In this episode, Jason outlines the two simple principles that alert an investor to an overvalued market. He explains the rent to value ratio and construction cost approaches and how the methods are applied to the linear, cyclical and hybrid markets. Jason also explores the benefits gained by experienced investors who use the proper metrics to analyze properties versus an immature investor who follows the current trend.
Mark your calendars for July 8th and 9th for the upcoming Oklahoma City Property Tour and JHU Live Seminar.
An amateur investor is seduced by capital appreciation and capital yield. A seasoned investor favors rent to value ratio.Click to tweet
[02:20] Jason explains why capital appreciation is attractive to the amateur investor.
[07:54] How do you know if the real estate market is overvalued?
[14:36] The self-storage facility purchase that wasn’t meant to be.
[23:09] The comparison approach, the income approach and the construction cost approach are the 3 basic ways properties are valued or appraised
[23:50] The Rent to Value ratio is the current value versus the rental income.
[26:56] The Cap Rate is not a good metric for residential real estate investing.
[28:15] Using the Debt Coverage ratio as an investment metric to protect your assets.
[33:34] The Oklahoma City Property Tour and JHU seminar will be on July 8th and 9th
How are all of the Congressional scumbags rich? They accept bribes and favors from lobbyists that’s how.Click to tweet
Mentioned in This Episode:
When the rent to value ratio gets to .5 you are in bubble land. Ideally, you want to get 1%.Click to tweet
iTunes: Stream Episode