The Most Important Metric In Real Estate Investing
There are two distinct groups of real estate investors. Those that invested in real estate after 2011 and those that invested before the prior financial crisis.
I have seen a lot of big operators who have not necessarily been through a down cycle and were very positive and gung ho and said things to me like "you can't really time the real estate market". I definitely don't agree with that.
A house that rents for $800 a month that is selling for $80,000 is very different to a house that rents for $800 a month and sells for $160,000. When you are looking at the multiple or the price to rent ratio the reality is that at high interest rates and high prices, it's very difficult to find a property you can buy, rent out and cash flow.
So you can time real estate from the perspective that the minute it becomes no longer sensible to buy properties to rent, then investors stop buying them. When investors stop buying then there are less buyers. When prices come down, then even sellers that did not want to sell start selling. As prices pull back, and as rents go up over time, everything reverts back to normal price levels.
What I have found over 21 years of investing in real estate is that 50 times rent is very cheap and 200 to 300 times rent is very expensive. Right now we are at the expensive end of price to rent ratios in retail pricing. That's why if you can learn how to buy wholesale at 50 cents on the dollar then you can eliminate this pricing issue and pick up equity (and cash flow) because you are buying at the right price.
Learn how to do this by attending my next Wholesaling Real Estate Boot Camp. You can call my office at (561) 948-2127 for more info or visit this link to learn more:
https://www.lexlevinrad.com/distresse...