Is the Market Too Hot to Invest?

[Chris Gorman]

Hi!

What are people's thoughts on investing in this market? I'm hesitant - should I be? If I'm a buy and hold multi-family investor, should I care about buying at the peak of the market (which I believe we're at) if my cash flow is acceptable? Prices seem to be insane in the northeast (NYC/Boston/Philly/DC). If I'm looking at comps to help with my decision making, but those comps are also inflated, shouldn't that give me pause?

Would love your insight.

Thanks,

Chris  

[Michael Enriquez]

when analyzing deals in NYC you can't approach it with the cash on cash ROI as your driving metric. Yes, you don't want to end up buying a dud that never cash flows but this is more of an appreciating market than a cash flow market so using Internal Rate of Return would be more suitable.

It should be noted that prices MAY hit a plateau for a bit here as the Fed is anticipating 3 interest rate hikes for 2017. Good news, however, is that if you're considering using an FHA loan to house hack the federal housing administration just lowered the annual PMI premiums on FHA insured loans that close on or after 1/27/17 from 85 basis points down to 60 basis points if you put less than 5% down.