Invest in real estate now or is pullback imminent?

[blacklisted917]

Small-time owner/operator and work in NYC RE. I can't see how this house of cards stays up indefinitely, but I've been wrong about the stock market since June....

If it wasn't for funds I need to roll in a 1031 exchange I'd be waiting a bit longer. Nothing is safe - commercial demand is down & eviction bans on residential keep getting extended. Mom & Pop commercial tenants that are still in place are not renewing and all requesting month-to-month at lease expiration.

Sellers generally don't want to recognize the pain and are not adequately discounting based on this risk (IMO).

[1st amg]

A wise man once told me the answer to "when is the right time to buy" .....answer NOW. They do not make dirt the real estate sits on is another one comment. If you are investing in the suburban area a stones throw away from the downtown core is the wiser choice. Most city centers in North America are taking a beating in the apartment rentals. But the slightly suburban locations are hot. Money is cheap, this is the right time IMO. For what its worth, I do this for a living and have for the last 25 years, property/real estate management or Landlord if you like. We are currently looking at adding to the portfolio.

[Frnkbonz]

Originally Posted by RaZCaL

I am speaking from the real estate perspective in New York City (five boroughs), which has pretty much collapsed. I have had tenants break leases, leaving apartments vacant for months, and rental prices have declined as much as 15%-25%, some locations even more. The market is over saturated at the moment as new construction continues with thousands of apartments, resulting in more inventory, further driving down prices. Doesn’t help when tenant/landlord laws in NYC do not favor the landlord at all. The eviction moratorium has permitted tenants to withhold rent without consequences.

Professionals are moving out of New York City seeking for more spaces when they can WFH. NYC based companies are also moving out and small businesses are shutting down left and right. Residential apartments configured for roommates with 3-4 bedrooms are being rented as 1 or 2 bedrooms and offices because everyone is WFH. This pandemic has forever changed the state of NYC, and I do not foresee NYC recovering in the near future. I would definitely not touch real estate in NYC for a long time.

Pandemic sped up the process in NYC. People were leaving prior (idea of raising taxes to the uber rich who can move easily was not the smartest move). De Blasio and Cuomo are both poor leaders and made the situation worse with the pandemic. A lot of these small businesses who are the lifeline of the city are closing up and the big companies realize they can save money from overhead with their staff working from home. Eventually NYC will hit rock bottom, but Id say it will take about 4-5 years before you see it reach it.


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[RaZCaL]

Originally Posted by Frnkbonz

Pandemic sped up the process in NYC. People were leaving prior (idea of raising taxes to the uber rich who can move easily was not the smartest move). De Blasio and Cuomo are both poor leaders and made the situation worse with the pandemic. A lot of these small businesses who are the lifeline of the city are closing up and the big companies realize they can save money from overhead with their staff working from home. Eventually NYC will hit rock bottom, but Id say it will take about 4-5 years before you see it reach it.


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Agreed. De Blasio is the worst Mayor we have had in the history of NYC. Watching them on TV dealing with this pandemic is comical.

[Thug]

NYC will be fine. People leave every year but get replaced by those moving in. Currently there may be more outs than in, but that's expected given COVID. Companies (especially bigger ones) will still want an office footprint somewhere in the city, don't fool yourself thinking otherwise. I forget which but i think two of Google/FB/Amazon acquired more office space in the city around the summer time. JPM's new hq is still under construction and i dont think there's any plans to change what was dictated before COVID to accommodate a post COVID world.

[Atone]

NYC, SF, Chicago, etc are not all falling into permanent despair. There will be a crash and there will be a recovery.

[MrGoat]

There will be a drop. Especially in major cities. Have cash and take advantage of the market. I am personally very concerned with commercial office space. Maybe it’s just because I’m a cautious guy. I already see a mass exodus from some of the US’s largest cities and states. This won’t go unchecked. There will be a drop, however minuscule or devastating.

This is solely my opinion and is not investment advice.


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[Atone]

Originally Posted by MrGoat

There will be a drop. Especially in major cities. Have cash and take advantage of the market. I am personally very concerned with commercial office space. Maybe it’s just because I’m a cautious guy. I already see a mass exodus from some of the US’s largest cities and states. This won’t go unchecked. There will be a drop, however minuscule or devastating.

This is solely my opinion and is not investment advice.


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commercial is going to be hit very very hard. no question.

[Star Ferry]

Originally Posted by Atone

NYC, SF, Chicago, etc are not all falling into permanent despair. There will be a crash and there will be a recovery.

Chicago will bounce back, but I never got the sense that Chicago real estate was that great. Even pre COVID the rents were nowhere close to NYC, SF, or LA. I've seen condos sell in Gold Coast for what they cost 20 years ago -- of course that will improve post COVID, but accounting for inflation/taxes/fees those sellers still wouldn't have made a profit selling in summer 2019.

[SDGT3]

Originally Posted by Frnkbonz

Pandemic sped up the process in NYC. People were leaving prior (idea of raising taxes to the uber rich who can move easily was not the smartest move). De Blasio and Cuomo are both poor leaders and made the situation worse with the pandemic. A lot of these small businesses who are the lifeline of the city are closing up and the big companies realize they can save money from overhead with their staff working from home. Eventually NYC will hit rock bottom, but Id say it will take about 4-5 years before you see it reach it.


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Completely agree that the Pandemic sped up the inevitable. NYC is in a long term slide and it starts at the top with Cuomo and Di Blasio. Anyone remember Mayor Dinkins and how awful NYC was under him??? What a time to be alive. It will only come back once the city has a strong mayor that can tackle the actual problems for both businesses and residents alike. Small support businesses will come back eventually once corporate jobs are restored.

Make no mistake about it, Covid has changed the way and places we work. Companies in Silicon Valley are recognizing this and moving to tax friendly states like TX and wall street firms are exploring the same.

If you believe just because a business is constructing a building for headquarters and will stay, I say look at what Amazon did with their headquarters in the greater Seattle area...

[woowoo]

Originally Posted by 1st amg

A wise man once told me the answer to "when is the right time to buy" .....answer NOW. They do not make dirt the real estate sits on is another one comment. If you are investing in the suburban area a stones throw away from the downtown core is the wiser choice. Most city centers in North America are taking a beating in the apartment rentals. But the slightly suburban locations are hot. Money is cheap, this is the right time IMO. For what its worth, I do this for a living and have for the last 25 years, property/real estate management or Landlord if you like. We are currently looking at adding to the portfolio.

First somewhat informed answer on here.

I totally get OP coming onto a forum of smart people and hearing opinions. No harm done. But some of the answers in this thread are totally clueless.

There are people who do commercial and residential real estate professionally all day long. Not sure why amateurs think they can just come in and make moves and smart decisions and make money like there's low hanging fruit. LA especially is hyper competitive. One needs to be very careful. Many guys out here are playing a very long game and still not doing the math right. While others are trying to flip houses on the west side and losing money every deal. Very easy to get burned. Very easy to make mistakes.

The idea of timing the real estate market or a potential upcoming crash is hilarious.

Whether it's the price of real estate, stocks, bitcoin or daytonas, lot of idiots who think they are experts, and even worse some of them have gotten lucky and made money so they are even more confident despite being idiots. and people listen to them. Yikes.

By all means dip your toe investing in a new asset class if you want to. But prepare for a learning curve that will cost money unless you have beginner's luck. Which I hope you do.

my 2 cents. LA real estate will be fine. It's part of a diversified portfolio if you live here and it's a long term play that may hold value more than make money - which is also ok. Don't try to time the market, loser's game.

Happy new year bra.

[Atone]

Happy new year everyone. I’m glad I bought Bitcoin sub $10k and bought rental property in LA after the crash. I guess I’m just “lucky”

[superdog]

Originally Posted by woowoo

First somewhat informed answer on here.

I totally get OP coming onto a forum of smart people and hearing opinions. No harm done. But some of the answers in this thread are totally clueless.

There are people who do commercial and residential real estate professionally all day long. Not sure why amateurs think they can just come in and make moves and smart decisions and make money like there's low hanging fruit. LA especially is hyper competitive. One needs to be very careful. Many guys out here are playing a very long game and still not doing the math right. While others are trying to flip houses on the west side and losing money every deal. Very easy to get burned. Very easy to make mistakes.

The idea of timing the real estate market or a potential upcoming crash is hilarious.

Whether it's the price of real estate, stocks, bitcoin or daytonas, lot of idiots who think they are experts, and even worse some of them have gotten lucky and made money so they are even more confident despite being idiots. and people listen to them. Yikes.

By all means dip your toe investing in a new asset class if you want to. But prepare for a learning curve that will cost money unless you have beginner's luck. Which I hope you do.

my 2 cents. LA real estate will be fine. It's part of a diversified portfolio if you live here and it's a long term play that may hold value more than make money - which is also ok. Don't try to time the market, loser's game.

Happy new year bra.

This is classic. Perfect example of the Internet warrior formula. Really, it doesn’t get much better than this.

First, call the actual expert on the subjects response, “somewhat” informed. Nick has literally many hundreds of doors and a large organization. He’s been doing this professionally for decades. And is extremely successful.

Second, insult literally every other commenter for sharing their thoughts.

Third, share their own apparently uniformed $.02 similarly to all the people just insulted did.

So perfect.

[brandrea]

Originally Posted by 1st amg

A wise man once told me the answer to "when is the right time to buy" .....answer NOW. They do not make dirt the real estate sits ...

This really strikes a chord with me my friend.

My uncle (who was also a land developer) told me almost these exact words many years ago.

My wife and are in the process of looking at a rental triplex here in our area

[brandrea]

Originally Posted by superdog

This is classic. Perfect example of the Internet warrior formula. Really, it doesn’t get much better than this.

First, call the actual expert on the subjects response, “somewhat” informed. Nick has literally many hundreds of doors and a large organization. He’s been doing this professionally for decades. And is extremely successful.

Second, insult literally every other commenter for sharing their thoughts.

Third, share their own apparently uniformed $.02 similarly to all the people just insulted did.

So perfect.

Yep, what a read

Wtf do we know

[superdog]

Originally Posted by brandrea

This really strikes a chord with me my friend.

My uncle (who was also a land developer) told me almost these exact words many years ago.

My wife and are in the process of looking at a rental triplex here in our area

It truly does make sense. Resonates with a lot of business advice I read too. “The Art of the Start” is one of the best books I ever read. It revolves around starting...now.

I have a few rentals. Mostly places I lived in and didn’t want to sell. But I’d really like to pick up a few more.

My area is so inflated right now, it’s nuts. But reading this makes me think again. Maybe the timing is right now. As per usual.

Lmao, Nick, I’ll call you Monday to discuss.

Happy New Years everyone.

[JWD531]

Originally Posted by superdog

It truly does make sense. Resonates with a lot of business advice I read too. “The Art of the Start” is one of the best books I ever read. It revolves around starting...now.

I have a few rentals. Mostly places I lived in and didn’t want to sell. But I’d really like to pick up a few more.

My area is so inflated right now, it’s nuts. But reading this makes me think again. Maybe the timing is right now. As per usual.

Lmao, Nick, I’ll call you Monday to discuss.

Happy New Years everyone.

Hey, if you get a good deal, you get a good deal, right?


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[FTX I]

Originally Posted by superdog

This is classic. Perfect example of the Internet warrior formula. Really, it doesn’t get much better than this.

First, call the actual expert on the subjects response, “somewhat” informed. Nick has literally many hundreds of doors and a large organization. He’s been doing this professionally for decades. And is extremely successful.

Second, insult literally every other commenter for sharing their thoughts.

Third, share their own apparently uniformed $.02 similarly to all the people just insulted did.

So perfect.

[1st amg]

Originally Posted by superdog

It truly does make sense. Resonates with a lot of business advice I read too. “The Art of the Start” is one of the best books I ever read. It revolves around starting...now.

I have a few rentals. Mostly places I lived in and didn’t want to sell. But I’d really like to pick up a few more.

My area is so inflated right now, it’s nuts. But reading this makes me think again. Maybe the timing is right now. As per usual.

Lmao, Nick, I’ll call you Monday to discuss.

Happy New Years everyone.

You know, one of the last sites we bought in 2016 we paid about 148k per door. I remember other friends/colleuges who were saying that we overpaid and not the best move. For us, it was the right move as it was close to another multi-residential site and it worked for our style/method of managing. Fast forward to this year, about 3 1/2 yrs later and its value per door is now about 300k per unit. The equity is there on paper in a big way. Yes this year it has jumped more than usual, but historically speaking the value has always increased about 12-20%.
Brian, the triplex idea is a great one as if one tenant vacates or decides not to pay, you have two other incomes that will pay your bills. I bet in three years from now you will be very happy as your equity has grown along with your debt being paid down, you will want to add another!!!

Seth call me next week...have a great start to the new year....I will start with eating less

[1st amg]

Originally Posted by woowoo

First somewhat informed answer on here.

I totally get OP coming onto a forum of smart people and hearing opinions. No harm done. But some of the answers in this thread are totally clueless.

There are people who do commercial and residential real estate professionally all day long. Not sure why amateurs think they can just come in and make moves and smart decisions and make money like there's low hanging fruit. LA especially is hyper competitive. One needs to be very careful. Many guys out here are playing a very long game and still not doing the math right. While others are trying to flip houses on the west side and losing money every deal. Very easy to get burned. Very easy to make mistakes.

The idea of timing the real estate market or a potential upcoming crash is hilarious.

Whether it's the price of real estate, stocks, bitcoin or daytonas, lot of idiots who think they are experts, and even worse some of them have gotten lucky and made money so they are even more confident despite being idiots. and people listen to them. Yikes.

By all means dip your toe investing in a new asset class if you want to. But prepare for a learning curve that will cost money unless you have beginner's luck. Which I hope you do.

my 2 cents. LA real estate will be fine. It's part of a diversified portfolio if you live here and it's a long term play that may hold value more than make money - which is also ok. Don't try to time the market, loser's game.

Happy new year bra.

Not sure if offended you or you are complimenting me, either way, happy new year.

[77T]

Agree that it’s worth considering residential real estate if it’s part of a long-term buy/hold income producing plan.

We are at an historic low debt rate, so perhaps go OPM for capital preservation. There are properties needing a rehab if you want to get in at a lower cost and use some sweat equity. I don’t know OP’s budget or time horizon but it could be good if he plans to stay invested.

While timing is always an open question - one trend seems to be an increased reliance on remote work tech.

It might attract tenants to suburban locations with lower entry costs. 5G may enable otherwise underserved locations to become attractive for the long-term.


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[Atone]

Originally Posted by superdog

This is classic. Perfect example of the Internet warrior formula. Really, it doesn’t get much better than this.

First, call the actual expert on the subjects response, “somewhat” informed. Nick has literally many hundreds of doors and a large organization. He’s been doing this professionally for decades. And is extremely successful.

Second, insult literally every other commenter for sharing their thoughts.

Third, share their own apparently uniformed $.02 similarly to all the people just insulted did.

So perfect.

The guy is a total clown. He just trolls on here. Meanwhile, he has a thread asking how to start a no risk, high dollar business. Just ignore him. He’ll be banned soon

[GoingPlaces]

Two plays, one is land. Buy and hold in relevant areas.

Second is time the commercial crash, it's not here yet but coming quick. Could make big money. Banks are going to eat it. We might see a commercial crash similar to the residential of 2007/8/9. Buildings will be bought at steep discounts as banks and servicer's will look to unload. Commercial owners are already starting to "turn in the keys." New commercial RE loans are drying up.

[Atone]

Commercial would take stones I don’t think I have. Although it could pay dividends, it would make me nervous. UNLESS I could use the space to run my own businesses out of . . . Now that’s a thought

[gabrielnovar]

well ideally you want a collapse right, but good luck timing it. You will probably do far better if you ignore the investment thesis and buy where you like....where you can see yourself in 10-15 years and ignore the noise.

NOW if you are held under the gun by investors and need to flip a profit in 1-2 years GL you need amazing timing.

[Atone]

Originally Posted by gabrielnovar

well ideally you want a collapse right, but good luck timing it. You will probably do far better if you ignore the investment thesis and buy where you like....where you can see yourself in 10-15 years and ignore the noise.

NOW if you are held under the gun by investors and need to flip a profit in 1-2 years GL you need amazing timing.

Nothing like the latter at all. Just a long term hold. While I hear the rumbling of dealing with renters, I can say I’ve had the best and the worst of luck with them. It is a bit annoying but one of my properties draws 2x the mortgage so I can’t really complain. No way I’ll get into a deal like that anytime soon but something that would cover the mortgage now would be just fine.

Additionally, I don’t think one has to time a “collapse” perfectly. Let’s say there’s a 15% pullback in LA real estate. Even jumping in at 5% or 10% on that continuum is a win. There’s never any way to predict such things but if market trends indicate a downturn, I’d be happy to see how things play out for another year or so.

[SDGT3]

The Southern District of New York has upheld a NYC law aimed at providing relief to commercial tenants affected by the coronavirus pandemic by rendering personal guaranties contained in leases unenforceable for commercial tenants. The plaintiffs are expected to appeal the decision, but I can see this spreading to other areas of the US. Not a good sign for commercial RE now.

[Atone]

Originally Posted by SDGT3

The Southern District of New York has upheld a NYC law aimed at providing relief to commercial tenants affected by the coronavirus pandemic by rendering personal guaranties contained in leases unenforceable for commercial tenants. The plaintiffs are expected to appeal the decision, but I can see this spreading to other areas of the US. Not a good sign for commercial RE now.

Do you suppose commercial mortgage holding banks will get bailed out? I imagine they’d have to. Otherwise this will all get very very ugly

[SDGT3]

Originally Posted by Atone

Do you suppose commercial mortgage holding banks will get bailed out? I imagine they’d have to. Otherwise this will all get very very ugly

The probability is pretty high as the Fed is bailing out everyone and has for the past 13 years... all markets seem artificial at this point.

[AGuy]

The deal is not about the building, it's in the human being you are talking too. Deals will always exist if you know how to talk to people.