Determining When To Buy

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Determining When To Buy

Thomas McNeil
Member since 2023 · 2 posts · 6 votes
Hello,
Total newbie, so forgive if I am missing some things. I would like to invest in a house hack in my area (Sarasota, FL) and everything you hear on the news is about how high interest rates are and that they will be eventually going down. So what is the prevailing wisdom on this? I don't understand how refinancing works, again, total newbie, so, is it best to wait until rates go down, or bite the bullet, pay a higher mortgage and then refinance?

Looking for multifamily in Sarasota area...

Thanks!!
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Stephanie Walker
Realtor · Charlotte, NC · Member since 2023 · 245 posts · 231 votes
2y

Best time to buy is when you can afford it. Even with today’s rates, which are currently at the lowest they have been in months, can you comfortably afford it?

Refinancing costs money but it is the goal with rates expected to come down over the next year.

If you were to wait to purchase, it is very likely that home prices will, in turn, increase.

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  • Stephanie Walker
    Realtor · Charlotte, NC · Member since 2023 · 245 posts · 231 votes
    2y

    Best time to buy is when you can afford it. Even with today’s rates, which are currently at the lowest they have been in months, can you comfortably afford it?

    Refinancing costs money but it is the goal with rates expected to come down over the next year.

    If you were to wait to purchase, it is very likely that home prices will, in turn, increase.

    2Reply
  • Sarah MeresBusiness Member
    Lender · Minneapolis, MN · Member since 2023 · 24 posts · 26 votes
    2y

    Hi Thomas - lender and investor in Sarasota, FL here! I agree with the poster above. It's generally best to secure a property while demand is lower and the market is soft. You're more likely to get a great deal. Have you heard the saying "marry the home, date the interest rate?"

    Now, depending on how long you plan to be in the property before moving to a new place, your lender should help you decide how aggressively to buy down the rate. This is a bit more complex piece I would be happy to talk to you about over the phone (I will DM you).

    In summary, it's still a great time to buy!

    1Reply
  • Kalen Kosik
    Investor · Dothan, AL · Member since 2023 · 8 posts · 5 votes
    2y

    I started about 4 years ago and the inventory wasn't that great. So all the advice I was getting was "when the inventory comes back, you'll have your pick. Save your money". Well, that was obviously bad advice. I did buy some properties but passed on a lot because I was new and didn't know any better. So the biggest piece of advice I can give you is buy if the deal makes sense regardless of the market. If the deal is good now, it will be good in 6 months, 5 years, 10 years. You will start appreciating, cash flowing, and depreciating on your taxes. Then if the interest rates in 2 years become more favorable, refinance to a lower rate and pull your equity out tax free and buy more. If it's a good deal, jump on it.

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    2y

    Investors buy when properties meet our return hurdles.  Our actions and decisions matter a lot more than the conditions.

    0Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    2y

    @Thomas McNeil Good on you to ask here on BP

    You left out a lot of important information to help you. I would love to learn what your goal is for this deal? Based on that goal it would be easier to tell you how well or not it might work.

    1. you said you like to do a multi-family house hack. IS multifamily 2,3,4 units or more?

    2. Do you have construction or renovation experience? If not, how do you plan to pay for the hacking?

    3. How much $$ do you have beyond the 25% down payment and how is your calculation during the hacking time. Do you keep some units occupied and get rent to cover financing costs, insurance, property taxes, etc? 

    4. Have you run a calculation of the end result of your hacking including the probably insane property tax and insurance costs when you refi to your after repair value?

    5. Other aspects not mentioned so far, like post-hacking rent level expectations, type of renting (STR, MTR, LTR), etc.

    Bottom line is the goal. If you were to say you re looking to generate passive income that is totally different than selling the renovated property for appreciation in value, or any other goal, so that's the main issue.

    As soon as you describe your goal and answer the question above and more, you will get wonderful support here.

    Overall it's a good time to invest if you can afford it and get into deals that work at the day of purchase. I always tell all my clients: "We only invest in deals that perform from day 1"

    If values increase, interest rates come down, etc. those deals will only work even better.

    0Reply
  • Morgan Gutierrez
    Wholesaler · Texas, USA · Member since 2022 · 139 posts · 40 votes
    2y

    Even though interest rates may drop some... they likely will not go back to the 3% range considering the events that would have to happen for rates to drop that much. Like other people have said here, if you can comfortably afford it now then it is a good time to buy and if it is a good deal now, it will still work despite what interest rates do in the future. 

    I feel like purchasing off market for your primary or a house hack is ofter overlooked, but a great way to get a bit lower of a purchase price depending on how much repairs, if any you are willing to do. 

    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    2y

    @Morgan Gutierrez You can not perfectly time the real estate market. 

    Set your buying criteria and put any property that meets those set criteria under contract and you will thank me later.

    You have to be realistic though so you don't waste your precious time chasing what does not exist.

    Goodluck.

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  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    2y

    @Stephanie Walker put it perfectly. The best time to buy is when you can afford it. No one really "knows" if rates are going to go down, or when, or by how much. But what we can predict is that a lot more buyers will jump in when they do and that usually has the effect of turning it into a seller's market because now there's more demand for the product. So while you might find yourself with a lower interest rate than today, you also may end up paying more for the same property. IF you can afford it, don't wait for interest rates to come down. VERY few individuals can time the market - even the ones who have been doing this for a long, long time. 

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  • Julien J.
    Investor · CO · Member since 2016 · 757 posts · 1k+ votes
    2y

    @Thomas McNeil

    No such thing as best time buy, especially a house hack. Find something that works for you and pull the trigger.

    2Reply
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