Cyclical real estate markets can spike property values fast, but they demand negative cash flow or huge down payments. The speaker avoids speculation and prefers steady long-term investing instead.
In a cyclical market, you can make more money on appreciation. Being a speculator during the good times, when the money printer is printing and the money is just flooding the markets, you will make big home runs. In cyclical markets, however, you will have to support that property with negative cash flow or dramatically higher down payments, which means you have an opportunity cost because you can't use the money for something else. We don't like cyclical markets, although, you know, occasionally you dabble in them a little bit. You just don't make that your main thing because it's very risky and we want to be prudent investors, investing for the long term, not gambling, not speculating.
