I read the beginners guide, and it kind of advises not investing?

Question

I read the beginners guide to real estate, and based on my interpretation of the section about the RE cycles, it seems pretty clear that this is a "Bad time to buy"

However, I also read the section that "Not acting" is pretty much the worst thing to do.

This is creating paralysis from analysis! (also what the guide talks about!)

So whats your take... is this an awful time to get started since the property values are so high and the appraisers aren't appraising as high as the purchase prices? or is this a fine time as long as your smart and don't do anything stupid?

Is it worth waiting for the market to decline, or should you move simply because procrastination is more painful than a bad move?

Jay Hinrichs · Answer

I think it somewhat regional personally.in markets that are pretty stable no real ups and downs.. what does it matter your just looking for a certain rental return on a certain quality property.. if the property hits that then fine.. being those markets don't top and drop just kind of trundle along.you only take a loss if you sell for less than you paid or if you have a non appreciating asset and you HAVE to sell in 3 to 5 years your probably going to lose money..but if your long term buy it and pay it off.. in other words have enough rental income that your tenant paid it off.. and so your tenant paid off say 80% of it and maybe 100% of it.. who cares what the market does even if it goes in half you still made money because your tenant paid your house off. And I am assuming your in the 90% of investors that is just looking to be a landlord.were you have to be more cognizant of market trends is what we do.. value add building new construction land development ext.. those are much more risky in fluctuating market.for us we are gung ho on 2018 and probably most of 2019... sales are brisk in Portland prices up 20% from last year and sales are steaming.. but that's more of a business not just buy and hold.I have personally been in this game for 42 years continually and have bought, sold, rented, loaned money and cut timber in every year .. regardless of what was happening.. changed models yes but always doing something. 08 09 were bloody aweful though no getting around that we got our butts handed to us.. but no one is predicting another melt down anytime soon

Brian Bradley · Answer

@Brooks F. It's an overview of real estate investing. Their will be ups and downs. Their will be cycles like in any market. You will win and you will loose. The name of the game is to one act, and two act informed and with as much information as you can to limit risk. Nothing you do in life is guaranteed. Trust your numbers and the work and education you put into your investment and jump. Just don't jump if you are not doing your homework and numbers. If you're market is not stable or you can't find a deal that works for you, or you feel your market is overpriced, then go find another market. Deals are all over, not just in your town, city or state. Just identify your business plan and the type of investment property you want to invest in, the class of property and class of renter, if you want turnkey or to do some work, and stop over thinking, crunch your numbers and get going. Know what works in your market and what does not and don't be afraid to find other areas. If you don't want to be a land lord, consider investing in underperforming notes (first and secondary). Lots of great info starting to get written about it on BP.

Brooks F. · Answer

Thanks for the thoughts.I don't know if I want to be a landlord yet. I own some NNN Commercial properties but I don't trust commercial long term in our market, and thought residential is safer, but I'm looking at medium sized properties under 1.5M. Seems like the apartment complexes in the 500-1.5m range just move in seconds and sell for ridiculous premiums that seem to break all the 1%/2%/etc. rules of investing. But I think your probably right, that its better to look around and be smart than just try to wait out the market, so thanks for the thoughts. My RE is trying to convince me to buy some unrented apartments that need to be completely overhauled, but that seems like a lot to chew for a first residential property, but that might be worth tackling. Found one for $200k that he thinks only needs about 100k to get value it around $500k and bring in 8400/mo in rents. thats a 10.08 cap rate, but a 17% on the investment amount. I'll save that debate for another forum though.I should have thought that way but paralysis by analysis seems pretty common in this industry! Thanks for the thoughts. My response to you is about the same as it was to @Jay Hinrichs! Your right about playing the current market instead of waiting for the market to align to you. Thats the same thing I'd tell someone else in business or stocks, so why would this be any different!Thanks for the thoughts!

David Dachtera · Answer

@Brooks F.,It's always a bad time to buy things the wrong way.The "trick" - if there is one - is to learn how buy in the current market. As the market changes, so must your strategy.As @Jay Hinrichs pointed out, it's going to be local as to what works where and why in any given market. Here in my area, dearth of lending is a HUGE handicap right now. So, we're working around it by focusing on owner finance strategies and private lenders. Others are finding success with other strategies in this same market.Dunno if this helps ...