It would work - but the market (yes I am invested there as well) can be unexpectedly volatile (COVID is a good example - my portfolio dropped 28% in a week).

I feel like being outside of the Nations Cap gives us an advantage as the market here is not quite as volatile compared to other markets. 

The quad was a purchase after the holding period of funds had expired.My motivation for moving on from the condos were the volatility of the association and deferred maintenance during the recession gave me the feeling that I was in for assessments pretty soon.

I would have assumed a cyclical marke is one that is more subject to price volatility due to market/economic cycles.

I have the fix and flip scenario where I have a bit more control over the asset and the market (I am not exposed to long hold periods which open up market volatility and other risk factors) and Aaron has more of the buy and hold, often with seller financing.

But, in some markets, it will be more volatile, you will see spikes up and down.I don't plan to buy in the US until at least late 2015 unless there are some dramatic changes.As for the foreign money flowing in, that has already happened and will continue.

I would think rental rates would be less affected as they usually are less volatile.

Such increased values are not taken by insured lenders.I can't change what the rules are, lower of cost or market, 12 months in RE valuations (marketable assets are different, they go at current book value, a horse of a different color, but I'd also say in reality, that any security that jumped in a very short period to double it's value probably wouldn't be taken at current book as collateral as it would be considered a very volatile security).The rules and regulations as well as definitions are what they are, opinions won't change them, I didn't make this stuff up, they have been effective for decades longer than I've been in business.As I mentioned, there are folks on BP who disagree, some for the opportunity to disagree, some to validate what they do, some have other motives, but it is what it is, you'll do better my understand the how valuations are treated.Point made on accounting matters, we are getting off topic in David's success story as the topic. :)

Orange County will not be subject to same level of market volatility as other areas due to the simple law of supply and demand.  

The market is at an all time high at the lowest volatility in 20years.