My market prognosis hasn’t changed dramatically since last writing to you. The rapid market gains have largely slowed (at least locally) and we are still tremendously endangered via record low interest rates. Cap rates have continued to decline leaving real estate investors nowhere to turn in this wild “where the heck can I make a decent return?” world. At this point you can barely break-even on multifamily property purchases and you are betting solely on appreciation if you look to buy a single-family rental property. From where I sit that means we’re much closer to a market top than a market bottom.
For friends and family I continue to recommend patience and extreme caution with any new real estate acquisitions. I truly believe the risks outweigh the rewards in this current market environment. That being said, I’ve advised exactly that for the past two years and the market has continued to appreciate, albeit slower than the break-neck pace of 2011-14. Advising rational thought in an irrational world can make you look foolish. In time I’m confident my suspicions will be proven correct but in the meantime I can expect some frowning loved ones. I’ll take a frown over tears any day!