The only certainty is uncertainty

[Chris Tomingas]

I have been looking furiously to get into a turn key STR before interest rates climb higher. I was certain this was the right play so I could take advantage of bonus depreciation, which is going to begin sunsetting in 2023.

But now I am feeling cold feet. 

As long as inflation stays high the fed must keep elevating interest rates and destroying money. The result is the value of all assets are coming down. Prices in vacation markets are nuts and the competition from other AirBnbs is intense!

I don't think there will be a sudden crash but an insidious decline over the next year or two, which in some ways is worse! You won't ever know when we've reached the bottom, but I think we're still ways off from it.

Should I keep building cash (which is losing value) and wait for recession to set in? Or should I buy a rental (which will likely lose value over the coming years)? Perhaps the right play now is a value add, maybe an extreme value add.

Alas, I have returned to analysis paralysis. I heard a quote saying, best to chose a path and stick to it rather than chose no path at all. Value add it is!

Any thoughts or advice?

[Benjamin Aaker]

Analysis paralysis is a real thing and understandable in this market of increasing rates. I recommend that you double down on evaluating deals, even if in your mind you don't intend to buy right now. Each deal needs to stand on its own and you should evaluate not based on your concern about what the rates will do, but what the rate is right now. Evaluate enough deals and you'll find one too good to pass up. Buy that rental. Also, don't assume it'll lose value. Value is only in whatever a single person will pay for it, not what the market says. If you intend to sell in the next few years, I understand your concern. Investors always have multiple exits planned. Plan B should be to simply hold on to the place until the market values increase. All the while, your property is bringing in rent above the expenses because you were smart in evaluating the deal. Which is why you need to keep evaluating deals right now. Trust me, one will pop up and all those analysis paralysis thoughts will disappear.