1259: Cap Rates, RV Ratios & Bubble Detection
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Jason Hartman finishes his conversation with investment counselor Doug about real estate and PE ratios. The two discuss the importance of analyzing RV ratios in markets to discover whether a bubble is forming (or might already be formed) but also the dangers of relying strictly on those RV ratios.
Key Takeaways:
[2:38] How to think about Cap Rates
[5:55] Commercial property doesn\'t have enough risk premium right now
[9:34] Real estate has a lot of embedded risk protection a lot of people don\'t realize
[15:16] The thing that is going to drive the next housing downturn will be when we see rising mortgage rates
[17:40] The 1% RV is for a turnkey rehab. New construction isn\'t getting 1% right now
[21:16] When your RV hits .5 you\'re looking at a bubble
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