Hello,

I've been a landlord since 2005 bought at the high at that time, (ouch). I've also bought in 2009, 2013, 2014, and 2016 was the last time I bought. I mainly invest in small multifamily properties because of cash flow. The real estate prices have gone up quickly. So I stopped buying from fear of bubble. In fact, I started selling a few last year and plan to sell more because of 2 reasons:

1. I expected the market crash to come soon. It's better to have cash on hand when everything is on sales after the crash.

2. I'm considering moving to Texas because it's much more landlord friendly. Eviction law in Illinois is a joke. The Illinois state also has a pending underfunded pension crisis. Once it blows up, they will raise taxes for all IL residents.

So, my plan is to move to Texas once the crash started, take sometime to settle there to learn the areas (probably 6 months), and start buying again. I know it sounds like marketing timing. I wonder what do you guys think about my approach? I wonder if anyone are waiting for another crash like me. Any opinions/advice is welcome :-)

Thanks,

Patrick

Hi NE[PA], thanks for your reply. Too bad I didn't get to meet you at the convention this year. Were you there?

I was not at the convention.

I'm not implying anything really, stating a fact. Deals can be had at any time.

bet[MA], thanks for sharing your opinion. Glad to know that I'm not the only one trying to time the market :-)

Yes, get out of Illinois. Illinois is losing people. More people moving out of state than moving in.

Hi ChicagoLL,

I think most of us will agree this doesn't "sound like market timing"...it IS market timing. ;-)

Knock it off...that doesn't work.

MAYBE we have 2 more years in the market like bet said...maybe 2 months....maybe 10 year. No one...I repeat NO ONE knows.

Going to sit out the game for a decade or go all in and get clobbered in 3 months? You don't know. Bet doesn't know. I don't know.

NE's advice is solid: buy when the deal makes sense.

If IL is bad enough to leave, then leave it now regardless of whether we crash today or 2029.

If a deal is good and makes sense today, buy it because it is good and makes sense.

I've got a similar story to yours. Bought our first rent house in 2005, then 11 more properties over the next 3 years, right up in the smack down of 2008-09, so I feel where you're coming from. But then I learned that the wise investor buys according to his/her criteria, not based on what the rest of the market MIGHT do tomorrow, next month, or next year.

There's plenty of room in Texas-- but for multi's, you might look into secondary cities rather than major ones. Dallas and Austin are overpriced. Houston is about 600 sq miles of sprawl-- it's good to know your market before you invest. San Antonio is worth considering, but (used to be?) very stratified--- either very affluent or very impoverished, but not a lot of middle. Fort Worth is (was?) better than the rest of DFW, but has been going through a ton of change, and my impressions aren't up-to-date. But smaller cities would have plenty of reliable opportunities-- like Killeen, or Waco, or College Station, or so on.

I've been investing in income property for the past 41 years. I've lived through 5 (five) up and down market cycles. As a investor in SFR and Units, I've seen each category "drop" 40% to 50% in value during a 5 to 12 year period.

I've seen the GRM (Gross Rate Multiplier) jump all over the map from a low of 5-Times to a high of 16-Times Gross.

Real Estate Cycles are REAL! To make my point, understand this:

A) When the GRM for units was at a low of 5 times gross, I could by units with almost nothing down and turn a huge profit each month.

B) When the GRM was over 12 times gross, I had to put a huge down payment just to break even, crossing my fingers that in time I could turn a profit.

C) And when the GRM was close to 14 times gross, I had to put 60% down just to qualify for financing.

I am a firm believer that besides "Location", "Timing" is almost everything in investing in income property.

I agree with NE. Unlike the stock markets, real estate markets are "inefficient" and uncontrolled by trading algorithms. That means that deals can be had regardless of market conditions. I do think we're near a peak though and I'm seriously considering unloading one of my properties to raise cash and deleverage.

We've been steadily buying since about 2003.

Nowadays we just look for different kinds of spaces than we used to.

In the beginning we were looking for larger houses because we believed the more bedrooms the higher the rent. That turned out not to be true for our market. So we turned our attention to Smaller Places and that works for us.

Interestingly, although the rent is the same for smaller places, the PURCHASE PRICE is not. So we can buy the Tiny Ones for WELL less that a normal size home, but charge almost the same rent.

Hey Chicago LL! It was good seeing you at convention. I agree with the dire straits of Illinois. We have room for you up in Wisconsin, , and our state is one of the very few with fully funded pension liabilities. Ignore the fact that our new governor tore down the ‘Wisconsin is open for business’ signs on his second day in office. We’re still open for business. Rooming houses are really going strong here again, if that’s your thing. I’d avoid Madison and Dane county like the plague, their landlord laws may be the worst in the country. Milwaukee is OK, and areas around and further north like up in the fox valley are fairly landlord friendly. We don’t make everyone eat cheese, beer and brats, but, if you like those, we have the best, and our football team doesn’t suck. And we have a new Bucks player coming that could make you and NE both look short! We don’t have fire ants, something Texas cannot say.

The next Apartment Association meeting of Southeast Wisconsin is Monday June 17th, networking starts at 5:30. Unfortunately, I have a family conflict for that day, or I’d offer to put you up at our house for the night. My son and daughter-in-law are stopping as they take a grand road trip, so I won’t be able to attend that meeting. Next meeting is August ( July is a baseball outing- he landlords need to hav e fun too!) so, if August meeting interests you, you could bunk at our house for the night. ( we’ve already shared a sweater., we could put you in our son’s old room.

Investors are still finding deals, as NE says. But, of course, if one move to a whole other state, there is a bit of learning curve, just to figure out that state. I, (obviously) am not the one to help you find fabulous deals, and make gobs of money, as that isn’t the focus of my landlording practice. I’m just in it to make small bucks, continue learning new skills and teach my grandkids skills, along with working on some social issues that I’ll leave out of this discussion. ( please, anyone, do not sidetrack this thread from Chicago LL’s relocation question to my ‘not-for-most-people’ practices. Yes, it has already been well-established that Busy’s methods are not best practices, according to the voices on this forum.)

Thank you everyone for sharing your views :-)

plenty [MO], yep

Robin [WI], same here. I haven't seen good deals in the past few years.

Beth [WI], yeah decrease population is bad for real estate.

Adele [FL], what I like most about Texas is the fair eviction law.

S i d [MO], glad to read your message again :-) I wouldn't try to time the market if my market is stable like yours. Do you believe that the price of the first property that I bought in 2005 still has not fully recovered? During the crash, the price dropped so much. It was like 80% off. It was a painful lesson.

Deanna [TX], very appreciate your brief updates on Texas.

Robert J [CA], Location first and timing second, you said. Interesting. I'll keep in mind.

AllyM [NJ], ummm... but we have had crashes just about once every decade in the past century, haven't we? Why would this time be different? Because the fed is willing to print money?

GKARL [PA], yes IL is not alone with pension problems. It's nationwide. However IL is the worst.

WMH [NC], I still have the same believe that you had (buying bigger for higher rent). In my town, people are willing to pay more for larger space.

Homer [TX], I've heard that Texas has the 6th highest property in the nation. IL is the second. NJ takes the first spot. At least, taxes is predictable. The retarded eviction law in IL makes a lot of thing unpredictable. Losing $5K to $10K in lost rent in IL is a norm. I cannot take that any more. It's absurd.

WMH [NC], yes crazy but they have no income tax. That's cool.

Busy [WI], great seeing you at the convention as well! Thanks for recommending WI and offering to host me for the meeting :-) Frankly I want to avoid the super cold states all together. Whenever the furnace/boiler breaks down in winter, it becomes a life or death emergency situation. We can't live without heat here. I really hate that. At least people don't die if the air conditioner stops working for a few days in Texas. :-)

ChicagoLL they are actually pretty nice. If I have to go through a full blown eviction, usually 3 weeks from date the 5 day notice is served until the day they have to be out.

Otis[IL], thanks for more info. Interesting, I never known that outside of Cook county and surrounding collar counties are LL friendly. Does the 5 day notice still have to be served in person? This is another sore spot in the eviction process. Tenants always try their best to avoid LL. In other states, it can be posted on the door. Can you shine the light on this?

Also, outside of Chicago land area, are there only farm land and single family home?

You can find deals but they are not anything like they were.........

Just the same, I have been using PACER to find deals now. The number of bankruptcies is down though.

Pmh. you can say that again...........Charlie.............but don’t let anyone hear you. .........................

We just refinanced on our last rehab. I’ve been poking around on Long Island, NY. However, prices are just very high currently, It is always difficult on Long Island to get good deals since real estate has always been expensive. However, those homes in the undesirable areas are expensive too. My last deal allowed me to rehab, pull my investment back out and maintain a positive cash flow of $300. The cash flow will increase to about $500 after tax grievance process is complete and I get my refund. I try to maintain a $500 cash flow on a property as my standard and increase it over time.