Hello all part time real estate investor and full time CPA. Looking at Houston and Texas housing prices become so heated in the last four months. Looking for advice to calm my investor clients who are getting very aggressive when offering on properties. What guidelines do you guys use to make a pass decision due to a hot market? Is it a certain % up in a year. Do appraisals have any sway with your decisions. Most of my clients are long term hold investors.
Part time investor and full time CPA on this end, too. To me, being a disciplined investor means buying properties that are cash flow positive or neutral and avoiding properties that cash flow negatively. When I hear someone buying a $500K property that leases for $2,300/month and nets them negative $400 in cash flow, that raises a big red flag. In a market like this where values keep going up, you can do okay on a property like that with all the appreciation. But, if/ when there's a down turn, those negative cash flow properties are really going to hurt.