Invest now or wait for recession?
Hey guys,
I'm thinking of going in on a duplex in a great, growing area of Fort Myers, FL. $380k, 2003 build, $30k of CapEx (paint, roof, AC, water heater), $3,300 monthly rent, $500 cash flow, 5% CoC return with a 6.125% rate.
I want to send an offer but my only dilemma is this recession we’re in/heading towards. The market the property is in is hot and has a lot of demand, but I wouldn’t want to get into it just to see the same duplex sell for much lower 6 months from now. What’re your thoughts? Should I go for it?
I’m reading a bunch of different articles on the future of multi-family homes so Im not sure what to think. Should I be waiting for lower prices? A part of me believes multi-family investments won’t be affected too much given they are investors with money, not primary home buyers.
I would tremendously appreciate your advice, thank you!
I was a real estate (foreclosure) paralegal in Fort Myers, FL during the 2008 recession. The area didn't recover for a very long time, they are just recently getting back to those 2007 numbers. I bought a house at the bottom of the market in 2010 at $62k, originally built in 2007 for $285k. It is a 4 bedroom, with an office, and 2 bathrooms - 1800/sq. ft. house.
I would really consider the driving factors for what is keeping the economy afloat there. It was mostly construction and tourism, but that may have changed now that more jobs are remote. I personally wouldn't invest in that market at that price because of the experience I lived there. It is fast growing compared to previous years. Also consider the type of renters in the market, it was horrible when I was in property management there. Interview a few property managers to ask the hard questions.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Always be looking. Just because a recession is due doesn’t mean you can’t find a deal before it hits the fan
I would do anything in RE for 5% honestly. Right now i'm selling my properties and sitting on cash. The rise in interest rates and everything else is a lot right now so i'll wait it out for 12-18 months and re-evaluate. I can't see almost way the market is higher in 18 months from where it is now at the current trajectory. Things change of course, but its heading down and the question is how much, you are already seeing it.
Quote from @Nicholas L.:
OK - good luck and keep us posted.
Hey Nicholas, I forgot to update you but it went really well - I'm extremely happy with my first deal!
I bought it for $380K and it appraised for $395K. To my surprise, both hot water heaters and AC units are from 2018, while the roof has 5 more years of life, saving me the entire cap-ex budget I initially acounted for. The tenants have been there for 6 years and have taken really good care of the property. I raised rents by 50% to $1,600 (still a discount to market rent) and both families decided to stay so we signed new 1-year leases. Overall, I couldn't be happier with the investment.
Thank you and everyone on this forum who pushed me to do it!