Is Multi Family Excitement / Prices getting ahead of itself?

[Michael Zuber]

I suspect a lot of folks who come to BiggerPockets are like me a Busy Professional who works 60 Hour Work Weeks, has a growing Family and is Desperate to find some type of Side Hustle that can over time establish Financial Freedom.

As real estate investing comes in vogue again I am seeing lots of excitement around buying units and big units as a first investment.  I get it, owning an apartment building is exciting, the value add possibilities are outstanding if purchased correctly and the cash flow can be life changing.

However after 15+ years of investing and owner of small apartment buildings I can tell you the excitement is getting a little a head of itself.  Frankly I see a possibility if the trend continues that Multi Family Properties will be over priced but still purchased by new investors (Think Single Family Homes in 2008).  This will lead to 1-2 years of hard lessons learned before investors either give up and sell at a loss or give it back to the bank.

Running Apartment building in C class areas is hard work and you should never pay A price Cap Rate is C Class Areas.

In the end run your numbers, don't get excited by Excel cash flow and please don't over spend because of bidding wars. Sometime losing an over priced property is the best option.

Remember: One Rental at a Time only works if you can hold for the long term through any market gyration 

Z