Is a crash in sight?

[Moshe Baum]

A big question that investors are facing now is as follows, since the fed hiked the rates, and it is only getting higher, does that mean that there will be a real estate crash in the near future?

for instance, if I do a hard money fix and flip deal, and by the time I'm ready  to make a cash out, (in a few months  from now) it will be in the middle of a crash, and the rates will be much higher then expected, and the value of the property will drop, I'll be in big trouble getting a bank to do my refinance,

so back to the question, Is a crash in 2023 a possibility? And is it enough a concern to hold on new deals for now?

[KT Burkholder]

Yes, it is a possibility, and one that you should calculate for. However, I won't let it hold me out of the market and I wouldn't let it for you either. It will however cause fewer deals to be good deals. One of the things that I am doing with all of my new acquisitions is adding in a 6 month longer window - supply lags - and calculating all my DD using 80% of the current market value with the same monthly expenses. 

The reason for the later is that what people are paying for a home is what they can afford monthly, not the price of the home. As the fed raises rates the same monthly payment will buy a cheaper house and my calculations put that at about 80% of the current cost within 18 months conservatively. Since I am in it for the long haul as long as after repairs I am not paying more than 80% of the current ARV I will protect against the downturn and therefore our investors money.