[quote=Bob]
Show me an investor who doesn’t think price is a motivating factor when purchasing, and I’ll show you a fool.
The bubble was caused by purchasers who didn’t concern themselves with “price” as much as they were concerned with “appreciation”. Obviously, there is a certain amount of “herd” mentality involved in real estate. The key to success is learning what the herd is doing and then make sure NOT to follow.
[/quote]
Rental property is a business. So the most important question is the return on equity. The purchasing price is NOT you only cost. You have to factor in other various costs associated with the business. And the return is NOT only the rental income, you have to have price appreciation. No one will invest in real estate if it doesn’t come with price appreciation. Just like no one will rush into rental car business if it is barely cashflow positive.
But there’re all kinds of ways to make money in any business, you can choose yours. I happen to agree with peterb on this. But I do want to point out there’re totally different logics at play with primary residence v.s. rental property.
