What To Do In a Changing Market?

[Robert C.]

Hi Folks!

I'm a new BP member, although I totally just binged a dozen podcast episodes! So much fun to hear interviews of other investors!

Real quick, I'm a Bay Area multifamily investor. I started in 2010, and things have been all on the up-and-up... rents have nearly doubled, appreciation has been crazy, and of course everyone knows the interest rates have remained super. However, this year the Bay Area market seems to be normalizing. There may also be signs of rents backing off and there's nowhere for interest rates to go but up!

Here's my dilemma: I've ONLY seen the good so far in my career. I'm wondering, how are other seasoned investors strategizing now that we may be cresting the top of the market? Hold? Sell? Diversify? Is there a way to maximize returns as a buy and hold investor even heading into a dip?

In general, it seems like younger investors tend to be sellers (pay the tax and wait) and older investors tend to say "hold". Thoughts?

[Russell Brazil]

For me personally, it does not matter if prices retreat. I know that in 10 years they will be higher than they are today...it doesnt matter to me if in 1 year they are lower.  So with that being said, my strategy is to continue to acquire more mortgage debt while rates are still this low. By the way, you probably thought rates had no where to go but up 6 months ago as well (I did) and they have been in a steady 6 month decline since then.  Frankly I thought rates had no where to go but up from 5% (Owner occupant 30 year note) in 2010, and they went all the way down to 3.3%.