Have you guys heard of utilizing the stress test?

Question

What do you guys know about utilizing the stress test when running the numbers on properties, and is it really something that needs to be done? I spoke to a lender in O'Fallon, IL that thinks there will soon be another market crash, and lenders will start increasing interest rates to 7-8%. I honestly feel like he was just trying to scare me because I'm young.

Bryan Balducki · Answer

@Jayden Hamilton the stress test is important because it finds areas where you might be weak when it comes to your investment abilities. This is to prepare you for market fluctuations and look at how an investment would perform in a market crash scenario and test your ability to withstand vacancies, lower rents, or a decrease in home values. It will look at your reserves and see if you can cover when a situation arises. It is not to scare you but prepare you for the worst. Don’t let this lender scare you, because he does not have a crystal ball and no one knows what the future holds. Just make sure you do have adequate reserves for your investment and a backup plan. Hope this helps!

Kevin Miller · Answer

Rates should have increased long ago, now is too late - even a hint at a future rate increase causes the markets to dump, like a baby tantrum. The fed will stay at 0 and print money until we fall off a cliff. Hard to say how to react anymore as we don't live in a capitalist system, we have crony capitalism; the fed just paid jeff bezos to fly into space. Buy as many assets as you can, the transfer of wealth going on now is the largest in history. The ECB, you know the clowns who are going after crypto for "money laundering" gave this Arnault FREEEEEE money to buy Tiffany & Co. to surpass Bezos as richest dude in the world (except for those abu dabei guys who don't disclose). Our Fed needs to give Bezos more $$$ to now catch up:)
https://observer.com/2021/05/l...

Have you guys heard of utilizing the stress test?

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