I bought a four-plex building for $530,000.
It was the most valuable possession that I had owned at the time.
Then the building value went down, down, down.
It fell from $530K down to $500K, then $490K, then $480K.
I didn’t know where the price bottom was going to be.
Soon I learned that no one could buy it from me because no one could qualify for a loan.
Everyone was afraid that the market would only fall farther, so no one wanted to buy it from me, even if they could.
I had never experienced this before, and it sure didn’t feel good.
I bought the building in 2007 and the price bottom was the height of the mortgage meltdown and resulting real estate slump of 2009.
Pretty soon, I began to discover that because no one could qualify for mortgages, that meant that people had trouble buying starter homes too.
As a result, my rental demand went through the roof.
Next, I found myself being able to charge more for rent than ever and my four-plex’s occupancy was always 100%.
I started to ask myself: “Why would I WANT to sell this building while it’s paying me better than ever every month I hold onto it, even if it’s temporarily suppressed in value?”
A couple years later, the price rebounded, and I had enjoyed the cash flow all the while.
Lesson learned: buy for cash flow (rent income exceeds monthly property expenses) and the value really doesn’t matter than much!
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