All Forum Posts by: Jin Zhang

Doubtful. The cost/benefit, risk/reward, effort/return on RE vs other asset classes right now isn't worth it. 

Be careful with the information on the forums.  There is a lot of talk that is not supported with real life purchases.  7+% interest rates coupled with high prices and tight commercial lending is making DTIs, DSCs, and LTVs very challenging.  Most of the investors that are buying right now likely have full time deal flow pipelines and access to cash and private money.  All the talk on the forums about "the market" is just talk without information on real transactions.

Yes, banks are using DSCR (Debt Service Coverage Ratio) 1.3+, and we are seeing below 70% LTV with our projects. If I were you, skip the multifamily and do micro-flex. 500-1000 sq ft warehouse spaces in a larger building. 1 man door, 1 roll-up door, 1 shared bathroom. Offer free wireless. You will get a lot of small start up businesses, contractors etc. They will need more parking than you can provide. Not sure what the rates are, but $1-2 a foot for a tin can warehouse has very upkeep. No evictions. Lots of demand. If you really want to make a dent, get a piece of property with extra land to build on. Give each space an actual address, and you are really making some headway. (Of course, mini-storage is great and i have some other amazing solutions, but that is another story) Oh, have I done this? Yes, I have. I find adaptive reuse a great opportunity as well. Currently converting an old cannary, fruit processing company, low security prison (this is a big one!).

@Jin Zhang, I found 2 "good deals in good B+ location" (20% off from market price and 30% off from the peak in March 2022) last month, under contract, but I cancelled both 2 good deals last minute, because 3 more even better deals were listed on the MLS before my close of escrow. I have been buying real estate properties every single year in Las Vegas since 2010, I have been doing great, but I got freaked out last month. I'm going to pause purchasing additional real estate properties after 12 years. I will not buy and hold in 2023, to me, buying a good deal today maybe a bad deal next month, it is like trying to catch a falling knife. I will wait for the falling knife hit the ground floor, then buy again.

Of course, when you are getting double digest net caps (based on cash purchase) and buying all in at 65- 70% of the current value, who cares about up or down 10- 15% 

Good Luck 

If the numbers make sense for your investing strategy, then they make sense and if you are buying and holding for a longer term, then you will figure it out. Understand rent growth in your specific market, will they keep pushing up, go down, or stay flat over the next several years. How will that impact your investment goal for that property? Interest rates are higher so less people you are competing with to buy. If you hold long term you will pay down the property and if prices pull back they will return at some point. 

Don't plan for mortgage rates to come down in the future to make your numbers work. If you buy a place at today's interest rates, but prices do pull back, you may not be in a position to refinance the property in order to take advantage of those lower rates in the future. I.E. if you need 25% equity/75% loan but values went down, then the only way to get that 75% loan is by having paid the current mortgage on the property down some or bringing more money to the table in order to refinance to get that lower rate. Eventually you will get there but don't count on it to make a deal happen, if you need rates to be lower to get your required return, then the deal you are trying to buy today likely isn't a deal.  

Paul

I am personally buying and holding, buying real estate at a 50% discount and holding until we see another market like April 

I keep my criteria the same, which means there are less possible deals out there. But it doesn’t mean I don’t make a deal. 

I prefer a market like this with less competition.

I’m playing the long game

@Jin Zhang

Interest rates and property values are sort of irrelevant to me. Don't get me wrong, I won't buy a property that is way over priced, but at the end of the day, I could care less what the interest rate is and the purchase price is so long as the deal meets my cash flow goal/need. And so what if property values drop in the next year or so. We're talking buy-and-hold so no plan to sell it anyway.

Lastly, I have never heard a highly successful Real Estate Investor say "Gee I'm so glad I timed the market and waited..." 😀