I’m not an investor but I think the pros shy away from SFRs as rentals in general due to higher maintenance costs. MFRs have the advantage of centralized systems to maintain, driving the cost per unit down.
On the current market, I suspect the bottom has passed at the low end but I can’t be certain. Everyone should know by now the current bounce is 100% contingent on availability of cheap money and government intervention. The reason prices bottomed so hard was due partly to few available qualified borrowers for the terms required to get the money. This was combined by an initial willingness by banks to foreclose quickly and process REOs. All that was during and shortly after the “credit freeze” the markets suffered in 2008. Then government stepped in and changed everything…for now at least.
It is still a 2 tier market. Cash is king and properties that will not go FHA or are not conforming will probably be scooped by an all cash flipper who will rehab to meet the minimum requirements to get the governments loans, then flip to the minimal money down buyers.
I saw an example of this across the street in the neighborhood where I’m buying. An investor paid $175k in June 2009 and sold for $400k in December 2009. Until cash buying flipper margins go down, it seems there is room for more declines. Posters have commented here that at the auctions crazy all cash flippers are bidding up properties, putting the profitability of the deals in question. That is what tells me the bottom may have passed for this cycle. Real estate in San Diego is a magnet for hot money again.
Qualified 20% down buyers really don’t seem to exist at the low end. No one can say what will happen because fundamentals are out of play and the rules seem to change daily. It is depends on getting free or cheap money to borrowers. If any sort of old school lending standards come back, look out below!
