High price/low interest vs Low price/higher interest

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High price/low interest vs Low price/higher interest

Vince Dent
Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes

Hi all, I’m in Columbus,Oh. We are in a high demand/low inventory housing market right now. House prices are at all time highs. I’ve always learned that buying when home prices are low/higher interest is better than the opposite. High home price/low interest. Buying a house with built in equity hopefully. Why would anyone buy in this environment in Columbus. Im think 2021 home prices have to start dropping. Any thoughts are appreciated.

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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
5y

Unfortunately there are no crystal balls for the prediction of the market so waiting on the sidelines to adjust wait to time the market is not the best move to make. You can wait for the market to drop and increased rates but given that time and equity loss if you bought today vs tomorrow, it might be a better approach to find some value in the market then hold out for another 2008.

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  • Lamont Chen
    Realtor · Hudson County, NJ · Member since 2017 · 176 posts · 110 votes
    5y

    @Vince Dent

    I would look at it from the lens of whether or not the purchase of the property makes sense from a income and expense perspective. An added bonus which I tend to look out for my deals is the ability to add value to the home by fixing it up, etc.

    That way you are buying a property with "low" purchase price and low interest but by the time it is fixed up you should hopefully be in a situation where it is worth more and you have refinanced for a low rate.

    3Reply
  • Vince Dent
    OP
    Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes
    5y

    @Lamont Chen My main concern would be buying at the high about the time the market turns down. This would mean I’m potentially upside down. I prefer to buy turnkey properties. I’m not interested in rehab and flipping. I do however still keep about 10k cash after purchase.

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    Vince, inventory is low everywhere because there's a record low-interest rate in history. Since bond investment is virtually zero, all this new money is going to investment that has better reward/risk namely stock market and real estate/property. The affordability index in your city is still quite okay compare to another market so there's still a lot of room to the upside. 

    0Reply
  • Lien VuongBusiness Member
    Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    Unfortunately there are no crystal balls for the prediction of the market so waiting on the sidelines to adjust wait to time the market is not the best move to make. You can wait for the market to drop and increased rates but given that time and equity loss if you bought today vs tomorrow, it might be a better approach to find some value in the market then hold out for another 2008.

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  • James Tackeberry
    Member since 2019 · 8 posts · 4 votes
    5y

    Keep in mind everyone learned from 2008. So everyone is waiting for the market to drop. Just think how much the big boys lost, they didn’t forget now they have millions sitting waiting for another crash if it happens at all. 

    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    One thing for sure, most millennials will become renters forever due to a massive student loan and other debts. I checked the Cleveland market, SFR price will increase 20% in the next few years while rental can't catch the curves meaning the demands for SFR owner-occupied is higher than rental. There's a good sizeable rental yield in the area, stable at 9%. For me, I'll buy in the area, If the market drops I'll buy more.

    0Reply
  • Ashton Karp
    Real Estate Agent · Bonney Lake, WA · Member since 2020 · 40 posts · 27 votes
    5y

    You can always theorize future housing prices but the only thing that is tangible is the moment. If you're looking for a turnkey rental, run numbers on properties and if it cash flows in your current market what's the hold up? If you want to hedge market crashes purchase distressed housing and add value. 

    I would prefer to start amortizing now because the numbers work than speculate for the future home runs like many other investors. 

    2Reply
  • Alan Jorgenson
    Member since 2020 · 6 posts · 12 votes
    5y

    Best time to plant a tree was 20 years ago. Second best time to plant a tree is right now!

    4Reply
  • Michael Hood
    Baldwinsville, NY · Member since 2015 · 12 posts · 2 votes
    5y

    IMO I don't believe another 2008 will happen. I would think the banks learned their lesson approving people for mortgages that shouldn't have been approved. I do think there will be an adjustment in the market though. Just not as bad as 2008. People right now see these rates and want to get in, not really paying attention that there bidding up properties that aren't worth the price there paying. Some people won't be to happy in a year or two I'm sure. 

    0Reply
  • Vince Dent
    OP
    Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes
    5y

    @Lamont Chen good advice. I’v been thinking about selling my primary and doing the house hack deal. I owe about 108k and can probably get 250k. I already own 2 SFHs and I’m free and clear on rental mortgages. So I’ve got plenty of equity. I’m looking for a 2 unit.

    0Reply
  • Vince Dent
    OP
    Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes
    5y

    @Carlos Ptriawan I think you’re right. More upside to this market. I’m starting to see signs that maybe renters are not paying landlords. Seems to be more than normal multi-units coming on the market. Thanks for replying.

    1Reply
  • Jacob Repreza
    Real Estate Agent · Orange County, CA · Member since 2016 · 207 posts · 111 votes
    5y

    If you're a turnkey investor then I understand the hesitation. You will have to look for real deals if you don't want to worry about a downturn. The investors that get distressed properties and fix them up should be pretty decently insulated from a drop if they have been making smart purchases. 

    That being said I absolutely think we see a decline in home prices in the next year or so. I really don't think it'll be anywhere close to 2008 because that specific recession was caused by real estate and the industry spearheaded the decline.  

    Also last note, one of our partners let us know that some companies are doing more and more stated income loans so saying the banks learned from the last time might be wrong thinking. 

    1Reply
  • Kyle Healy
    Investor · Hartville, OH · Member since 2019 · 10 posts · 12 votes
    5y

    I think it all comes down to your strategy (buy+hold/flip/wholesale/BRRRR), the numbers and how you run them. I currently buy properties in the greater Akron, Ohio area and the numbers are working for me with my strategy. I think it comes down to a preference of if you want the cash flow. I don't see it as a downside that its a high demand area. Columbus is a growing city and housing needs are going to be there even in 2021 and beyond.

    I think overall there may be a decrease in housing prices nationwide, but I wouldn't expect a big decrease in growing cities with currently "limited demand". 

    Best of luck in your search.

    3Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    @Vince Dent Im helping people buy investments everyday here in Columbus Oh. Sure most properties on market are well above what I believe they should go for, but she on the MLS still make sense, and if you can pick up a phone and cold call, you can find some REALLY good off market deals still!

    2Reply
  • Vince Dent
    OP
    Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes
    5y

    @Steven Wilson I've been looking at buying a duplex or SFH in the next 3-6 months. I've been only looking at Trulia and Realtor.com for listings. My plan is to sit down with bank in near future and see what amount I can get on a HELOC. Reynoldsburg area seems to be a good area for SFH. I already own 1 in Independence Villiage area.

    1Reply
  • Vince Dent
    OP
    Rental Property Investor · Columbus, OH · Member since 2020 · 15 posts · 13 votes
    5y

    @Steven Wilson. If you’re interesting in linking up let me know.

    0Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Vince Dent:

    @Steven Wilson. If you’re interesting in linking up let me know.

     Absolutely, im always interested in seeing how I can help others invest here in Columbus Oh

    0Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Steven Foster Wilson:

    @Vince Dent Im helping people buy investments everyday here in Columbus Oh. Sure most properties on market are well above what I believe they should go for, but she on the MLS still make sense, and if you can pick up a phone and cold call, you can find some REALLY good off market deals still!

    Properties in Columbus, Ohio are higher than what you believe they should go for, for now. Just wait a year and you will have wished you bought everything that came on the market.

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  • Jonathan Heagle
    Member since 2020 · 5 posts · 1 vote
    5y

    Forward looking returns in all asset classes are being compressed by the actions of the Federal Reserve.  The compression of cap rates in real estate is completely logical through that lens.  Rental properties can still offer mid/high single digit net rental yields with inflation protection and appreciation upside.  This is an attractive investment profile for investors, as compared to fixed income, and a diversifier vs. equities.

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    Jonathan is right ;  for a question like this, just look at Zillow home index for your specific area and compare it to the nationwide index. Analyze the uptrend slope. Don't use feeling :)  I'm very confident those who don't buy today in CF-market will end up as renters forever in the next 10 years.

    The actual buyers in this market are actually the Fed.

    2Reply
  • Andy RouschPro Member
    Investor · Mt. Arlington NJ · Member since 2018 · 251 posts · 143 votes
    5y

    If it will cashflow after running comps and bring a return that you like then go for it. The good thing about low interest is that you will pay down principal faster, the bad thing is the higher price if your plan to pay it off before the thirty years, or refinance later on when rates might be higher. 

    0Reply
  • Zeke ListonBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Vince Dent:

    Hi all, I’m in Columbus,Oh. We are in a high demand/low inventory housing market right now. House prices are at all time highs. I’ve always learned that buying when home prices are low/higher interest is better than the opposite. High home price/low interest. Buying a house with built in equity hopefully. Why would anyone buy in this environment in Columbus. Im think 2021 home prices have to start dropping. Any thoughts are appreciated.


     I'm still buying properties, I think the market is only going to grow. You have a ton of businesses pouring millions and millions of dollars into the city. 

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  • David Lepiten
    Real Estate Agent · Lathrop CA · Member since 2018 · 2 posts · 1 vote
    5y

    Something I've thought of with the predicament. Living in CA, what are the thoughts of higher property taxes because of higher home prices even with low interest rates and vice versus? Should higher cost property taxes be looked at in the situation before buying? 
    Thanks all! 

    0Reply
  • Allen Williams
    Realtor · Jacksonville, FL · Member since 2019 · 95 posts · 87 votes
    5y

    @Vince Dent

    This is such a great question and for me I think it all depends on your timeframe for holding the property. If you are looking at holding it 10+ years then I believe it makes sense to purchase as long as it cashflows/meets your personal goals. Indicators that may play into decision making includes supply/demand, population/income growth, rents increasing/decreasing, development in the community/amenties etc. And if it meets your paramters then locking in a low interest rate is the way to go. There is usually a correction every 13-18 years in the real estate market/business cycle depending on what time in history you look at. So prices tend to always rebound BUT you still have a great low interest rate NOW. Later on rates may go up and will be a better price to buy yes but cash flow will not be as nice most likely. That is my advice and hope it helps!

    0Reply
  • Account Closed
    Developer · Delhi · Member since 2020 · 1 post · 0 votes
    5y

    Satta king 2021

    0Reply
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