During bear markets, I’ve learned to embrace the losses. Accepting reality as it is helps me navigate these tough times better. Recently, I lost about $1 million in real estate, which was a big blow to my net worth. Despite this setback, my cash flow from rental income remained stable, giving me hope that I can maintain financial stability over the next couple of years.
In 2019, I purchased a property for $1.75 million, significantly below the asking price of $1.9 million. The seller had hoped to spark a bidding war that would push the price over $2 million, but I managed to secure it at a discount. A month later, online estimates valued the property closer to $2 million. Despite these fluctuations, I’ve learned not to rely entirely on these online estimates, using them instead as tools for negotiation or tax purposes.
After investing $200,000 in adding more space and making improvements, the property’s value soared to about $2.85 million, and at the peak of the market frenzy, it could have fetched even more. This is a testament to the potential long-term benefits of strategic real estate investments, despite the initial hefty loss.
The current downturn in real estate, exacerbated by rising mortgage rates and a bear market in stocks, will likely see cities like Austin face significant price drops. This situation is complicated by property assessors who are slow to adjust assessed values downward in bear markets, which could unfairly keep property taxes high. I’ve had multiple disputes with the San Francisco property assessor’s office, which has been reluctant to adjust valuations despite clear market declines.
Two months after contesting my property’s value, online platforms like Redfin adjusted their estimates downward, which should theoretically help in future tax assessments. I’ve fought hard against unfair property tax assessments, encouraging homeowners to challenge inaccuracies.
Personally, I prefer to value my real estate conservatively, enhancing my psychological and financial resilience against market volatility. Real estate should be valued accurately mainly when planning to sell, for estate purposes, or when calculating potential returns from rental income.
Adopting a strategy of appearing financially modest in public records can have practical benefits, reducing unwanted attention and potentially lowering property taxes. In the eyes of the community and the tax collector, it’s sometimes advantageous to appear just ‘average.’
I encourage property owners to proactively manage their property’s public valuation to safeguard against overtaxation and maintain privacy. Despite the challenges, strategic real estate investment remains a robust path to building long-term wealth, especially when complemented by platforms like Fundrise for diversified, passive income. For those interested in deeper investment strategies, consider exploring comprehensive resources like my book, which delves into effective wealth-building through real estate.
