Is the good time about to come?

Question

Hey everyone,

This is just a random question. And here I refer good time to buy the Buy and Hold investments. This question is for Charlotte Real Estate investors, gurus, and agents.

So, I've been reading the news about the whole real estate scenario lately. This includes home prices, interest rates, etc. everyone is saying that now is not a good time to buy deals as the home prices could fall more in the next 12 months. Also, I talked to a local real estate agent(Charlotte area) about buying my first duplex for house hacking. I asked her if I should wait for a good time to come And she said that Charlotte's RE market is significantly going up as people are moving to Charlotte from other areas. Therefore, even if the RE market crashes, Charlotte will be one of the least affected.

Is that true? Being a first time home buyer, I don't want to take any wrong steps which could hurt me. Should I go and search for good deals or I should just wait and increase my knowledge for now?

Nasar Elarabi · Answer

The GOOD Time??? UHHHH, you do know we been having the good time for at least 8 years. RE has been going up since 2012. The market has been in our favor for long time so much that you could mess up a rehab but the home prices were still going up so you still made money.  Shift happens and thats what we are leaning too. Also, its never a bad time to buy a GOOD deal. Charlotte has advantages that other markets would never have. So betting on Charlotte RE at discount prices is not a bad play.

Joe Villeneuve · Answer

If you're talking about health issues, then no.

If you're talking about REI, then yes.  Nothing has changed except the markets, and the strategies.  A good deal is a good deal.

Evan Polaski · Answer

@Yashank Choksi, in general the consensus seems to be that prices likely won't rise dramatically over the next 12 months.  Could they fall?  Yes.  Could they stay flat? Of course.  Could the economy rebound quickly and go on another wild ride? It is possible.

Right now, in a lot of primary and secondary markets, demand is still incredibly high for housing.  While demand is down somewhat, supply is down even more.  In my market (Cincinnati, OH), we have less than a 1 month supply of residential property for sale.  Owners don't want people in their house, so they aren't listing.  Because of that, pricing is staying high.  Mix that with incredibly low interest rates, and you have a strong sellers market.

Combine that with a fed basically saying they will do whatever is necessary to keep the economy afloat (read that as keeping rates low for a while) and I don't see prices on the aggregate falling for a while.  BUT, there are still deals to be had, you just have to hunt for them.  There is a landlord that bought a duplex thinking he could raise rent to $1,500/mo and can't, so needs to sell.  There is a parent moving to a nursing home and the kids don't want the outdated house that is paid off.

The moral of the story is I don't think now is necessarily a bad time to buy, if you can find a property that the numbers work.  House hacking a duplex you are almost guaranteed to be cash flow negative, but that is not the issue.  If your out of pocket is significantly less than renting somewhere else, and you are creating equity and getting some tax benefits from it, you are still ahead.

Nick C. · Answer

"everyone is saying that now is not a good time to buy deals" - who is everyone and where are you getting this advice? I disagree, I always think it's a good time to buy good deals. Especially if the reason is "prices could fall in the next 12 months". That statement is always true, so by that logic you would never be able to buy anything.

I am no expert on pandemics, but I keep thinking about supply and demand. Supply is almost non existent in many markets (the ones people should be buying in anyway), and demand is outrageously high, especially for entry level properties that hedge funds are salivating over. This may change eventually, but until it does I just can't see how prices are going to drop.

Account Closed · Answer

@Yashank Choksi - In regards to waiting and increasing your knowledge: First, where do you want to be in 12 months? First property? Fifth property? With that goal in mind, consider the costs of action. But just as important is the cost of inaction! What is the cost to you (monetary, mental, emotional, time/freedom, etc) of waiting and staying where you are? If you want something different, you have to do something different.

So my guidance would be that now is the best time to act. Find a market that will allow you to cash flow, obtain appreciation, and have a low price entry point (best for new investors) and get over the hump of the first property. The BP community can help you along the way, but you have to commit to yourself first. You can do it!

Joe Villeneuve · Answer

Ever notice how often this person named "everyone" is used as some sort of expert...and yet they are usually the least knowledgeable (I'm being nice here) person in the room?

Royston Lobo · Answer

Is your goal is to buy a duplex and live in 1 and rent the other unit ? Do the numbers work out? Where does this fit in your investment goals for the long term?

Antonio Cucciniello · Answer

@Yashank Choksi One don't listen too many people's opinions on the market.  Only glance at it, understand why they are saying it and then make the decision for yourself.  But one thing that frustrates me is seeing beginners getting worried about the home value dropping over the short term.  If it drops, but you are planning on buying and holding, then why does it matter? If it cash flows or in the house hack case allows you to live for free then it does not matter (in my opinion, take this with a grain of salt as well)

Nasar Elarabi · Answer

the advantages I speak of are people constantly moving here and we have a growing local economy! Once the shift officially happens prices may dip but stuff will still sale..

Yashank Choksi · Answer

Haha, I totally agree with "if the reason is "prices could fall in the next 12 months". That statement is always true, so by that logic, you would never be able to buy anything." That is just so accurate.

And Nick, Could you tell me more about the usage of a hedge fund in REI. I just saw one podcast of bigger pockets and there were also talking about that as a guy started in REI with the help of  the hedge funds.

Is the good time about to come?

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