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Rent and Price Resiliency for Real Estate Investors

How resilient are you and your real estate investments if prices drop? Will you be upside down or underwater with negative equity? What about if rents drop? Will you have negative cash flow?

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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:
  • 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™.

Classes Mentioned

In this presentation James mentions several other classes:

Duration: 1 hour and 30 minutes
Recorded: August 10, 2022
Instructor: James Orr