Sicklerville, NJ · Member since 2020 · 22 posts · 3 votes
Hey yall, Im pretty new to Real Estate investing and ive been reading a lot of books on Real Estate Investing too. In the news and other outlets, ive heard a lot of talk about a housing market crash or recession. I was wondering if I should still be investing prior to this and during a possible crash/recession? If someone could give me some insight, I would appreciate it alot!
Unfortunately, there is just so much unknown right now. It really is an unprecedented time. Q2 GDP was down 30+% (I think it was 32.4% or something like that). Unemployment in many markets is still quite high (10+%). 250k+ FHA borrowers in Atlanta alone are behind on their mortgage payments. And the fed is pumping trillions of dollars into the economy. These big headlines make me think we're headed for stormy waters, but right now things are looking pretty good (at least in comparison to what many expected when COVID began). So who knows when the boat will change directions.
There's no sense in trying to time the market, but just keep your eyes on what's going on. The more you have your finger on the pulse of the economy and the market, the more prepared you can be for coming opportunity. And don't be afraid to jump in right now if you are ready and you find a great deal. Just make sure that you are extra conservative with your numbers. I would not recommend jumping into anything with a long timeline since no one really knows what the market will look like in 3+ months.
Hope this helps a bit and please feel free to reach out anytime if you have other questions or just want to chat!
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y
Definitely invest during a recession/crash. Timing the bottom is very hard to do but when prices drop and the numbers make too much sense it's time to buy!
Real Estate Investor · Crescent Mills, CA · Member since 2010 · 128 posts · 74 votes
6y
Some guy on CNBC yesterday (Tuesday) said we're in a depression (and said definitely not a recession).
Because of the low inventory, I still see prices rising. But a search on "Stockton, CA" on Zillow came up with 11 pages of houses for sale (actually houses, multi-family & apartments; other categories eliminated) with most of the last 4 pages (8-11) being pre-foreclosures and foreclosures.
Not as bad as 2008 +/- yet, but ... ?
Commercial is problematic too. Way too much vacant/abandoned retail & restaurants; similar re offices? Are these permanent? You tell me; I don't know. I am hesitant re these. I'm watching mobile-home-parks, but marinas are out for moment - boats seem to be the height of discretionary spending. I'm looking at a MHP with an expired listing, but noted that there are >5 years back taxes owing so maybe should wait for it to go to tax sale.
People I know with online shops are slow if they sell anything other than necessities. I know that's all I'm spending on - anything that's discretionary can wait.
You might look at tax sales (note that some are sales of the liens and not the property) for bargains. BUT often these are either trashed properties or deceased owners without heirs. If they're any good, there will be multiple bids almost up to retail. Due diligence mandatory or do you want a strip of land 2" wide (yes 2") by 1/2 mile? Check county tax sales on **************. Otherwise it may be county by county (though realauction does all/most of the CO and NJ counties; NJ being liens not deeds).
Definitely buy during recessions & depressions. Fortunes can be made if you find the bargains.
Real Estate Agent · RI · Member since 2018 · 10 posts · 4 votes
6y
The housing market has continued to stay strong in 2020. With historically low interest rates driving demand and low levels of inventory I do not see it crashing anytime soon.
Unfortunately, there is just so much unknown right now. It really is an unprecedented time. Q2 GDP was down 30+% (I think it was 32.4% or something like that). Unemployment in many markets is still quite high (10+%). 250k+ FHA borrowers in Atlanta alone are behind on their mortgage payments. And the fed is pumping trillions of dollars into the economy. These big headlines make me think we're headed for stormy waters, but right now things are looking pretty good (at least in comparison to what many expected when COVID began). So who knows when the boat will change directions.
There's no sense in trying to time the market, but just keep your eyes on what's going on. The more you have your finger on the pulse of the economy and the market, the more prepared you can be for coming opportunity. And don't be afraid to jump in right now if you are ready and you find a great deal. Just make sure that you are extra conservative with your numbers. I would not recommend jumping into anything with a long timeline since no one really knows what the market will look like in 3+ months.
Hope this helps a bit and please feel free to reach out anytime if you have other questions or just want to chat!
Sicklerville, NJ · Member since 2020 · 22 posts · 3 votes
6y
@Brenden Mitchum Yeah all of what you said really sparked my questions in the first place. Right now Im saving up for a down payment but I was thinking about using the Hard Money to Refinance Strategy because it might be the best option for me rn. Appreciate the response!!
Real estate prices adjust at a slower pace than stock market prices, so if we see a crash on the real estate market, this will be delayed, most likely in 2021 or 2022. Foreclosures also take a while to hit the market, and massive unemployment takes some time to make an impact on the market as people try desperately to hold on to their properties until they have to fire sell them (so it is not very wise to do this.. sell before, while market prices are still high!).
BRRRR is an awesome strategy 99% of the time, but I would say with so much unknown now would be that 1% when you really want to be careful. Most BRRRR projects don't get turned around and refinanced for at least 6 months. Who knows what that ARV will look like 6 months later. You're better off going with an owner-occupied rehab loan right now to get into your first deal. Sure the returns won't be as great but your risk will be much lower and getting started is just about getting started, not about hitting a home run. So you're on the right track saving for that downpayment!