$50,000/door for '60es Junk!

[Ben Leybovich]

It is absolute comedy out there. The last several apartment communities that have come across my screen in Ohio and Indiana were being marketed as "value-ad" at $50,000 to $60,000/door - these were all 1,960es construction...

I have to laugh. These are trophy asset prices for 60es junk with rents of of $650/month - NUTS!

And what would be the value-ad proposition when you're starting out at the absolute top of the market?

I just laugh...

[Serge S.]

@Steve Olafsonwhat happened? 

Steve hit the nail on the head. If RE investors can hone just one skill, it would be the ability to recognize where we are in the cycle and move accordingly. You want to accumulate heavy buying the best assets with as much debt as possible irrelevant of rates, naysayers and the doom and gloom around you. Once the cycle peaks we shift sideways via 1031 to either other asset classes that have yet recovered (SFR, retail, MF, Office, whatever) while holding the true quality cash flow which at that point becomes irreplaceable. By that point you should know exactly what you are holding. If everything you are holding is a homerun then at that point its time to consider deleveraging or accumulating cash for the next cycles.

These cycles take a long time and can be hard to see if you have not been through a few. These cycles will wipe out the weak that jumped in when risk was seemingly low (positive employment, RE in the news and uncles buying SFRs) while those that accumulating will be moving sideways growing their balance sheet preparing to buy from those that missed all the signs. Stay disciplined and staying patient is the name of the game.