kendrique Coats
Greeting Kendrique:
Reality is we are in one of the worst economic depressions since WW1. With this said, you have to be very careful how you invest your money. You made a very important point some people are selling in order to avoid loses. This means the storm is coming.
I suggest you take your time and be patient. However, if you do come across a great deal go for it.
0 Reply
Kevin Manz
HVAC Tech · Fort Wayne, IN · Member since 2015 · 423 posts · 223 votes
6y
@Michael Robbins
What do you mean by over-leverage? You suggest putting more than 20% down?
0 Reply
Bill Goodland
Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
6y
@Kendrique Coats maybe not in an expensive market, but in a middle class market I don’t expect to see huge swings in prices and no matter what there will always be renters. If I can find a solid place I’d be happy to hold long term at a significant discount, I’m jumping all over it
0 Reply
Adama Sombie
Investor · Takoma Park, MD · Member since 2017 · 9 posts · 3 votes
6y
I am looking at this market with my eyes opened waiting for the right numbers for me. I think " Great deal is relative " in real estate and it really depends on your goal " Short or long term". If you think the numbers are on your side then go for it. We have been talking about a repeat of 2008 for several years and that we needed to be ready for it. That mindset had us point to this covid 19 crisis as the moment we have been waiting for. Not so fast ........
Just lets us pay attention to the market trend and government policies been taken to prop up the economy. I think this covid19 is an adjustment of the 2018 crisis. We all agree that it has and will have a huge impact on the economy, but we need to know which part of the economy the impact will be. Looking at the trend, I doubt it will have a strong impact on the real estate industry. Why ? Look at the actions taken by the fed to support commercial real estate and the CARES ACT that was passed to protect the mortgage. yes, owner will have to pay back, but they have the choice to add the missing payments to the end of their mortgage term.
I think this Covid crisis will most likely affect renters, rather than home owners because at some point the eviction block will be lifted. Estate owners will have the choice to replace their tenants and increase their mortgage term.
What do you all think ?
1 Reply
Dave Becker
Investor · Pensacola, FL · Member since 2017 · 21 posts · 9 votes
6y
@Kendrique Coats
As many people are saying, if the numbers work and you have done your homework, any market is the right market to buy in. I keep hearing people tell me they can't find deals in my area. I close on 4 properties in a few days. After rehab, I should be sitting at a 20 cap on the low side. I took my time and happened across this deal and didn't hesitate to buy it before someone else could think. Confidence in your info is key.
0 Reply
Michelle Martin
Rental Property Investor · Los Angeles, CA · Member since 2019 · 55 posts · 26 votes
6y
@Gerry Logan Hi, can you please PM me your lender's contact information? I'm looking to purchase an 8-unit property, and my lender won't finance anything over 4 units.
0 Reply
Vaughn A Wiebusch
Real Estate Agent · Omaha, NE · Member since 2018 · 9 posts · 3 votes
6y
If the Numbers work do it!
0 Reply

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