Buying in current markets

7 Replies

hello, I am new to BP and am about to sell one of my two rentals for a profit. I bought in 2004 and can cash in on equity; however I am rather Leary about current market conditions and I see many bubbles bursting like they did in 2008. I want to use the cash from the sale and buy more RE however am getting skiddish. Any thought? Is it all about cash flow? How do I buy in this market?

With your potential profits from the sale, will what your next buy be better then what your currently considering selling?  I dont see any bubbles bursting in the near future but I am no economist.  I see prices continuing to slowly increase. 

Good luck

As always it depends on your markets! Personally in my markets the market has not recovered to its previous high. Let alone gone above it. In my markets I predict them still rising alot in the next 0-15 years. So I am in the BUY mode. As always the question is where are you going to put the profits to make more of a return than your current homes?

thanks for your replies. I suppose I can't foresee a market/housing decline (there are economist predicting it in the next 2 years), but I want to know what my contingencies are. I am thinking  buy and hold is a good option as long as there is a strong rental market and good cash flow? Do I forget  equity returns, but as Josh Dorkin says...it's the icing on the cake and still worth while?

Brian:

Real estate markets go up and down, typically in a 7-8 year cycle but we never really know for sure. What you need to be aware of is trends in your own geographic area.

Then, focus on buying at deep discounts. Not all markets took the huge dive that you hear about on CNN. In our area, prices dropped about 15%. So, as long as you're buying at least 25% below retail values (that's after the property has been repaired, you should have not more than 25% below retail invested in it), you are pretty safe over the long term on most anything you hold.

If this was an exact science with exact answers, however, everyone would be doing it and no one would lose money!

Be cautious, buy low, but don't talk yourself out of investing.

thank you. That's what I wanted. I really appreciate preciate your post. I'll move ahead. Thanks, Brian

Would just the profits of your investment let you buy something that would cash flow as well as the current property(presumably something cheaper)?  If so I would try to do that.  Then I would take the original investment and try to find an even better investment.

I lease optioned it. I will get 70k out with a 23% ROI total over 5 years.

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