I have an interesting History.
I started a Real Estate Education Business where I taught my own Real Estate Course based upon a solid foundation of Financial Calculations such as PV, FV, DCR, Amortization Tables, ROR, ROI, Cashflows, IRR, etc.
The Year I started the Course was around 2005 or 2006 and I tried recruiting students from an REIA that was called "NYCCashflow".
What I offered was to teach all the Math that was necessary to become a sophisticated Real Estate Investor.
There were also 3 Levels to the Class and each level needed to have a Final Exam to move up.
I only charged $20 per week, but you had to spend 3 hours for that single class per week for approximately 6 months because most Students, including most Investors, are really Financially Math Illiterate.
Really, if you don't understand how to calculate a Future Value or Discounted Cashflow........... I would advise people to learn it before they invest. It's the only way to understand Investing in any kind of Investment.
Of the 500 students who took the class, Adults like you and me, some without College degrees, some with PH.D.s a full range of rich and poor..... only about 30 students were able to get past the 3rd Level exam, which basically made you calculate the Internal Rate of Return of any investment, especially Real Estate.
Of that 30 students, about 20 of them pulled the Trigger as their Analysis proved that there was merit in buying an Investment Property, particularly in Brooklyn and close by.
One student in particular, made $2 Million, again, on a Clinton Hill property.
Most of the other students, made somewhere between $50k and $1 Million.
Some of those 20 are now my partners. We employ our sophisticated spreadsheets to continue to buy in Brooklyn. In fact, we are in Contract to buy a 3 Family in Ditmas Park.
There seems to be a fallacy that I have kept on hearing in my entire multiple Decades long Real Estate Investment Experience.... that somehow Price Matters.
It's not the Price of the Investment that Matters necessarily, it's the Future Cashflows of the Investments in relationship to the Purchase Price that Matters.
Another way of putting it is like this.....
Using about $27k of investment money, I bought a 2 Family property in Windsor Terrace for $140k in 1999. It wasn't a Bargain. It was the same price as all the other 2 Family Properties in that particular block.
But my Internal Rate of Return Analysis (IRR) told me that given all the factors that affect the future cashflows of this property in this area, that this was going to be a great deal.
in 2013, I sold the property for $675k in order to buy a Bed-Stuy property.
The return was astronomical. You can try to do the calculations given that in 1999, the invested Capital was $27k and the sales proceeds was approximately $675k minus $150k (paid of Mortgage and other expenses for the sale) = $525k.
Rents also tripled during that time. Cashflow was great except in the beginning where I had a small negative Cashflow for about 2 years.
Anyway, it's a long story and I'll leave it up to the readers.
The theme here is to really understand the Math about what you are doing. There is a great Book that I had all my students read, Frank Gallenelli's "What Every Real Estate Investor Needs to Know about Cashflow...."
In fact, don't just read the book...... UNDERSTAND the book. There is a difference between reading, and understanding which was why I implemented exams in my course. Too many students were reading and not understanding.
So, back to your question.... did I change strategy? NO. I make assumptions which will get updated when I look for the next investment. Assumptions like what is the likely appreciation rate, how much will rents and expenses rise, what is the long term economics of the area, etc.
I then plug it into my IRR Spreadsheet and it then tells me to pull the trigger.
