LION IN THE WEEDS

[Brandon Skidmore]

Looking into building my next Empire in multi family, I have been networking heavily with high school and college friends that have spent there career in the space.  As i'm anxious and ready to write checks, they are all signing the same tune "Be Patient", "There will be blood in the streets" "It's Coming" "Don't Buy" just be a Lion in the weeds watching and waiting for the kill. Now I can understand everyone is an expert in their local market and deals are always going to be available, but with cost basis in mind who else is "Being Patient"? And what is the time horizon for market shift? 18,24,36Mo whats your thoughts?

[Joel Owens]

Depends on your market. If you are talking California that is very overpriced right now. All my clients are selling at 4 to 5 caps and buying out of state doing a 1031.

The Iranians and Chinese are buying many of these properties. Where they are from the U.S. is a safe harbor doing better than other parts of the world for stability and returns. So they tend to be happy to buy at a 5 cap and with rent grow eventually have a 7 percent return etc.

Many pay all cash and then just refinance out or do a smaller loan in the beginning. There are still parts of the country where multifamily makes sense. It is at a peak in some cases and areas.

Investors typically buy just a few that are still deals in the hot markets and then either change asset classes more at the bottom to buy or wait until the markets go down and gobble up a bunch then.

You never just buy to buy in a market people say "can't lose".  You get stuck with high debt, no equity growth, and declining rents that way. That is where the famous words "upside down" come in and if you do not have holding power for the next cycle to regain back up what you lost then you are in trouble.