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Originally Posted by Prowler
"They" have been saying its about to burst since 1998 when this thing started. $500,000 gain per house later...hmmmmm
id say im glad i didnt listen to people like you and kept on investing..i have 14 houses and there is NO sign of a burst in CA or LV or AZ keep on keeping on..
i have scared friends like you that for years told me "hey man dont buy now, just wait" and they are very sorry.
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I'm not "scared". I'm buying this year. I put down enough on each property that there is a solid profit after mortgage, taxes and maintenance. This is a good way to manage your risk. Profiting from the positive cash flow. I plan on holding these homes for up to a decade - maybe even longer. The real danger is for those trying to flip homes.
What happens at the top of a bubble is that no one knows when it will burst. There are those who make fortunes on the way up and there are those who go broke buying right at the top. Those who buy at the very top of a real estate bubble with the purpose of making profits on equity increase get killed because of the leverage. Historically, frothy RE markets can lose 40% of their value within 6 months. With leverage between 5-1 and 20-1 some people will get killed.
This has happened many times in many places in history - from the local boom in Miami in the 1920s to the entire nation of Japan in the 1980s.