If you’ve been watching multifamily investing from the sidelines, you might be wondering if now is the right time to get started.
In today’s video, we are going to talk about the intangible aspects that impact passive investing: timing, greed, and fear.
Things are Heating UP!
My argument is this: it’s always a good time to get into multifamily investing.
The difference that I’m seeing right now, especially during the times of COVID-19, is that it’s somewhat challenging to find deals. Deals haven’t been around and that’s frustrating to both operators and investors.
But, over the next few quarters in 2020, I’m confident that we’re going to find more opportunities and deals rolling in. In fact, we’re already seeing evidence of this happening.
I anticipate that the weaker operators out there are going to feel the squeeze. They may need to refinance or possibly sell to get out, which is going to create opportunities for us to buy at much lower prices.
As a result, the passive investor is going to see much more opportunity to invest later in the year. Use this bit of lag time to research operators and choose wisely.
It’s important to invest with a strong operator that is carefully considering their investment options, and not just snatching up every property that comes up for sale.
We don't know how far down these prices are going to drop, and we don't want to try to catch a falling knife. We want to pick it up when it's on the ground. Right? As an operator, we're going to be very cautious with how we proceed.
Right now is an unprecedented time that we haven't seen since 2008. I’m excited about what’s to come, and so should you!
No Winners in the Waiting Game
There is never a perfect time to do anything.
Whether you’re starting a family, starting a business, or just starting to invest – perfect timing doesn’t exist.
Of course, you can always be better prepared. We strongly believe in being confident in your investing decisions through self-education. But there comes a point when you have to pull the trigger and just go for it.
Some people think the multifamily market is overheated, and they will wait for it to cool. Then comes a recession trough and they say, “Oh no! Now probably isn’t a good time to invest.”
Hot or cold, if you’re waiting for the perfect market timing, you’re going to wait forever. As they say, the best time to invest was 10 years ago. The second best time to invest is today.
During this time, there are a lot of our peers that are playing the waiting game. They’re simply not doing anything, and that’s fine, but we are a little more proactive at NightHawk Equity.
We’re still looking for deals, but we're very cautious. For example, we aren’t putting deposits down on day one. We are looking for financing contingencies, mostly because the capital markets are really wacky right now, and we don’t know what the value will be in 2 months.
We’re not only looking at price, but we’re also looking for the right deal's terms to protect us. We get as many deal extensions as we can because things are changing on a daily basis!
The bottom line here is this: don’t play the waiting game. Start by partnering with a proactive operator that has their finger on the trigger today, and will capitalize on their preparations tomorrow.
Greed & Fear
Our Director of Investor Relations, Bronson Hill, loves to study Warren Buffet. One of Warren’s most famous investing rule is this:
“We should be fearful when others are greedy, and greedy when others are fearful.”
Why is it important to be willing to invest when others are fearful? It seems counterintuitive, but I remember back in the recession, the greed was so strong in 2005 with a run-up on property prices. People would brag at the real estate investment clubs about buying a house for $100,000 and listing in on Craigslist for $120,000.
At the time, there was a lot of greed and a complete absence of fear. Fear is actually a good thing because it helps to keep us alive. Fear stops us from doing dumb things, like jumping off a literal cliff.
Fast forward to 2008 and there was blood in the streets. Everyone was selling and no one was buying. Holy moly! I mean that's why the stock market and real estate went down. There was only fear, so more people were selling than buying.
But those who DID buy during that point in time created wealth. The same opportunity is presenting itself right now. People don’t want to buy because they are fearful, and they are waiting for things to swing back up.
The thing is, once things are back in full swing, you’ve missed the real opportunity! When your grandma and everyone else around you is investing in real estate, it’s a sign that it’s too late to jump in.
You see, there’s this inverse relationship between fear and opportunity. The higher the fear, the greater the opportunity. The thing that holds most people back is that fear is paralyzing.
When there's fear in this industry, everyone is paralyzed and they don't want to do anything. If you can overcome fear, you’re gonna uncover amazing opportunities to create wealth over the next 12 months.
I'm not saying throw caution to the wind. The key is to stay calm and objectively analyze the investment opportunities that come along.
When Preparation Meets Opportunity
There’s a misconception that people just get lucky in investing. They pick the right asset, at the right time, and chalk it up to luck.
I believe that everyone creates their own luck. You can increase your chances of getting lucky by aligning preparation with opportunity.
We know that the very near future is full of opportunity in the multifamily space. We also know that when it comes to investing, the only time that’s better than today was yesterday.
How prepared are you to pull the trigger?
While there’s a bit of lull in the action, now it is a great time to prepare yourself through education. I’ve pulled together a few resources that you should check out:
Read the Special Report: What’s the Better Investment, Stock Market or Real Estate?
This is a great report that will provide insights into these two popular asset classes. While I am obviously a proponent of multifamily investing, it’s important to understand the pros and cons of each opportunity.
Join the Deal Maker Community: Deal Maker Mastermind
Connecting with operators and other passive investors is one of the best ways that you can immersively learn. We have a mastermind community full of people that are serious about investing, learning, and sharing through networking. Join us to see what it’s all about!
Schedule a Call: NightHawk Equity
If you’re ready to have a conversation with an operator about the investment process, why not start with us? This link will take you to the Nighthawk Equity website where you can register to join our investment club. Once your account is created, we'll follow up with you to learn about your investment goals and if there's a fit, we'll notify you of upcoming investment opportunities.
Thanks again for being here with us, and for taking the time to educate yourself about the opportunity to invest in multifamily syndications. We’ll see you in the next video!