CW 828 - Bubble Alert! Two Simple Ways To Know When A Market Is Overvalued

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.

Key Takeaways:

[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

Mentioned in This Episode:

Renter’s Warehouse - Get 3 free months of property management with this link.

Jason Hartman

Real Estate Tools