I Paid $530,000 For A Four-Plex. Then It Went Down, Down, Down

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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Originally published at www.getricheducation.com on March 13, 2018.