When is the market good to sell and when is it good to buy?

[William Thomas]

How do you know when the market is good to sell vs when it is good to buy? 

[Joe Villeneuve]

Originally posted by @Mayer M.:

@Joe Villeneuve

Why do you say that? Not that it doesn’t necessarily make sense, but does it in all scenarios? such as a $50k condo that was successfully brrr’d (no cash left in the deal) and now worth $100k

And does it with a $7.5 mil property with the same scenario as above?

Perhaps I’m confusing equity vs. value

I know your a mathematician so curious on your thoughts

p.s. always love reading your posts

 Every deal is specific to that deal.  Also, commercial deals and residential deals are not analyzed the same way.  I sell after I double my equity in a residential property because I start losing money...big time.  I don't look at the property as the asset, I look at the cash in the form of equity as the asset, and as that asset builds, the cash value becomes diluted.  When you initially buy, your cost is only 20% of the PV.  That 20% represents the equity you paid for.  AS the property appreciates, it appreciates on a 1 to 1 basis...meaning every dollar of equity increase is due to a $1 increase in PV.  Now this is free equity, but useless, and valueless in it's current/dormant state.  The only real value it has, is when you release it..meaning you sell the property.  Now ALL of the equity is in liquid form, and ALL of it has a 5 to 1 value.

So, if your initial property cash flowed based on the initial cost, after you sell, you should be able to duplicate your original property (if you analyze and buy based on markets...not one property at a time).  That duplication is in the PV and the cash flow.  However, your cost comes from your now liquid equity/cash.

Look at it this way.  IF you let the equity double, but the property value increases only as much as that added equity, and the CF doesn't go up, you just doubled the cost of that property.  Why not double the return on that cost instead?