RE investors have a more in-efficient marketplace due to the illiquidity risk, irrational buyers, and uneducated consumers.

Looking at what has been going on in the Chinese stock market and now what the government is doing to the Yuan I can see the rational.To Donald's point about developers buying up small multis for condo conversions, and do anything they can to add units if possible, or enlarge them if they can't, to get as much stuff out there while there is the irrational exuberance.  

If they are in their 20's or 30's, it is a very different risk category than if they are all in their 70's or 80's (in which case I would not move a new tenant in).Really this is about satisfying their fears, which may be partially irrational. 

Extremely unreasonable, I mean borderline completely irrational.

The equities markets have been irrational for some time now, you can't compare to them.

Costing them more money that they're getting negative returns on.Finally, with them already having had an auction, and you winning with the bid of $425k.... it would be irrational for them to hold another auction in the hopes that hey get a higher bid.

The marriage that involves yelling and irrational rage over the tenant.....WTF indeed.

In practice, the effect of tax savings is usually not included because it can be complicated to calculate.I use CoC and IRR at a minimum to evaluate, and I think IRR is a great comparative metric to use when I need to compare real estate to other type of investments such as stocks and bonds.NOTE: I do use other metrics which are not performance measure related such as 1%/2% rule, DSCR, Breakeven, etc. which help me anticipate potential cashflow problems if any.

These emotions can affect risk perception and lead to impulsive or irrational decision-making.

One reason I'm bullish on Western NC is that many people, myself included, move here for irrational, lifestyle reasons.