Oh, and they are being repackaged into securities.I am sure you would agree the macro environment has a lot to do with how people feel and therefore how well the economy does generally.I have come to think that the debt load will be a hindrance on growth, and 10 years of low rates has baked in some risks, we otherwise would not have, in place.I am absolutely investing in real estate, especially since the last similar instances of this situation have sent the stock market sideways for a decade, and imo will put a lot of pressure on multi family or any cash generating asset.That certainly could compress cap rates even more, but will vacancies increase at the same time?

My experience is the % discount from ARV generally compresses as the ARV gets lower.The 450k home doesn't necessarily equate to a much larger rehab.

When the market rises again they stick to their preset amount.This way you have a steady plan but capitalize on the down turns.4 to 5 years ago someone could buy a multifamily at a 9 or 10 cap and do nothing to it and lets rent growth and cap rate compression create the yield.These days it's all about buying value add to create the high cap for equity after stabilizing or doing new development where you cap rate to cost is high once built out. 

It typically takes some strong value adds and cap compression to get those kind of returns.  

Living in Fort Collins, the way the market has appreciated over the last 3 years has made people do some things they might not otherwise and ask new questions because the market has compressed buying so much and giving homeowners a new found confidence.While I do agree with most on here that it would be a bad idea to take on negative cash flow every month, i disagree that town homes are a bad investment option.

Cap rates can still compress in some neighborhoods.

Once I find out my true "why", I pushed past the fear, educated myself, became a life coach and went all in, or as they say, burned the ships.The market has slowed us down in adding to our portfolio, cap rates have been compressing and buying right is more challenging.BestGino

conventional rates on the rise and HML rates falling.with all the private money / Hard money / secondary financing/  rates have been super compressed.. part of this on the west coast is lack of inventory and deal flow.. so to get deal flow HML are lowering rates.and of course rates had to rise from historic lows on conventional.anyone seen this set of circumstances before?

Cap rates have already compressed anything on the MLS or the auctions. 

Because water won't compress, it will then just push out somewhere else besides your basement (like back out of the storm drain on the street).