How do you determine when is the good time to buy Multifamily Investment properties?

In Buying Property - Asked by Yasushi I. - Sep 22, 2009
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Answer(s)

Bob B.
Listing Administrator
Marion, IA

I'd say it depends on the area(s) you are considering. In Eastern Iowa we have many buildings priced below normal market values with a tight tenant market, i.e. rentals are filled easily.
Of couse you want to review the cap rates, rental history, do a cash flow analysis and unless you are going to manage the properties yourself, you will want to consider a good Property Manager.
Hope this helps.

Sep 22, 2009
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Albert Maxwell G.
Broker/Agent
Ventura, CA

When you are making good money or it is on a valuable piece of property you can tear down and develop.
Don't buy it if you are going to make just a little money, or break even, or lose money

Sep 22, 2009
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Manny K.
Property/Asset Manager
Calabasas, CA

There is no specific good time to buy Mulifamily. The cost of the property is a function of the income, expenses and management. Any time is a good time as long as the CAP rate is satisfactory and the future is bright for the area. Certain areas with high unemployment are bad today to buy. Financing is difficult today but good properties are available.
Manny Klier at : tlvla@msn.com

Sep 23, 2009
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Steve M.
Owner/Investor
Plano, TX

Yasushi, Any time is a good time to buy as long as you know the market, the product, and what you can do with it. It also depends on your investment goals. Most of the "distressed" product right now is either very high end developments that got caught in the downturn or the worst the market has to offer. There are a few good ones (good NOI/CAP rate, little or no deferred maintenance, etc) mixed in with the distressed deals as well.
If you are a new investor sometimes it is best to team up with an experienced operator (like myself) and learn or observe and decide if you want to do it on your own. It is not a passive business and many that I know that have approached it that way have lost money. Particularly independent out of state investors. A management company is just that- a vendor- not an owner with skin in the game.

Sep 23, 2009
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Mark M.
Owner/Investor
Norristown, PA

Anytime is a good time AS LONG as you're educated in commercial transactions.
There are ways to get educated inexpensively. It may behoove you to try flipping first using transactional funds to do the flips.

Sep 23, 2009
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Anita D. R.
Broker/Agent
Killeen, TX

It depends on the area. Central Texas (Killeen/Ft Hood) is the home to 50,000 soldiers with great rental opportunities. 4-plex foreclosures are selling for 60% or less of there original value new 4 or 5 years ago. You should also be experienced or enlist the help of a professional Property Manager who is also an investor (like myself). We have some extraordinary deals here. Keep them rented moderately until the market comes back and you will have a pile of equity built up.

Sep 23, 2009
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roxanne m.
Metairie, LA

I work with banks and lenders all over the country and the multi-family foreclosures are on the rise/ You may want to contact some of the banks in their special assets or real estate departmenst and find out how they are selling their distressed properties.
some do bulk sales and some due individual property sales.
My firm propvides commercial and residential broker price opinion reports and appraisals nationwide
Roxanne melerine
www.nreo.com
800-509-6060 ext 379

Sep 24, 2009
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Brad T.
Owner/Investor
Cape Coral, FL

I believe when ACTUAL CAP RATES from the previous year financial statements of the properties in question are above 7.5%. I think we will see an increase in investment when this happens. These properties will have to be free of neglected maintenance and fairly "well tuned". If the properties are distressed, a fair assessment of the competitive rents in the vicinity with an accurate analysis of the capital costs and repairs to get the property stabilized would have to be included in the cost estimate that could prove a healthy return on the investment. A 7.5% cap rate would be required to finance the purchase without the investor having to come up with a huge cash down payment.
I have looked at hundreds of properties which are very difficult to analyze because I can only see the "projected" financial analysis. Actual purchase and rent comps in the immediate vicinity of the property would save analysts mountains of time and get more credible offers out.
Brad Turek
Investors Group
bradturek@wavelinx.net

Sep 24, 2009
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Michael R.
Broker/Agent
Ann Arbor, MI

You need to understand where your prospective tenants will come from and what is happening in that area such as layoffs, new companies coming, university students, etc and income levels. Then look at the multifamily properties that are catering to the target market you want to work with. Then look at pricing. Remember, real estate is locational and the value depends on location for multifamily as well as residential. Where does this property sit in relation to its price, the prospective tenants, condition, and management? I work in two university towns only 5 miles apart, but worlds apart with regard to investment properties and price. Ann Arbor(University of Michigan) is upscale and prices are higher, low cap rates(lower than 7.5%), rents higher and different economic levels than Ypsilanti(Eastern Michigan University) which is more the middle class clientele, lower rents, higher vacancies, lower prices, higher cap rates demanded(10%+). Some people want to buy workout properties with upside potential, some want to buy a cash stream that is fairly predictable. The price should reflect it. They are all good deals if the current and future situation and potential reflect a reasonable price.

Sep 24, 2009
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Mick D.
Owner/Investor
Punxsutawney, PA

Obviously, anytime you have the proper investment criteria ie. Solid P&L, good market cap rate/NOI, good financing terms from institutional ,if needed, private financing but in a market like we see today well..............multi-family is going to thrive! Why? Because we have homeowners bailing out of homes all over the country......they must have someplace to live thus many more renters. In addition, the commercial real estate
market is crashing and the opportunity for unseen opportunities lie ahead. Be patient and do your homework...........now is a great time to buy Multi-Families!
Mick Depp
Owner/ Investor
mickdepp@gmail.com

Sep 24, 2009
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Ray E.
Broker/Agent
Santa Clarita, CA

Now.. Its always a good time to buy Real Estate! Never hesitate as the Market is always changing ..swinging Back & Forth...it may dip but there is always an Upswing! Buy Now!

Sep 24, 2009
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Peter N.
Broker/Agent
Valhalla, NY

Multifamily investment properties are a business. You buy the business based on income, expenses and potential, NOT based on timing. The up and down markets will always affect your business, but you should not count on it nor depend on it.
In a DOWN market, your business will have a lower perceived value, but it should still be a viable business. In an UP market, your business will have a higher percieved value, this could be added value.
Countless people tried to time the market over the past few years. Some made out, while many others just contributed to their own and the countries economic disaster.

Sep 25, 2009
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Ron S.
Broker/Agent
Manitou Springs, CO

Hi: JUST FINISHED AN ARTICLE FOR THE COLORADO REAL ESTATE JOURNAL ON THIS SUBJECT AND WHY CAP RATES ARE NOT A GOOD METHOD TO USE TO VALUE REAL ESTATE. EMAIL ME AT Ron@CommonwealthUSA.net and request a copy of this article.
COMMONWEALTH IS COLORADO'S OLDEST APARTMENT FIRM AND HAS CLOSED MORE APARTMENT COMPLEXES IN COLORADO SPRINGS THAN ALL THE OTHER COLORADO BROKERS COMBINED.
THREE MOST IMPORTANT WORDS IN REAL ESTATE INVESTING ARE TIMING, TIMING, TIMING, NOT THE OLD LOCATION, LOCATION, LOCATION IDEA.
RON SPRAGGINS, CCIM

Sep 25, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

When you find the right deal.
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Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)225-9894
gregory.garver@gmail.com

Oct 23, 2009
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