Los Angeles, CA · Member since 2017 · 5 posts · 1 vote
Hi, I've been learning for about a year about real estate and I am very interested in investing in multifamily rental properties. However, we all know that real estate have cycles so I was wondering should I invest now? or I should wait for a crash and learn more meanwhile?
Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
7y
@Bashar Azzu
I hate hearing people say “wait for a crash”.
You should never wait. That’s lame.
Always be hunting for a deal, stick to your criteria. In This market maybe you get one deal per year. In a “crash” maybe that equates to 10 deals per year.
If you just “wait” then you won’t have the experience or the network (not to mention capital) to be able to take down 10 deals a year if/when the crash finally comes.
Telling yourself it’s ok to wait is just an excuse for inaction. Take smart, prudent action instead.
Rental Property Investor · NJ/PA · Member since 2016 · 555 posts · 149 votes
7y
Do you have enough cash to do something during a crash ?
During a crash, not many owners like to sell for cheap; they will just keep it. During a boom like now , sellers like to sell to lock the profit , so more listings at higher price and more inventory for buyers.
Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
7y
@Bashar Azzu Multifamily (5+) market have cycles by area, so there maybe market crush today in one area and expansion in another area at the same time.
I would suggest learning a little bit more market cycles and once I have an area you are focusing on to know where it is in the cycle now.
Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
7y
@Bashar Azzu
I hate hearing people say “wait for a crash”.
You should never wait. That’s lame.
Always be hunting for a deal, stick to your criteria. In This market maybe you get one deal per year. In a “crash” maybe that equates to 10 deals per year.
If you just “wait” then you won’t have the experience or the network (not to mention capital) to be able to take down 10 deals a year if/when the crash finally comes.
Telling yourself it’s ok to wait is just an excuse for inaction. Take smart, prudent action instead.
Rental Property Investor · Columbus, GA · Member since 2016 · 634 posts · 337 votes
7y
Like Kyle said, stick with your investment criteria and keep looking for deals. A better question is when do I stop investing in the stock market and funnel the money into a real estate portfolio. I struggle with this sometime. Do I continue to max out my 401K plus another 6k in a Roth IRA or shift all cash into a savings account and build up a hefty down payment.
Rental Property Investor · Annapolis, MD · Member since 2011 · 232 posts · 170 votes
7y
@Bashar Azzu no do not wait. Yes RE is cyclical but that doesn’t meet you only buy at the bottom of the market. No one has a crystal ball and you can’t time the market. If you wait until it hits rock bottom you may never get off the sidelines. There a deals out there you just may need to look through a heck of a lot more now than you did 3-5 years ago. Don’t wait. Educate yourself and get in the game where it makes sense. Learn, grow, invest, and you’ll be more prepared if/when there is a downturn than you would be if you just waited.
Rental Property Investor · Fort Wayne, IN · Member since 2016 · 258 posts · 177 votes
7y
@Bashar Azzu with the crash if there is any ,we do not know whether it is going to be the crash or correction and correction is good .But if there is a crash there are other that come with the crash too like cash crunch,liquidity and lack of confidence in the market so it is always a good time to buy as long as there is a good deal. Sometimes those sit there and wait never catch the bus and keep waiting for a good time and they miss the good timing because of the fear in the market.The sooner you start the sooner you succeed and make sure to do stress test on your deals for the dip.
New Rochelle, NY · Member since 2018 · 235 posts · 151 votes
7y
@Bashar Azzu the crash could happen tomorrow or it could happen 5 years from now. You have to ask yourself if you want to wait that long. I would not wait.
Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
7y
@Bashar Azzu
Here’s the thing. Why wait to get in the business? Yeah it may be cheaper to get in in a recession, but it is also harder to get loans and know when the recession may or may not come. For all we know you could be waiting 5 years to buy a property in a recession, while I have hit my 1000 unit mark in those 5 years. The best investors know how to invest in all market cycles!
do you currently own and operate, or is this your first deal? You cant go into a "crash" without a track record and expect to take down first time deals.
Do you have enough cash to do something during a crash ?
During a crash, not many owners like to sell for cheap; they will just keep it. During a boom like now , sellers like to sell to lock the profit , so more listings at higher price and more inventory for buyers.
I bet no recession in next 5 years.
What boom? Economical data both globally and nationally have been slowing since last summer.
Hi, I've been learning for about a year about real estate and I am very interested in investing in multifamily rental properties. However, we all know that real estate have cycles so I was wondering should I invest now? or I should wait for a crash and learn more meanwhile?
Thank you!
If you have to ask this question... I would say wait. There are lot of other assets or investment vehicles that can be purchased such as stocks, flipping cars, flipping rvs. Etc that are not as much of a long term investment vehicle.
No one can predict a crash. Period
However there are currently lots of indicators of a recession looming which is different then a crash.
It is and has been a sellers market for real estate....meaning deals are harder to find.
Multis it becomes a little more complex, rents typically don't decrease in recession, depending on your asset class.
So they can be a nice safe haven, they will also protect you against inflation.
However I would first consider looking at your overall finances. What is your debt to equity ratio, debt to income, where are your cash reserves at. Are you positioned defensively or aggressively.
Typically in late cycles risk reward factors would point towards waiting on purchasing any major purchases. However if its truly a deal and not speculative deal. It may be worth jumping on. For example even though the market is over bought. Boeing was not after the 737 crash.
I personally am in a holding pattern and am paying off debt to get into a more defensive position. I am still doing flips but have slowed my growth to one flip at a time. I am focusing on generating Cash through my contracting business. To increase my cash reserves.
A good place to put money right now is in federal bonds. The TLT can be purchased through the robinhood app. JMO
Realtor · Minneapolis · Member since 2018 · 35 posts · 39 votes
7y
@Bashar Azzu , real estate investing is not like a lottery. As an investor, your job is to analyze businesses (rental properties in this case), understand the economics that make it run, and then decide whether or not it's worth acquiring. Sure, it's nice when businesses go on sale but as others have said already, it's much better to set your investment criteria and buy when you find something that meets it.
Los Angeles, CA · Member since 2017 · 5 posts · 1 vote
7y
Thank you everyone for your contribution to this thread. I found your input highly valuable. I will learn more about my niche and invest right when a good deal comes by.