“investors” keep telling me to wait to buy because the prices will fall. . Anyway, I know they are wrong but I can’t articulate why. Can someone explain why I should not wait?
I figure that there are always deals and to wait would be missing money.
I agree with your comments about there always being deals. Although I’ve found that they have been hard to locate and take lots looking. I suggest that you keep looking at properties and stay with it. You never know what house could be your next deal and make you a good profit.
I’m new at rei and found it to be very frustrating. Yet I continue to be motivated and continue to look at properties, talk to investors and real estate agents, and most importantly learn my market. I want to get to a point where I can go through a house and be confident about what its after repair value will be.
The short response, keep looking at properties.
Brian
You should probably wait about 80 or 90 years to purchase your first investment property. While it’s plausible the prices will drop in the near future, the investors are telling you this to keep you out of the game.
Value is really only perception. The media says that real estate sucks, therefore buyers aren’t buying. Foreclosures will increase when the horrendous mortgages start catching up with borrowers, further perpetuating the downward spiral. I think I read from previous posts that you want to hang on to some rental properties. If you were to buy 6 a year now, all with positive cash flow, then 6 next year (when the prices sink a little more) you’ll have 12 properties with positive cash flow, vs. only the 6 you gained next year. Don’t only buy properties when the market reaches rock bottom. Mediocre deals are still money in the bank which you wouldn’t have if you sit idle. You might pick up some ‘better’ deals when prices fall but good deals should not be overlooked.
December January February.
We’re going to go insane!
“Buy it and MAKE IT make you money!”
Be the controller of your destiny…
just don’t be a schmuck and buy without doing your homework!
who cares what others say…and why do you have to convince ANYONE why to do anything. sounds like you’re trying to explain yourself to friends and family.
FORGET ’ EM!!!
seriously. stoop, you and alot of us have been on these boards for a while - the rei moderators see us come and go. any moderators on other rei forums do the same.
forget about trying to convince others.
know what YOU want…and go get it!
I know that I should buy now. If I wait the right time may never come.
The reason is because for example:
I know a guy who paid 15 year mortgage and has a nice cash flow from it. The thing is, I think I know more than this guy and it messes with my mind when someone who owns 20 properties is giving my REI advice that makes no sense to me and I won 0 properties. I told him that I would never pay more than 70% of the market value of a property and they looked at me like I was crazy and asked me where I could find that. I told them my plans on going to bankruptcy attorneys and giving them my bussiness card and offering them a finders fee if I buy a house that they refered me too. I had other ideas also. Anyway my point is that a guy with 20 properties comes off like what I say is unrealistic and it makes me second guess myself.
I can relate to your frustrations. My father in law was a realtor for over 40 years–in the same town I’m trying to do business. He’s been no help and shoots my ideas down. So, I’ve quit talking to him about what I’m trying to do. I have a couple of investors that I can call who support and encourage me. I visit with these folks about what I’m trying to do and not someone that is negative.
Are the people you are hearing that from real investors? Probably not. Most likely they “invest” in properties that they buy retail or damn near retail. If they were truly buying right and getting them at 60-70% of FMV they could still be reselling a tad below market value for a fast sale and still making a profit. When the stock market went in the toilet did you see the real brokers lining up at social services for a handout? Heck no, there was still money to be made…the poor conditions just seperated the real investors from the wannabes. Everyone in the tech boom was making money (not unlike the recent RE boom in CA, etc) due to rapid unjustified appreciation, the market readjustment (readjustment does not equal crash) just showed us who the real investors were and who the weekend warriors were.
This is where I come come for motivion and guidence.
Exactly. I just feel like a “know-it-all”. If I feel like they are wrong. All I have done is read books and come here and talk to you guys but I know that I have learned alot.
Ignore CNN and the Wall St Journal, focus on each deal invidually. I can buy 123 Main St for $X, it needs $X in rehab, FMV is $X…can I do this deal, sell it fast, cover my costs, and make a profit that’s worth it? I’m no expert but its really not much beyond that, sure there is a lot of detail to each of those questions but that’s the basics. People buy houses in all markets good or bad, you just have to beat the competition and sell a better house cheaper and someone will buy it. If there are 200 similar houses for sale in your metro area your price and options have to work to position yourself on top of that pile. If your price hits the median of those 200 houses and there is nothing special to draw the customer in off the street to see YOUR house over the others count on some extended holding costs and sleepless nights.
Stoop,
The fallicy with the argument that you should wait for the bottom is that you will not know when the bottom occurs. The bottom can only be known once it has occurred and prices are starting back up. Also, the bottom may occur in one area at one time and another area at another time.
However, what your friends and family are telling you has some merit. What they really should be saying is that you need to buy at a bigger discount in a depressed and declining market.
In a rapidly appreciating market, it is hard to lose. You can pay full price for a house; spend too much on the rehab; and still sell two months later for a big profit. Just look at those silly flipping shows on TV. Things are quite different today in most markets. If you don’t buy at a sufficient discount to sell at a significant discount, the property will sit on the market a long time, with the price deflating the entire time. Over many years, you will certainly recover that price, but in the mean time you may have a loss.
Therefore, I agree with you and the others that this is a good time to buy, but buy at a BIG discount, especially if you are planning to resell.
Good Luck,
Mike
its a Catch-22, the worst the market gets, the more true deals will appear (there will be plenty of dogs as well).
as with any investment, what’s your exit strategy and time horizon.
as my stock broker says, only one eperson actually buys at the very bottom of the market
Dont wait just find the right properties or the right areas. If you have to go somewhere else then make contacts and go somewhere else. The rule I like to followw is to make sure your property makes money for you the day you buy it otherwise dont buy it. Simple?
Your father in law is not a bad guy and he is not wrong. Think about it. Real estate agents really don’t believe in real estate. What they see all day are people that have invested in real estate the wrong way and are desperate to get out. They say please get me out of this mess. Agents see that all day long. The successful investors are sitting at home playing golf and watching TV all day (not really) or running around town making their investments work. So your father in law rarely sees that side of it. He has to believe his eyes and warn the people he loves about it. I say that you can’t learn from other mistakes. All you learn is how not to do a thing. You can learn a million mistakes and still have no idea how to do it right. That is why I think local real estate investors clubs are so important to attend. What they allow you to do is to surround yourself with people doing it right.
You need to get off the fence and get in the streets! You motivation should be to make $$$ and prove
all the playa hatas wrong. This site is great for motivation and guidance but without action these words
are pointless. Start looking today!