How prepared are you for a drop in rent in Santa Monica, California? How prepared are you for a drop in property values (price) in Santa Monica, California? Rent Resiliency™ measures how much rent can drop before you have negative cash flow. Price Resiliency™ measures how much property values (price) can drop before you're upside down, underwater or have negative equity. Learn how to measure and evaluate your individual properties, entire portfolio or entire real estate investing strategy in terms of these measures of risk in this class recording.
Topics discussed include:
- What is resiliency?
- What is Price Resiliency™? What is Rent Resiliency™?
- The two flavors of resiliency: dollars and percent.
- Measuring resiliency on the individual property basis or the entire portfolio
- Measuring resiliency as a snapshot in time or over time
- Examples using over-simplified math:
- What happens when rents go up 10%, down 10% in two different portfolios?
- What happens when prices go up 10%, down 10% in two different portfolios?
- Resiliency is largely about leverage
- Thought experiment: what is more risky... 0% or 10% down payment?
- The 7 Ways to Measure Risk in Real Estate Investments
- How much riskier is it... a discussion of offsetting risk measures
- Examples of interpreting Price Resiliency™ (charts)
- Examples of interpreting Rent Resiliency™ (more charts)
- Comparing putting 5%, 20%, 25% or 100% down - how risky are they compared to each other?
- Evaluating risk: why 20% resiliency is not twice as good as 10% resiliency
- Diversification and the role of resilience based on various levels of diversification
- The counterintuitive nature of risk and reward in real estate investing
- A brief overview of rent and price resiliency from various Scenarios we discussed in previous classes on:
- Buy and Hold Real Estate Investing
- Nomad™ Real Estate Investing Strategy
- House Hacking Real Estate Investing Strategy and
- BRRRR Real Estate Investing Strategy
- An introduction to True Price Resiliency™ and True Rent Resiliency™ and how they differ from their non-"True" counterparts.
- How Cash Flow from Depreciation™ acts when discussing Rent Resiliency™
- An introduction to Vacancy Resilience™, Property Insurance Resilience™, Property Taxes Resilience™, Maintenance Resilience™, Maintenance Resilience™ and Capital Expenses Resilience™
- The Price Resilience™ and Rent Resilience™ of James' personal real estate portfolio.
- Plus much more
This class was recorded to help real estate investors better understand how risky the real estate investing strategy they are considering is and how to compare strategies they're considering using 2 (of 7) ways to measure risk: Price Resiliency™ and Rent Resiliency™.
Watch the video version of this class:
Additional ResourcesThe following are additional resources mentioned in the class recording:
- Rent Resiliency™ - Learn about Rent Resiliency™ and how it is used to measure risk.
- Price Resiliency™ - Learn about Price Resiliency™ and how it, too, is used to measure risk.
- Cash Flow Power Meter™ - Learn how to visually see how powerful the cash flow from a property is.
- Real Estate Partnerships - Learn about the real estate investing strategy of forming real estate partnerships in this special class.
- Buy and Hold Real Estate Investing - Learn about the buy and hold real estate investing strategy.
- Nomad™ Real Estate Investing Strategy - Learn how to acquire a portfolio of rental properties with little or nothing down and owner-occupant financing.
- House Hacking Real Estate Investing Strategy - Learn how to make extra cash flow from properties you're already living in.
- BRRRR Real Estate Investing Strategy - Learn how to acquire rental properties at a discount... buying properties, rehabbing them, refinancing out all or most of the money you have into the property and then holding it as a rental.