Cashflow Investors' Strategy During Peak Years?

[Mehran K.]

Hey Guys & Gals, especially the folks that have been around for a few cycles of the RE market!

In the big scheme of things, I'm fairly new to investing. I've only been around post-crash and am blessed with a market filled with great cash flow opportunities in the residential (1-4 units) arena. As prices and rates start creeping upward, I can't help but wonder how this will effect my strategy down the road.

During the times when prices/rates are higher (which was the case before[boom], and inevitably will be again) and rents don't follow, what is a buy & hold cash flow investor to do?

Do people generally stop adding to their portfolio during these times?
Do they just keep the same criteria and have to scour/mine for deals harder?
Do they change their investment strategies all together?

I'm sure there are tons of views on this and I'd love to hear them!
I'd really appreciate the chance to learn from the experience and insight of those who came before me so I can better plan for my future. Please share your thoughts!

Thanks in advance :)

[Frank Oudheusden]

@Mehran Kamari

I think wise investor do all three of the things you suggested. While buy and hold may be your personal preference (it is also mine) knowing about other investment vehicles will let you ride you cycles where it's not plentiful in the buy and hold arena.

I think you could do several things with the cash:
- pay down your current mortgages faster and save on interest payments you didn't spend.
- fix up current properties to obtain higher rent (ROI on a $10,000 kitchen would be in direct rent increase?)
- Put some cash in with a hard money lender and get a nice return?
- Invest with someone reputable who does flipping?

I will always be looking for deals in my market, even if I don't have the money. If nothing else you'll notice when prices go up or down and it will help you keep your pulse on your area.

If you still have cash leftover and you're looking at other investment vehicles the old mantra of "zig when everyone else zags" comes into play. You should always be thinking of changing your investment strategy since the market changing is the only constant in investing.

What investment gets cheap when mortgage rates and home values are higher?

-Frank-