Hedging against the burst (real estate)

[TStoneMBD]

How will a real estate burst affect the economy? Are the effects of such an event entirely dependant on what the cause of the burst is?

Let's say that in 5 years, a sudden real estate burst occurs. Many housing prices drop 20%. How will this affect other real estate markets?

It seems that upscale family houses would be the first set of properties to collapse, followed by middle-class family houses. These owners should turn towards renting.

As a result, will apartment rentals go up in value with the added increase of renters now that the buyer's market is dead?

From my limited economic perspective, it seems that commercial properties with several family units would be the best investment for real estate at this time. If the property has a ROI that excedes the interest rate on the mortgage, or excedes it just slightly, I would imagine this property would be a fantastic investment if it possesses alot of vacancies. After the real estate market collapses, the vacancies will be filled and the property will produce extreme revenues and as a result, the value of the property should rise significantly.

Does anyone agree with this theory? Are there any books that properly explain how one should invest in real estate in the current market when everyone fears a real estate collapse? I am personally not very interested in flipping or any other short term prospects. I am interested in long-term leasing.

And to cut some assumed responses from happening, I could of course wait until the market bursts and purchase properties then when everything is a bargain, but if the bubble never bursts I could be waiting forever. I would like to know how to profit in this economy under the assumption that a burst is likely.

[thebroker]

This would be better posted on a Real Estate forum. Try creonline.com, no need to register to post. Many good investors there. Not to knock anyone here of course.

[Ice]

Tstone mbd

Believe it or not there are some good books on real estate investing that can help.William Nickersons books are great and John T Reed has a number of great books.Reed has an internet site with all kind of real estate information and you can order his books through his site. Robert Bruss has written extensively on single home investing and i believe he has an internet site,too.That should keep you busy for awhile. Best Wishes .Ice

[Ray Zee]

rents go down with property values, so your premise doesnt work. and all boats float lower when the tide goes out. all values go down because the value of the next higher one is lower so yours must as well.
if you believe in a crash then short some real estate type stocks or bet interest rates, as that is what tends to lower property values the most as it makes it more expensive to hold real estate.

[lastsamurai]

This is the problem with the boom we have today...you have 23 year old kids buying homes with no money down through private lenders. when interest rates go up...and they cant make their monthly payments...they will be forced to sell...when there are no buyers...the price will go down... I would say wait about 18 months before you consider investing in real estate today...