For today’s episode, we will be discussing whether or not we should invest right now.
You know, right now, maybe we're at the top of the market. Should you wait until we see a crash or maybe we're at the bottom of the market? I don't know. Maybe now's the time to buy and jump in.
We will go over the most common question asked, when is the right time to invest?
We will talk about these things…and more in another episode of Multifamily Investing Made Simple in under 10 minutes.
Tweetable Quotes:
"First of all, if you can go in, you can buy an asset for below-market-rate right now than you're already buying at a discount, almost like you're buying in the past in some ways - Anthony Vicino
"the main question here is when's the best time to bomb? And that really has everything to do with what the investment strategy is" - Dan Kreuger
"certain types of business models in this industry will do better at certain times in the economic cycles" - Dan Kreuger
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Anthony Vicino: [00:00:15] Hello and welcome to multifamily investing made simple in under 10 minutes, this is the podcast where we take the complexity out of real estate investments that you yes, you drive into work and your car right now or on the treadmill or on the rowing machine, wherever you are listening to this, maybe taking the dog for a walk so that you can start taking action today. And we are going to do that in this episode by answering one of the most common questions that we come across in the investing world, which is when is the right time to invest? You know, right now, maybe we're at the top of the market. Should you wait until we see a crash or maybe we're at the bottom of the market? I don't know. Maybe now's the time to buy and jump in. So we're going to try and tackle that question and answer it in all its myriad ways. Sedan, how are you doing today?
Dan Kreuger: [00:01:01] Do fantastic.
Anthony Vicino: [00:01:02] Are you ready to market? Are we there? Is it time? Is it time to pump the brakes and wait? Probably roller coaster about to go off the cliff.
Dan Kreuger: [00:01:12] This is the biggest question, right? I mean, no one knows the answer, but I mean, the main question here is when's the best time to bomb? And that really has everything to do with what the investment strategy is, because that answer to that question is going to be different for every individual and their investment goals and for the deals that they're looking at, certain types of business models in this industry will do better at certain times in the economic cycle. So for those of you listening right now, it's April of twenty twenty-one. Things have been going quite well. They've been going quite well for a long time, with the exception of that little blip we had back last year, old covid.
Anthony Vicino: [00:01:57] We just we're just going to go straight from twenty nineteen to twenty twenty-one. We're just going to ignore twenty.
Dan Kreuger: [00:02:02] I don't remember it but yeah. No, it's, I mean we've been ever since 2008, 2009, we've had this slow, steady grind in real estate and financial assets and the stock market's GDP. It's just been this very long recovery, very long, long recovery, and it's been going on for a long time. And so everyone sitting there thinking it's got to be the end has got to be the top, it's got to crash. It's got a crash. And, you know, to that to that point, there is going to be a cyclical nature to all this stuff. Right. So there's going to be some ups and downs. So is this a good time to buy real estate? That's the million-dollar question. I would say if you are looking to flip houses, this is a pretty risky time to get into that. If you are a value add multifamily individual like Anthony and me are, then the nuances of the market cycle become a little bit less important and really comes down to whether or not your debt on your property is appropriate for where we're at, the economic cycle and what your business plan is the property.
Anthony Vicino: [00:03:15] Yeah, I'll add to that how well capitalized you are as well, I think to answer the question, should you invest right now? I can't answer that. I can't. I don't know. I don't know you. I don't know what your investing goals are. And that's really where it all starts and where a lot of it ends. For if you're nearing retirement and you are entering into the low-risk phase of your investing career and you can't afford to lose anything like maybe you start hedging into some safer assets and real estate, there are some really safe aspects of that. Like Dad mentioned, it's about the business plan. And for a lot of that, it's making sure that you're getting into an asset and a business plan that regardless of what the market does, it's going to perform well. And even if it takes a dip, even if takes a hard hit. And to my point before about being well-capitalized, if you have enough money in the bank, you can write out any of the rough patches. And so right now, I think is a good time to still be investing in real estate because I think it's going to continue going up or at least multifamily. I think it's going to continue improving. But you're going to want to come to the table maybe a little bit better capitalized and prepared for CapEx or low vacancy or high vacancies, low occupancy or, you know, dip it in like whatever you want to be in a position where if those things do occur if the market does go down, it's OK. You can ride it out until it comes back up, because as long as you're not forced into a selling position, as long as you're not forced to go to market because you didn't have enough money to ride it out, generally be OK. Now, the Fix and Flip's where you have maybe a six-month window to get the thing done. And every day that goes by, you're draining money. Well, you you should tread lightly. You should be careful. I bet I always say that. I always think fixing flips are a little bit scary.
Dan Kreuger: [00:05:02] Yeah. Hundred percent. And, you know, I think a big factor. This also comes down to the areas you're investing in as well. We've really doubled down on quality post covid where prior to covid we were looking at things that had a lot of meat on the bone and there was a lot of room for improvement. And over the last 18 months, we've shifted our focus to things that are a little bit more stabilized so that we have the option to execute our business plan slower, keep that occupancy nice and high, or we can get more aggressive and execute our business plan pretty quickly. So I think that you know, if you are making those kinds of decisions and looking at, you know, things that are a little bit more stabilized by near the top of a market is going to be less of an issue if you're taking that approach. But if you're going into a war zone, the property needs a ton of work that requires a ton of capital. And you're in an area that you're hoping improves over the next five, 10 years, a little bit more risk there.
Anthony Vicino: [00:06:02] So another aspect of this, I'll add is just don't buy at market rates. First of all, if you can go in, you can buy an asset for below-market-rate right now than you're already buying at a discount, almost like you're buying in the past in some ways, like if you're able to go in there and get something at 20 percent off-market, then it's almost as though it's 20, 19 again or twenty-eighteen again. And you're buying it. Right. And so if the market does take a dip in that and wherever you're investing, is it going to drop back three years' worth of growth? Maybe. But if that does happen, that's OK. That's where you bought it at. So that is maybe a higher level thing to be considering is that don't buy off the MLS or be buying at the top of the, you know, like something that's been bid it up because it's on market and 50 different investors all want it. Go get the aftermarket deal, go directly to the seller, go get those good, good broker relationships that you get the pocket listing and you get the really good deal because regardless of where we're at the market, there are always good deals to be had. There are deals out there right now that are going to make you money. The only sure way that you definitely one hundred percent will not make any money is if you completely sit out and people started sitting out as early as 2016 and saying, OK, we're at the top of the market, I'm going to start hoarding cash. So I'm ready for the next downturn. And the market just kept going up. Twenty, seventeen, eighteen, nineteen, twenty. It just kept going up. And so they missed out on five years of growth and they're still sitting out waiting for it to take a crash. They don't let that be you. The only sure that's like putting cash into your, your mattress because you're afraid to, to invest it. And that's a surefire way to lose value. Slowly but surely.
Dan Kreuger: [00:07:37] A hundred percent.
Anthony Vicino: [00:07:39] All right. So anything else too when's the best time to buy? Well, I think the as the the quote goes, the best time to plant a tree is twenty years ago. The next best time to plant a tree is today.
Dan Kreuger: [00:07:55] Well, said
Anthony Vicino: [00:07:56] I, I can't take credit for it, but I will. All right, guys, so going to do it for us here at multifamily investing made simple in under 10 minutes. And that is how you know. Whether or not you should invest. Right now.