All Forum Posts by: John Colburn

Can you time the real estate or stock market exactly - certainly not.   There is no way that anyone can predict the exact peak of the market.  

That said you can tell when the market is close to its peak.   

A good example is a property I have now.   In 2005 the market was hot very similar to todays market the house sold for $279K to a first time home owner.   The market tanked and the family walked away from the home and I purchased it in 2010 for $135K.   Now the house is worth $350K.  

Timing here makes all of the difference.  For the first time home owner buying at the peak will have a life long impact with bankruptcy and investment lost.   I was lucky and was able to buy at the right time.    

I would keep the cash in the bank, and wait a year.   The market is overpriced.   

Both have their advantages.   The multi family will generate higher cash flow, and if one tenant moves out you still have cash flow from the other units.  You tend to have more problems with family's living right next to one another in apartment buildings   

Most folks prefer to live in a single family property versus a multi family.  The single family houses are much easier to sell.  The value of a home may appreciate more.   The value of multi family is based on it cash flow.  

That is a tough call.   The worst thing to do is overpay $100K on a property to save $30K in taxes.   Personally I think the market in MA and RI is overpriced and ripe for a correction.   

Housing prices wont go down for a few years.   It will get to a point that there are no buyers, but for the first couple of year sellers will not be willing to lower prices.    In year three when nothing is moving people will start to walk away from properties when they realize the market value is much less than what they owe.   I have been through this cycle at least three times most notably in 2006.   

I always tell my children the time to buy stock or houses is when no one wants them, and the time to sell is when everyone is buying.    Right now everyone we know is buying stock and real estate and making money.  

The most important answer to your question if you do not have discipline to hold on to the cash you are much better off with a 1031.   

There are too many unknowns with the economy right now.   I would be patient and hold on to your cash.  I know it does not feel like the right thing as real estate is super hot and you feel like you are going to missing out.   

I have been through market highs a few times, and this is how it feels before the bottom drops.

I would be concerned the cleaners left the comforters in that condition for the guest.   With Covid we clean the comforters for every guest.   Guest now more that ever take cleanliness very serious.

Someone earlier mentioned having two sets of sheets that you can have the cleaner take back home and clean during the week.   This is much more efficient, and has been working well for us this year.

My biggest concern is not receiving a 5 star rating, and I know someday it will come.   

This will be considered a commercial loan.    It may be easier to find out which bank the current owner is using and use that same bank to finance the property.   That is what I did when I bought my first 6 unit building, and it was very easy.

I agree the real estate market is red hot.   The challenge is that real estate prices will take 3 to 4 years to go down, and it will not happen in 2021.  

A good example is in 2006 the market was super hot.   Everyone was making money and felt the market will continue rising for at least a few more years.   Housing prices remained high from 2007 through 2009, but there were no buyers and the sellers were not willing to lower prices and take a loss.   In 2008 folks realized the prices would not come back and started to default on the loans.    House prices did not go down until 2010.   From 2010 through 2013 there was much value in the market. 

Timing may not be on your side if you sell and wait for the market to go down.

If you follow the basic requirements such as income, credit ratings and background checks you should find good renters.   This is not a perfect world, and it will be hard to find the perfect applicant.   Many will have less than perfect credit scores which is why they are renting and not purchasing a house.   

You will also learn a lot through meeting with potential tenants and having conversations.  I always look at the car they drive is a clean and neat or a mess inside.

Also it is very important to check references.  

In your case with student housing there may not be as much risk with the parents responsible for the payments.

Renting is very much like dating.   The tenants that you want are very hard to get, but the tenants that you don't want you can't shake.

Best of luck

I can not speak for other parts of the country, but in the Boston market there is a real possibility that universities will not open in the fall.    The business I am in provides services to universities and I can tell you that several schools are strongly considering not opening dorms in the fall.    To the extent that they have notified us of their intentions.