Does it make sense to invest in real estate in 2018

[Animesh Das]

Hello,

Beginner real estate investor here.

I have 2 condos in bay area, 1 in fremont, and 1 in hayward, I bought fremont one in July 2012 and hayward one in Oct 2014.

I am considering selling both and consolidating into to a multifamily property ( 4 or more units) in bay area, or 6 or more units in Sacramento area.

I have 1.5M budget, with 25% down payment and and rest conventional financing.

But looking at the cap rates, GRM and net income listed on sites like redfin and loopt, I am wondering if it makes sense to invest in real estate in 2018.

The property prices are very high and there will be barely any returns after expenses.

So need the advice of pros on this forum. Does it make sense to execute my plan in 2018? Or should I hold on my existing condos? Or should I sell but invest in mutual funds.

Any advice is highly appreciated.

Thank you,

Animesh

[Gordon Cuffe]

@Animesh DasYour allready invested in real estate in 2018. The question is do you just keep what you have and watch your loan balance go down over the years or do you try to speed up the equity creation process by investing somewhere else in real estate. It seems crazy to sell, pay taxes then invest in mutual funds considering the dow dropped 666 points on friday. We have seen a 9 year run up on the stock market. How much longer do you think that stocks can run up from here?  Could you deal with investing in stocks this year and watch your portfolio drop 10% to 15% next year. If you can stomach that drop then invest in mutual funds. You can do a 1031 exchange so that you dont pay taxes then invest the proceeds in another market. Sacramento has cap rates a little better than the bay area but our values are on the 6th year of price appreciation so it will stop or slow down as mortgage rates go up. If you want much better cash flow then you should consider buying a multifamily in a mid west city like ST Louis or Kansas City. Kansas City has seen price appreciation since 2014 plus better cap rates than CA. If you want to determine if Alameda county values have peaked and are expected to drop ,you should look up and follow a real estate investor named Bruce Norris of the Norris Group. Not related to Chuck. He has predicated CA market drops since 1989. He looks at data from the Southern Ca, Northern CA and bay area to see when there might be the next drop in values.