All Forum Posts by: Nolan O.

I also wonder how accurate/realistic/predictive the four-phase market cycle model is. For instance, I'm not sure where to find vacancy rates leading up to the 2007/08 meltdown. My understanding is that the meltdown was driven by the mortgage markets imploding, not necessarily oversupply, which would be indicated by increasing vacancy rates. What was the vacancy rate trend leading into the 2007/08 crash?

I wasn't investing leading up to and during the last crash, but I'm interested in absorbing lessons from those who learned a lot in that time. If you were investing at the time...

- Were you investing right up to the crash?

- What sort of leverage were you using at the time (fixed, variable, interest only)?

- How did the crash impact your portfolio?

- What are you doing differently (or the same) now to ensure your current portfolio is sustainable?

Great points and perspectives here. Really, this is very helpful! I'm going to think on this advice. As an aside, have any of you been burned by cashing out equity to the point where you ended up running too lean? 

I bought a rehabbed home about a year ago (turnkey-ish), which has cash flowed nicely and also appreciated significantly since. Given the appreciation, it appears I may be able to do a BRRR (rehab R missing) and recoop my initial investment. The only question in my mind is whether it's worth eliminating the cash flow to redeploy that initial investment. The tenant is about to re-up for a two year lease at her current rent, which is now below market (trade off, I'd rather reduce the turnover than risk scaring her off by bumping up the rent). Anyways, based on the below numbers, what would you do?

Current State

• Purchase price: 77500
• All in: 23902
• Balance: 57038
• Rate: 4.125
• Monthly P&I: 281
• Monthly Insurance: 82
• Monthly Taxes: 135
• Management: 76
• Monthly Vacancy Reserve: 48
• Monthly Capex Reserve: 85
• Monthly Repair Reserve: 59
• Rent: 950
• Monthly Cash Flow: 202  

Possible Refi

• Zestimate now (Zestimate was accurate -- within 1k -- at time of purchase): 108346 
• New loan (75 LTV, with 3k for closing): 84260
• Estimated New Rate: ~5.125
• New Monthly P&I: 281
• Cash out: 24000
• ...
• New Cash Flow: 33

@Account Closed, if you're aware of a recent market sentiment poll of investors, the community BP represents, I would love to see it. Personally, I haven't had anyone survey me about my thoughts. Is that something you get frequently? I'm of the mind that if folks are interested in seeing the results, they would be open to providing their input. 

Who would be interested in seeing a market outlook/sentiment survey of the Bigger Pockets community? What insight might you like to see out of something like that?

A recent forum post (Dollar-Cost Averaging Applied to Rental Property Acquisition) has me thinking about market phases: Recovery, Expansion, Hypersupply and Recession. (Boring and academic, I know. Bear with me.) Many markets are going gangbusters with new construction, but the markets I follow are continuing to see decreasing vacancy rates (which leads me to believe we're in the Expansion phase). As those additional units are absorbed, supply will catch demand, eventually. According to this market phase model, when we see vacancy rates spike, we will be entering the Hypersupply phase. Given that construction lags and new units will continue to come online, even after supply begins to outpace demand, Hypersupply will tend to lead to Recession. The question I'm hoping to get your thoughts on relates to our ability to see transitions in price trends coming. Do you think vacancy rate is a leading or trailing indicator for price? Put another way, when we see vacancy rates spike, do you expect median sale prices to have already started dropping, or do you think increasing vacancy rates will precede a price downturn?

Are we in the Hyper Supply phase, @Dmitriy Fomichenko? It certainly "feels" like we're approaching the edge of a cliff sometimes, perhaps even experiencing a blow-off top. But the markets I follow still have very low inventory compared to demand, and my understanding is that the Hyper Supply phase has two defining characteristics: New construction (which is happening) and increasing vacancy rates (they haven't yet broken their downward trend). I don't mean to fork the thread -- which is about NOT timing the market :P -- but I'm just curious what you're focusing on with regard to market phases. 

List prices can be just as inaccurate as Zestimates too. Some list VERY low to attract attention and attempt to incite a bidding war. 

You could also go the turnkey route, or offer above asking to get something under contract and leverage appraisal and inspection contingencies to negotiate the price down. (That approach has worked for me in the past.)