Worried about declining property values?

Question

Lets say you can purchase property at a "nice" discount under retail value, as in 20-40% under market value...simply being in the right place at the right time.  Ok, its a bargain.  Now, if you intend to lease this property out, and "wait out the storm", then investors who are doing this with intention of selling later, obviously have are betting that property values stabilize at some point and head north again, correct?  There are also tax advantages to this type of strategy, compared to flipping.

Timothy W. · Answer

Frankly I'd love property to lose more "value".  I thought I was getting them as cheap as I could.  Personally I don't care about "value" when it comes to the daily operation of a real estate rental business but there is a voodoo to owning a "portfolio" of properties rather than onesy, twoesy rentals.  The portfolio starts getting "valued" based on it's cash flow rather than what the market is doing.  Learn that voodoo and you can do some crazy things with "valuation".

Shaun Steckler · Answer

I think that in today's market you should acquire property at a 40% discount without a problem.  This is the easiest market to do that in.  
When it comes to your exit strategy, that should have been decided before you made the buy.  Buy low, renovate and rent is really hard to beat.

I hope you're not thinking of selling (after a year and a day) and paying capital gains tax to Uncle Sam.  Always look to 1031 into a larger property.  This way you can defer your tax obligation indefinitely.

Steve Beck · Answer

I'm not making much off my rental properties and my hope is that the value goes up and I can sell them someday, and payoff my primary and maybe one rental for additional income.  I pay interest only so at this rate, I won't pay them off unless the value goes up and I can sell a few.

Rich Schroeder · Answer

I agree with Tim...I don't really care if the value goes higher....I'll take my cash every month and run to the bank to show them.

Vikram C. · Answer

It's just like stocks.  The cheaper the better to a real investor.  The key is in identifying which stocks are cheap and deserve to be, and which ones are simply mispriced.  More art than science, in my opinion.

Worried about declining property values?

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