With the current housing market should i wait to do my 1st flip?

Question

Hello BP, I'm writing to find some guidance and opinions for my first deal based on the state of the housing market. getting my first property right now as a college student in this market is daunting to say the least. I know its possible but I'm wondering if it's smart. I'd be investing in Washington, Missouri a medium sized up and coming town I grew up in and i'm weighing my options to pull the trigger and get a property or to wait for the market to level off. But I've heard everything from "the market is going to keep rising" to "it will drop by Christmas."

Obviously no one knows what the market will do but I'm curious to hear any opinions the community has!

Obviously no one knows what the market will do but I'm curious to hear any opinions the community has!

Joe Villeneuve · Answer

"The things that come to those who wait, are the things that are left behind by those that got there first"                                                                                                                                  - My tagline on my emails

Steven Foster Wilson · Answer

This is the best time to do a flip, reason why? The housing market is going up, meaning your sale price will tend to be higher! The issue as always with everything Real estate is how to buy it cheap. I buy flips and long term buy and hold in Columbus Oh and I couldn't do it without finding off market deals. Alot of that comes from cold calling and direct to seller marketing, however if you dont want to put in the time learning, Id suggest you connect with an agent that does alot of off market deals or a wholesaler.

Theresa Harris · Answer

Run the numbers based on the current market and see if it would make sense.  If you are a college student and can afford a home, why not buy a duplex or house where you can rent out part of the house and reduce your living expenses?

Kevin Scott · Answer

Your concerns are valid, but they will likely always be a concern.  If the market is dropping you likely won't guess the bottom exactly and if it bounces up you will wonder if it is short term. It's probably more important to go over what you would do if it goes bad.  Regardless of market conditions you can end up with a bad deal.  So knowing what you would do with a bad deal now should help give you an idea of what might happen if the market tanked (making your deal now bad). I think the biggest concern is what strategy to start with.

Your credit, personal income and savings or buffer should be considered.  These things (whatever the answer is to them) shouldn't stop you from doing your first deal, nor should they give you a pass to do any deal.  They should however affect how you do your first deal, or what strategy you use.  Other things that might matter are your risk tolerance and ability to bounce back if everything goes south.

You should definitely consider doing deals now and all the time.  Your personal situation might just affect how you exit or refinance deals if you get a bad one.  Whether you will be able to keep the deal as a rental by refinancing out of hard money. Or if you have the money to eat the loss. Maybe you need to find a money partner or a bunch of friends that are willing to go in together to limit the losses or maybe even just pay cash depending on the friends.   It's hard to say without knowing your personal situation.

Jim Kalish · Answer

Welcome to a great business. Starting now will make your life unbelievable.   I was at one of my rentals today, a triplex that is a gold mine, now. Whole driving the neighborhood my son said why didn't we buy 5 more 10 years ago. Don't try to time the market. You will never get it right. The key is finding a good deal. Run the numbers and if you find something now is the right time. And the suggestion to buy a duplex or a house you can rent rooms to other students is a great idea. So what if the market drops by Christmas?  If you do a good job on fixing it up and find good renters you can ride it out. It will never be the perfect and safest time. There will always be a risk.

Joe Villeneuve · Answer

How many different strategies do you know?  Flipping, holding, refinancing, are NOT strategies.  They are strategy categories.

Jaron Walling · Answer

If you're looking for excuses to NOT do something you'll always find one. The most experienced investors are always buying. The speed at which they buy depends on market conditions. The majority of investors are buying at a snails pace. The markets are over-heated but it won't always be that way.

The best chance to find a deal is local. Look under the table, under the carpet, under the subfloor, and find a deal that makes sense for you. "House-hack" a SFH or a duplex property. Save some cash while attending school and pay down the property. Hold it as a student rental. That's a great way to get started in REI. Be ready to make sacrifices otherwise you're probably not ready to buy.

Travis Hanson · Answer

Never wait to buy real estate.  There are always deals out there, not matter the real estate market is telling you.  We buy several houses a month, including flips, regardless of what the market is telling us.  Search hard for the right numbers (they won't be as good as they had been in the past) and just go for it.  Otherwise, you might find yourself never making the move to get started.  Good luck!

Todd Powell · Answer

@Amy Frisella you can never time the market and RE over time is a solid investment. I would work to find a off market deal not on the MLS at a discount that needs a little paint, yard work, etc.  Even if the market levels off, no one can predict a drop. I like buying at discounts and that also covers your margin of error so to speak.

Jon Kelly · Answer

@Amy Frisella the reasons not to buy will always exist if you're looking for excuses.

If you find a good flip opportunity with numbers that make sense, why wouldn't you move forward? You'll have the property rehabbed and sold well before Christmas, so who cares what prices will be at that point.

If you want a safety net you can look for flips that meet the 1% rule of rental income to purchase price (e.g. $100k property should rent for $1k). In case the market cools off while you own it you can always turn it into a buy-and-hold and rent it out.

With the current housing market should i wait to do my 1st flip?

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