Buying in this current market

[David Yandel]

Hey BP crew! 👋🏻 

Im looking to invest in a property to start building my portfolio. To start, we’d purchase a home (preferably a multi unit) so we could make it our primary for the first year, then move on and use it as a rental. The question I have is regarding the current rates… they are either hovering high 6s or low 7s right now. As the saying goes, the best time to buy real estate was 20 years ago, and the next best time is now… but with these interests rates I’m curious if it makes sense buying and then if they drop later refinancing to the lower rate, or just hold off purchasing until the rates (hopefully) come down a bit. However, I feel this won’t be for another few years and I want to start building my portfolio sooner rather than later. Is it ok to be bullish in this bear market? Or would it be better to wait for the rates to level out? 
just trying to avoid making a bad decision that would hurt me later. 

[Nathan Gesner]

Quote from @David Yandel:

It's all about the math. Right now it is typically much cheaper to rent than to buy. On the other hand, your rent payment will be part of the investment property income, so the numbers may work.

Example:

A fourplex costs $500,000. You put $50,000 down and mortgage $450,000 for a monthly payment of $3,000. Taxes are $500 a month and insurance is $250 a month. Landlord pays for water and some common area lighting, $100 a month. Total expenses: $3,850.

Each unit rents for $1,000 a month. Including your monthly rent, the property has $150 cash flow. 

This is a very simple scenario, but gives you an idea. If the units rent for $1,200 a month, it could be a really good deal in today's market. If they rent for $900, then it could be a stinker. The math will tell the tale.

When analyzing, assume little/no appreciation for 3-5 years and anticipate rents will stagnate. If those numbers work, you should be safe.