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902 - How The “Denominator Effect” Is Impacting Real Estate Investors by Paul Moore
902 - How The “Denominator Effect” Is Impacting Real Estate Investors by Paul Moore
ratings:
Length:
12 minutes
Released:
Apr 4, 2023
Format:
Podcast episode
Description
Do you want to destroy your wealth? I can teach you how. Do you want to create more wealth for yourself? I can teach you to do that as well.
Do you know about the denominator effect?
In finance and investing, the “denominator effect” occurs when the value of one portion of a portfolio decreases drastically and pulls down the overall value of the portfolio. As a result, any segments of the portfolio which did not decrease in value now represent a large percent of the overall pie.
While this is true and somewhat obvious, there is another denominator effect at play in real estate. An insidious destroyer of investor dreams and wealth.
If you acquire and operate a great asset and this denominator goes in your direction, you will celebrate with a double win. But even if you buy and operate your asset well, this denominator effect can destroy you and liquidate your equity.
What is this denominator effect? I’m talking about cap rate decompression.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Do you know about the denominator effect?
In finance and investing, the “denominator effect” occurs when the value of one portion of a portfolio decreases drastically and pulls down the overall value of the portfolio. As a result, any segments of the portfolio which did not decrease in value now represent a large percent of the overall pie.
While this is true and somewhat obvious, there is another denominator effect at play in real estate. An insidious destroyer of investor dreams and wealth.
If you acquire and operate a great asset and this denominator goes in your direction, you will celebrate with a double win. But even if you buy and operate your asset well, this denominator effect can destroy you and liquidate your equity.
What is this denominator effect? I’m talking about cap rate decompression.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Released:
Apr 4, 2023
Format:
Podcast episode
Titles in the series (100)
739 - House Before Spouse: Single Women Are Buying More Homes Now Than Ever by Lindsay Frankel by BiggerPockets Daily