Hottest market in decades. Buy now, or wait it out?

Question

Hey Bigger Pockets,

I live on the East Coast of Canada, specifically Nova Scotia. As anyone in the areas knows, the housing market in Halifax has gone absolutely ballistic over the last year or so, way beyond anything it's ever seen before. At least part of it seems to be fuelled by people fleeing more populous, richer provinces, like Ontario, for an area that has been relatively spared by COVID. Things are flying off the market at prices waaaay over asking, sometimes 30-40% over.

It just so happens that I hit a point financially where I have the money and interest to purchase some investments properties, but I'm wondering if waiting for things to calm down a bit may be better than diving in in the middle of the hottest market the city has ever seen. The risk, of course, is that even if things slow down a little, the prices won't really dip, meaning that delaying just results in me paying more.

Thoughts? Any one else looking at the Halifax market? Anyone else with a similar experience elsewhere?

Thanks in advance.

Jordan Perry · Answer

Hey Christopher,

I am a mortgage associate/ investor so can speak from experience when i say that this is happening all over Canada right now. For whatever reason, real estate investing has never been more popular and on top of many people fleeing more expensive provinces, many are also looking to invest out of province in less expensive markets such as N.S and New Brunswick. I always caution my clients not to buy based on the appreciation, but instead, base your return off of the income that the asset produces for you I.E the CASHFLOW and principle paydown ROI %.

In my opinion, regardless of purchase prices, if the numbers make sense to you, it can be a good buy.

I myself own a few properties in Nova Scotia, but have had a hard time lately making the numbers work, so last year i started investing in New Brunswick. The purchase prices are much lower there than the HRM and i have been successful thus far in my search for cashflow, as have a number of my real estate investor clients.

Halifax is going to be tough in my opinion to get anything with alot of cashflow, but it is still possible.

I love to quote Jason Hartman at times like these:

"Dont wait to buy real estate, buy real estate and wait!"

When your return is based off of the income and not the actual value of the asset, even through a down time if property values decline, you will still be making your monthly rent and can ride out the wave.

Those are just my two cents on the matter, but i know many others are having very similar struggles as you. ITs easy to get frustrated, but you can feel good with the fact that just for expanding your horizons, learning and exploring real estate investing, you are already part of a very select few, so congrats!

Feel free to send me a P.M if you want to chat!

-Jordan

Christopher Bebbington · Answer

Yeah, deal 1 is a bit intimidating. I'm fortunate that I'm not really in a huge rush, and that I have a bit of flex room, even if the deal doesn't turn out to be perfect.

Yeah, Stefano, it's quite possible we're looking at the same stuff. I haven't been bidding quite that much, but I've had a few failed attempts over the last few weeks as well. I'm just trying to stay level headed and within the math, so I don't regret anything. I'm sure it will work out, even if it takes a few more tries.

Dominic A. · Answer

@Christopher Bebbington

I’ve been investing for years and I’m in the same boat with (and possibly bidding against 😬) you.

I’m averaging about 3 offers a week and still getting beat out at the last minute (...it’s possible I’m too cheap though lol).

I agree with the above notes that waiting it out might be a mistake. I wish the market was going to cool long enough for a few great deals but it might be a long time, maybe never.

My suggestion is decided what your willing and able to offer; and just keep going until it works out. You don’t want to go bust paying more than the property is worth to you (and make no mistake, some investors may have plans for the that make it far more valuable to them..just means it wasn’t the right spot for you).

It can be a lot of work and stressful at times, but the rule I was taught when starting out is “don’t get emotional about real estate.” Just keep going along, keep your head steady and eventually you’ll connect with the right deal.

Reaching out on BiggerPockets is a great first step.

Ryan Kenneth · Answer

Hey Christopher,

Making that first leap can be daunting,  I found the best way to minimize *some* of the mistakes is to analyze numerous properties before you pull the trigger.  I'd often find small details in the expense reports of properties that I was not offering on that would add context or help me ball park expenses that I couldn't track down exact numbers for on the property I eventually offered on. You have an advantage in that it sounds like you plan on investing in your backyard so you will be somewhat familiar with things there. Best of luck.

Roy Cleeves · Answer

I agree with you. invest what you can and what you are comfortable with. good luck!

Christopher Bebbington · Answer

Yeah, all of that seems to make sense. I think it's just unfortunate timing for me, finally having some cash to make a move and it just so happens to be the craziest market Halifax has ever seen (to my knowledge, at least). I've done my best to learn the math and the basics, but the only real way to learn this is probably to read, read, read, then ultimately just dive in a make the same mistakes that everyone else made the first time in. The math is easier to make work the more units per property, but I'm a bit hesitant to start big; if I'm going to screw up a bit, I'd rather screw up small first.

Even if the market slows, I suspect prices won't actually drop, just the ascent will slow.

Roy Cleeves · Answer

I agree with Jordan.  I am buying in Halifax right now.

4 deals closing on March 31st.  And putting more under contract before prices go higher.

Hottest market in decades. Buy now, or wait it out?

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