112: Rookie Reply: Should You Invest in an Expensive Real Estate Market?

Real Estate Rookie

BiggerPockets

How To, Education, Business, Investing, Entrepreneurship

4.8 • 1.7K Ratings

🗓️ 11 September 2021

⏱️ 12 minutes

🔗️ Recording | iTunes | RSS

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Summary

This week’s question comes from Scott (@hotdads1) through Tony’s direct messages on Instagram! Scott is asking: How are expensive properties profitable? Is it a mindset shift to buy expensive properties, or should I look in cheaper areas? Should I purchase in a quickly appreciating market? This is a very 2021-type question. We’ve seen numerous markets around the United States (and the world) see massive appreciation over the past year and a half. Now, real estate investors wonder if it’s even worth pursuing deals on the market. Although prices may be higher than they were before, you still have numerous options when trying to purchase a profitable rental property. Here are some suggestions: Price becomes irrelevant when looking at cash on cash return and true cash flow Look at creative financing solutions (like FHA loans) to close on a home with low money down Calculate your numbers for the long term to get rid of any short-term price dropping fears Stop looking at past prices and ask: “Is it a good deal today?” And more in the episode… If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE). Links from the Show Real Estate Rookie Rookie Facebook Group Real Estate Rookie Youtube Channel Scot Morris's Instagram Rookie Podcast 109: From Sleeping in His Car to Multi-Unit Landlord & The “Nomad” Strategy Check the full show notes here: https://biggerpockets.com/rookie112 Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Real Estate Rookie Episode 112.
0:04.3	My name is Ashley Care and I'm here with my co-host Tony Robinson and we are back with another
0:13.0	rookie reply. Today, we are not picking a topic, we are not pulling one off Facebook,
0:19.2	we actually have someone that's slid into Tony's DMs and Tony, what does that DM say?
0:26.1	You guys know the drill before we get to the episode let's hear a word from our show sponsor.
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0:56.5	Go to Salesforce.com forward slash 360 to learn more.
1:20.0	All the time visit kraken.com slash see what crypto can be to learn more.
1:25.2	Don't invest unless you're prepared to lose all the money you invest.
1:28.0	This is a high risk investment and you should not expect to be protected if something goes wrong.
1:32.6	So this message came from a Scott Morris and his Instagram handle is hot dads one so hot
1:39.2	dads number one and he said hey Tony, I'm a huge fan of what you and Sarah, my wife,
1:45.2	what you and Sarah are doing in this short term rental space. I'm having trouble wrapping my head
1:49.6	around the prices and the smokey mountains and how can those properties even be profitable
1:55.3	at the current market value. Am I looking at things the wrong way and is the price not make that
2:00.4	big of a difference in strong markets like Tennessee. I'm just trying to figure out if this is just
2:05.4	a mindset shift that needs to happen or if I should be looking in different markets.
2:11.0	So Scott, great question. And I think it's really part of a bigger question around
2:16.4	should you continue to buy in a market where things are appreciating quickly, right?
	...

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