If you're already cautious about not putting in higher Offers, I recommend: remain cautious!You seem to have a good head on your shoulders. People can throw in statistics all day long to support their point of view. But, ignoring your OWN fundamentals could be very risky! My 2c...

There is good info in this thread! My purpose is to retire in 10 years. The pace I am current acquiring properties at is slowing my plan down. Im watching market prices rise and rise and also wondering the following..If there are a lot of investors just like me buying properties and turning them into rentals due to the low interest rates. Wouldn't that eventually drive down rents? ( AKA cashflow)

Some of this is really academic stuff. The CoC is money deposited to your account.Q? What is the purpose of YOUR investments? That should be your compass.

Two things: Cash Flow and ROIYes remain skeptical on pricing but don't turn properties away if they cash flow well and the ROI is on the high end (12% and over). Just food for thought: What would happen if you bought an investment property for 200K which cash flowed $500/mo. with an ROI of 17% (just an example) and the month after you bought it the value dropped to 150K? Does it really matter if you're not going to sell anytime soon? --- Now if you're trying to refinance and take the cash back out sure it would affect that and you would be on 'pause' from being able to do so, but you wouldn't be loosing $ on this investment, you would still be cash flowing and making a profit. Still look for a deal and don't over pay but really the term 'overpaying' for a cash flow buy and hold investor is obviously determined by what you pay compared to market pricing but MOST importantly what you can cash flow... if you cash flow only $100/mo. then yes you overpaid (in some markets) if your cash flow is healthier then you should be okay in the long term so long as you don't sell during that time and you are fine not needing to refinance during that time. It is possible to over pay on the purchase and yet have a high ROI say... 20% with higher cashflow which would make it underpaid in a sense Ex: Home1 50K BELOW market cashflows $400/mo 12%ROI / Home2 100K OVER market cashflows $1000/mo 19%ROI......... just know that your probably not refinancing anytime soon and that equity is off the table for now. I hope this helps.

That make sense as well. I'm conflicted.

Wow! Very good take on things!!! I was wondering why I keep getting outbid on offers! It makes sense now! I think I was just looking at things the wrong way. That was a long time ago!

Three brief thoughts: 1) at some point prices will make new highs. 2) it's been 8-11 years since "2005-2008". 3) you're not accounting for inflation, so prices haven't actually reached "those" levels quite yet. Even at 1.5% inflation you're looking at the mid-teens percent higher prices. $700,000 in 2005 dollars is closer to $800,000 in 2016 dollars.

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Updated over 8 years ago, 10/07/2016

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Brandon P.Poster

Pro Member

Investor
Paradise, CA

General Landlording & Rental Properties

What is Smarter?

Brandon P.Poster

Pro Member

Investor
Paradise, CA

Posted October 06, 2016 23:11

When you find a pretty solid SFR Buy n Hold investment property is reasonable to just look at the Cash on Cash return or should the market purchase price be a significant factor? The reason why I ask is with the current low interests you can find 10% cash on cash returns, but the purchase prices on the investment are at or approaching the previous bubble peak price. ( 2005-2008)

Is this dangerous? What are your thoughts?

Brandon P.

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