Residential real estate tail risks

[Justin Hanson]

As an avid learner of all things finance, economics, business, and investing, and someone looking to get into real estate at what may be a very crucial point in the markets, what are all the tail risks to be aware of? 

Given the current state of the business cycle with rates elevated, potential economic turmoil ahead, and a whole lot of uncertainty for the economy as a whole, Its easy to second guess entering the market right now. Rather than be doom and gloom and miss potentially a great opportunity Ide like this post to be a place for veteran investors who have been through cycles in the past to share some cautions and due diligence for me and any others who are looking to get started. Thanks!

[Chris Seveney]

Quote from @Justin Hanson:

As an avid learner of all things finance, economics, business, and investing, and someone looking to get into real estate at what may be a very crucial point in the markets, what are all the tail risks to be aware of? 

Given the current state of the business cycle with rates elevated, potential economic turmoil ahead, and a whole lot of uncertainty for the economy as a whole, Its easy to second guess entering the market right now. Rather than be doom and gloom and miss potentially a great opportunity Ide like this post to be a place for veteran investors who have been through cycles in the past to share some cautions and due diligence for me and any others who are looking to get started. Thanks!

 1. There are still opportunities today that exist. What people should not do is get hung up in FOMO and forcing an acquisition. Too many people force the numbers to make it look like a deal

2. There will be opportunities tomorrow and I believe as each day passes we will see more opportunities. Why, because a lot of inexperienced investors got into the business over the past several years and there will be a time where they no longer have the cash available to pay their bills or mortgage. Many are over leveraged and eventually will try and walk away from deals that turn under water.

3. If you are in real estate for the long term. Market fluctuations do not matter. Buy a good asset, let it cash flow and hold it. You rarely lose holding real estate long term unless you are buying in cash flow only and no appreciating areas.