Should you Invest in this Market?

Question

Having listened to both the BP Real Estate Podcast and On The Market in the last month or so, I find that there is much more uncertainty present as to what direction we're moving in and the best way to handle a possible recession.

With rising interest rates and inflation, a changing market, and different dynamics in our investing world, what are some of your own personal ideas in regard to investing in today's market? Would like to open a conversation as I think there are valid points on both sides.

Victor Steffen · Answer

You should, absolutely, 100%, continue to invest. If you're following sound fundamentals (buying 20% below market value, cashflow positive real estate in areas with growing populations) it would take a true black swan to derail your growth and leave you worse off than not investing.

Victor Steffen · Answer

@Christian Sabatini Interesting Question! curious to hear what you think as well?

IMO: higher rates are just another line item in your pro forma. If the cashflow margin is adequate with the higher rates go ahead and proceed with the traditional 20-25% down payment.

More equity in a deal does not limit our exposure- cashflow and liquidity does.

In a nutshell- I suggest my clients increase their reserves rather than put that cash toward a larger downpayment if the property will hit our cashflow target. Always good to have some dry powder especially in the changing market environment!

Jim Bray · Answer

You can tell that the real-estate market is tanking when real-estate

agents start returning your calls six months later after you left them a

message regarding a property. Last month the number of new home loan

applications dropped to a 22 year low. Its is turning into a buyers

market.  Property values will plummet by 40% by September. Lack of

available affordable homeowners insurance, 6 to 8% mortgage rates and new

insurance requirements that require roofs to be below 15 years old will

stagnate the market like the mortgage debacle back in 2008. This time

the government will not be able to float the note for homeowners who are

upside down.

Jon Martin · Answer

Source for 40% drop figure?

Also- I don't recall the government "float(ing) the note for homeowners" in 2008.

Should you Invest in this Market?

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