Landlords Flee the Housing Market…Should You?

Investors are fleeing the housing market. But…is anyone surprised? After over a year of high interest rates, cash flow has become almost impossible to find. Real estate investors are comparing ultra-safe investments, like bonds, against rentals and coming to the conclusion that the risk isn’t worth the reward. But why now? And could investor activity drop BELOW pre-pandemic levels?

Dave is back to dig into the data on the investor exodus from the housing market. Even with home purchases down across the board, investor purchases are SERIOUSLY nosediving, especially in specific markets. BUT, one type of real estate investing is still holding strong, boasting an average profit of over SIXTY percent (yes, even in 2023). Which strategy is still winning? Stick around to find out!

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00:00 Investors Flee the Housing Market
01:30 Investor Activity Falls 45%
04:26 Purchases DROP to Pre-Pandemic Levels
05:19 Why Investors Stopped Buying
08:28 High Mortgage Rates Aren't Helping
10:02 Flipping Is Taking OFF
11:38 Falling and Rising Real Estate Markets

[nld]

I am a real estate invester myself and it's what I expected. The reasons why people are pulling out because of high interest rate, high property price, high property tax, and high maintenance/repair cost. I have been raising my rents to the market level and it's still not catching up with the property tax/insurance/maintenance costs. Right now, it's better to look at an alternative investments without all the headaches with rental property.

[clifft]

Investors are always ahead of the regular home buyer market. They are pulling out faster now and will jump back in faster when profitability increases.

[imdoc]

When others panic you must get greedy. When others get greedy than you panic.

[billieerickson]

I'm new to the game of RE, but come from 35 yrs of owning a small manufacturing company. My instincts tell me to keep investing, cautiously, and be open to various strategies that can be more favorable, have some reduced risks and realize you have less competition with other investors so finding workable deals is likely even though there are fewer. In the long run, it is likely to all work out.

[koby]

I am trying to see if sellers are motivated to do seller financing, biggest issue is convincing the realtors in charge of the properties because they don't want to talk to you as soon as you ask them about it.

[davidstephens]

Investers are pulling out of the housing market because they can't cash flow due to the interest rates that investers have to pay. Either housing prices have to go down or interest rates need to drop or rents have to go up in order to get investers back in.

[charlesbutler]

"Be greedy when others are fearful and be fearful when others are greedy." Sounds like a great time to buy..

[BrasingtonAssociates]

Cash flow is just a “little harder” to find? Hmm Brandon always talked about how 100 a month AFTER 10% pm, 10% maintenance, cap ex, etc was a base hit. what makets have this for the passive investor that are turn key and don’t require a value add.

Not everyone has the time do a value add. For these types of investors the time, risk etc to get a return is just not worth it.

So I think a better statement is that we are in an “operator market” who can also make their money as the GC or a full time wholesaler or property manager. But for the nine operators the juice just don’t now feel like it’s worth the squeeze outside of house hacking

[sethadams]

The market is tighter, margins are slimmer and there's pressure in the renter's budget causing issues there also. But right now I'm using the BRRRR method to get A to B quality SFH for "free" on one and a good COC return on the other. And flip starter homes which most folks can afford. I'm looking at 60-90% COC return on this type right now in my area. 🏠🏠🏠

[charlesritter]

7:45. This guy is really recommending investing in FIVE PERCENT BONDS?
is he on drugs? Even if you are just stashing cash for the next deal there are savings accounts that pay 5 percent.
He should never be allowed to speak on BP. Someone needs to tell him this is a R.E. channel. Government bonds as an "investment". 😄😄😄😄

[kanaka_haole_]

In Hawaii it’s looking like 50% down or more to break even or cash flow at the current rates. But when rates come down and you can refinance into better cash flow it’s going to be a great win 🏆 plus the 5% historic appreciation per year and higher price point so larger depreciation write offs 💅

[DanKohan]

Great video! It's interesting to see how more people were buying houses during the pandemic, especially investors. But now, it seems like fewer investors are buying houses because it's getting more expensive. Interest rates are going up, which makes it less profitable for them.

Personally, I'm keeping an eye on my local housing market, and I'm ready to buy a house if it's a good deal. Thanks for sharing this information, Dave!

[RealEstateAndLandlordNews]

The fed increased interest rates a lot, but not enough to cause a price decline.

In my mind they need to increase interest rates a lot more if they want a price decline for real estate.

[Voidroamer]

good. sell. real estate "investing" is killing the American dream. should be illigal

[rockford]

How about buying a rental property and stay in one of them as main place to stay and rent the remaining 1 or 2 units? It is still bad time?

[ChristianC-gyym]

The current market remains a viable landscape for cash investors. In certain areas, the real estate tax aka the property tax is towards the lower end. $3000 to $4000 annually. If rent is $2100 to $2300 for a 3 beds, 2.5 baths 1800 sf house, and you pay the property manager 10%, pay $300/month tax, you're pocketing around $1600. While that amount won't allow you to abandon your main source of income, it's a nice little cashflow. That's if you are a cash investor. If you had a mortgage to pay, then absolutely not. It's not viable at all....

[theelitestrategist]

This is a great video with excellent data. As an investor we are always purchasing in every market we just adjust our strategy according to what’s happening in the capital markets as that’s truly what dictates where the market is going. Remember the old saying in our space he who has the money makes the rules and lastly as real estate investors we make our money when we buy with multiple exit strategies on the deal so we can adjust if the market shifts. Thanks for this content!

[dennishowland]

David I’m going to invest in Cape Coral Florida investment property I’m gonna look for a duplex in the next six months to a year but I don’t think it’s true to coming down I think they’re going to stay home I’m a buyer at the Shane property and I like the RV parks as well but I’m Byron Cape Coral Florida

[player]

Real estate investors, let first time home buyers buy their first home . Dont be too greedy

[BradHardy-zw]

Back before the lending market became mature and rates were higher (pre-70's/80's)real estate was a very low risk low return investment. It was typically owned by those "preserving wealth". The current environment looks similar. Look at Latin America where I come properties are very rare due to the fact lenders are scarce due to high risk profile in general. Bottom line- don't under estimate the influence lenders have on the big picture RE market. We may be j for a long period of low returns and low activity