The following premises, when adhered to by real estate investors, will reduce investment risk and increase investment return. Income-producing real estate is a business.
Demand determines value.
Need creates earnings Current earnings determine present value. Future earnings determine future value. The quality of real estate and what users can afford determine earnings potential. Math must be qualified. When the users of real estate can no longer afford increases in their rents and the prices that they pay, user demand begins to decline, causing prices and earnings of real estate to stabilize and begin to move sideways.