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Real Estate Investor: Housing Prices Will Fall in Next 6 Months – Business Insider

  • Inflation moderated in October, but it’s unlikely the Federal Reserve will cut rates immediately.
  • Higher interest rates aren’t that big a deal, Ahmed Seirafi, a real-estate investor, said.
  • Seirafi said he believed housing prices would fall in the next six months.

Rising interest rates have spooked would-be real-estate investors, bringing down home prices and cooling the red-hot housing market. Even though decades-high inflation is finally showing signs of moderation, the Federal Reserve is unlikely to start cutting interest rates in the immediate future.

The near-term macroeconomic outlook might not look very positive for real-estate investors, but Ahmed Seirafi — a veteran investor who has over two decades of industry experience — isn’t worried.

The 48-year-old Seirafi holds a 178-unit real-estate portfolio spread across three properties in Texas and his home state of California. His portfolio — which consists of two retail office buildings and one multifamily apartment complex — is worth over $50 million, according to documents viewed by Insider.

Seirafi is also in the middle of building a 300-unit development in Anna, Texas, that he will hold 60% equity in. Upon completion, Seirafi estimated the combined value of his projects could be worth anywhere from $400 million to $450 million.

Don’t try to time the real-estate market

With so much on the line, it’d be easy to understand if Seirafi was a little more trepidatious about the future of the housing market as rising interest rates brought prices down. Yet he remains unfazed.

“Everyone’s so concerned about interest rates, but I don’t care if the interest rate is 50%, as long as I’m making money on the property,” Seirafi told Insider in a recent interview. “To me, it’s all about cash flow and cash-on-cash returns.”

For that same reason, Seirafi also believes that trying to time the market is futile.

“Everyone’s looking for the grand-slam home run that wins the World Series,” he said. “They’re all trying to time the market and their investments and when they’re buying and when they’re selling, but you’ll never time it correctly.

“As long as your investment is making money, is well-positioned, and you have enough cushion there for any sort of change in the market, it’s a good investment.”

Seirafi said he had found success by focusing on protecting his investments and finding “really good deals that make sense,” rather than the “perfect deals” that more opportunistic investors may seek out.

Housing prices are due for a correction

Because Seirafi doesn’t take rising interest rates into too much consideration, he’s not that worried about a dearth of investment opportunities. On the contrary, he said he believed it’s crucial for new real-estate investors to get into the market sooner rather than later.

“There’s more opportunity than there has been in the last 10 years,” he said. “I think people can definitely get in on investing, especially in the next six months.”

Even though there’s a lot of properties on the market right now, he’s not seeing any great deals just yet. But he’s optimistic because he believes that prices are due to come down as sellers learn to adjust their lofty price expectations to the market realities.

“They’re going to have to let go of that sale price and lower the price on whatever they’re selling because as interest rates go up, the price has to go down in order to get the kind of return to justify the higher interest rate,” he said. “So people are holding on to the high price, but they’re going to have to let loose of that grip very soon.”

But when housing prices finally correct, Seirafi said the landscape for real-estate investing may be much bleaker, especially for investors who aren’t experienced, are highly leveraged, or don’t have the knowledge or skill set to manage and operate their properties.

“In the past decade, the majority of the success in the market has been caused by the market and not by sophisticated and experienced real-estate practitioners,” he said. “You could be dead in the middle of the street and you could be making money in the last 10 years.”

As a more-normal housing cycle materializes, Seirafi believes these inexperienced investors won’t be able to simply ride the wave to success again and may be in danger of losing their properties, he said.

“Those people who lose their property are the ones who will provide the opportunity for people like me to take advantage,” he added. “People who have the experience in the real-estate industry are going to take advantage of all those who got into the business but do not have the experience on how to run and operate through cycles.”

To help investors avoid losing their investments, Seirafi offered several pieces of advice, including investing with a syndication, not taking on too much debt, going against the status quo, and carefully planning for the long term, instead of chasing the latest trend.

“Don’t chase the sizzle because most people do — they want the cool thing, the hot thing, and that’s what gets people in trouble,” he said. “They chase the sizzle and not the steak.”



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