It is absolutely easy to say buy when everyone else is selling or to sell when everyone else is buying. These statements assume you are making an informed decision.

Running into a burning house when others are running out doesn't make much sense if all that you are doing is oppose of the masses. You need to have data.

What data are folks gathering today to keep up with the market place as it starts to evolve into a new phase.

Same as before ... the 1% rule . A decade ago when I started, I bought SFH for $70-80k and rented for $1100. Now , it is buy for $160k and rent for $1400 ... no thanks, not worth it for the hassle. I will take my rental profits and invest them into index funds while the market is down, as I have a very long time horizon.

Buy when everyone else is selling doesn't mean buy as soon as everyone else is selling. It means if everyone else is selling, the price will go down and you buy after the price is down.

However, when everyone abandoned Chicago and prices went down to free, I still wouldn't have bought anything there. Price isn't the only consideration.

My mantra continues to be a combination of "look for diamonds in your own back yard" and "look where no one else (or few others) are looking."

What does that "look" like? (*grins)

1) I'm still focused on commercial. The buying frenzy continues unabated in residential, but as David notes that means yields are getting squeezed tighter and tighter. Rents were keeping up, but now a $1500 rent costs $200,000+ to buy. Nope.

2) Commercial intimidates a lot of first time investors. It's more expensive for starters, weeding out a lot of first timers looking to start small. It's harder to get loans, so there's less competition overall. Fewer folks have the ingenuity and imagination to totally repurpose or rebrand a place to maximize income. Residential value increase is limited to improving the tenant payment rate and rent increases on stressed household budgets, adding more bedrooms, etc. With commercial the sky is the limit. Don't like the current building/use? Tear it down/modify it to be something better. Or just rent the dirt "as is". Lots of folks think commercial dirt must have a building on it, but parking is in high demand. Zoning laws are more permissive as well, so while you can't put a tiny house to live in on an empty residential lot in my town, you CAN put a tiny house to be used as an office on a lot and turn the dirt around it into parking space for whatever said business wants to sell (cars, RVs, trailers, sheds, etc).

One of my best investments has been paying a local realtor for access for the MLS. The inventories on the market building ever so slowly. I am also seeing few places with multiple over price offers - something that occurred routinely about four months ago.

Values are still edging upward here, but the rate of that increase has absolutely slowed. I have been targeting my subject to mailers to Multi Families and retiring landlords.

I have been looking for vacant places as I normally do but just sent out a mailing to the delinquent tax list. I an getting more calls on these post cards, but I am also hand writing a short note on them - do you want to sell at the top of the market or after it crashes?

Basic metrics always has been the best assessment of whether to tackle that burning house. On a micro level, cash flow for me is the big one, I want no albatross to deal with. A growing local economy, ideal location (neighborhood on the verge of improving), and property ripe for improvement (or repurpose) are all key things that also go into the decision. All those things you read in books years ago that make up the basis of good investment analysis.

I distinctly remember reading several articles in 1997-8 where prominent guru's were saying the old valuation methods made no sense in this new dot com market right before the bubble burst. Sure enough, the valuation methods of old outlived those stark predictions that everything is different now. It's always best to make your own decisions about running into a burning building based on an UNBIASED, logical assessment rather than what everyone else is doing. People tend to be sheep following the heard, even when that is in the direction of the cliff. History always repeats itself.

Here's things I'm watching now on the macro level to predict ripening of the next crop.

Number of foreclosures hitting the courthouse steps. (going up slowly- more distressed properties to choose from).

MLS- months of inventory, mean sales price over time, and which price points are moving faster (moving away from sellers market, price appreciation slowing, housing in the 70-90% of mean are most desirable which equates to B- properties in my niche).

Fed policy relative to money supply (contracting which means cash will be king in the coming months, getting ready)

Number of new business (new jobs) coming to town (growing astronomically which drives housing prices and rents higher meaning I have to continually adjust my future projections)

It feels like a bubble about to burst, but some facts say otherwise. There is still a housing shortage which could take a couple of years to correct. And even after increases, interest rates continue to be historically low.

Just my opinion, questions to ask yourself are:

1. Why am I in the rental business? For me, it is enough net income to live comfortably on once I retire from my eyeball job.

2. How do I go about achieving this goal? For me, it is residential homes. So how many homes do I need to purchase to accomplish this.

3. That's it.

I use foreclosure dot com to get a feel for the REO activity in my small county. I am noticing something odd but it makes sense. The number of distressed owners basically hasn't changed....there seems to be between 80-125 homes listed.

What has changed is instead of just 8-12 folks filing for bankruptcy and 70-100 REO homes, there are about 80 folks in bankruptcy.

Why?

The way I see it, the banks gave out many loan mods and they worked in preventing the REO tidal wave from occurring. But people got used to not making that payment. so they have to restart that payment - and at the same time inflation has spiked and ouch that hurts them. How do you deal with the pain?

I just gave a quick peek. We have three foreclosures in my town. One of them is a two million dollar house, one is a huge commercial warehouse looking building, and the third doesn't have a price listed but it is located in one of the most expensive neighborhoods. I'm not seeing anything of use to me.