First off—big thanks to the 1,800+ people who’ve read the article this month—If you haven’t already, be sure to follow us on Facebook and/or Youtube for some quality “non-spammy” multifamily tips/strategies.
Now let’s get to it.
As we saw in the real estate crash a little over 10 years ago now, each of our personal investments can come crashing down in a matter of months.
Understand though, there are a lot of factors that played into the financial crash of 2008—some of which we’ve put up protections against in an attempt to avoid similar disasters…
Is 2008 Happening Again?
To avoid large scale risk taken on by lenders and investors across the country, our government has enacted thinks like the Dodd-Frank Wall Street Reform in order to restrict lending risk. Improving these basic fundamentals make a crash similar to the 2008’s very unlikely.
“The real estate crash in 2008 was unique in that we saw a very fragmented industry that was burdened by large-scale systemic risk. This is not what usually happens.
It’s important to realize this situation would not be easy to duplicate; it was sort of a perfect storm of bad circumstances.” – BiggerPockets
When Should You Buy?
We’ve seen a lot of people over the years claim that they are waiting for the perfect opportunity to build their portfolio. While it’s likely that we’re not going to have such a lucrative season of investing as we did in 2012… many investors 5-10 years from now are going to be looking back on this year and wish they got into the game sooner.
With rising inflation and the increasing difficulty of financing a property, now is better than ever to cash in on an investment property.
Yes, a recession of sorts is inevitable. However; with the caution of both consumers and lenders, it’s very unlikely that it will play out close to the way it did before.
“In real estate, you make money when you buy. This holds true no matter where we are in the market cycle.
So instead of waiting for your market to downturn, find great deals that are going to make you money no matter what. Have good exit strategies in place, and pass on deals that don’t make sense.”
Recession-Resistant Investing—Does it Exist?
“Since 2013, FIG has built over 4,000 doors of multifamily units, providing investors with over $500M in cashflowing properties”
Nothing is recession-proof, but when we can adequately deal with the terms of our financing and the income streams associated with the asset then we have something that’s a little bit more recession-resistant.
Mindset is also important. There were many investors who struck big buying low and riding it out until prices began to soar. Is that how you’re looking to invest in the future? This is often the mistake that’s going cause you to stray from risk-free investing fundamentals.
In Steve Bond’s upcoming book he mentions that “Quick cash often leads to crooked deals.” If we have a mindset focused on leveraging long-term investments toward cashflow, we remain safe through a recession and equity becomes a delightful bonus.
Real Estate Investing is a Long-Term Game
“In many cases, chasing unrealistic gains gets people into more trouble when ambition outruns reality. Real estate is a slow business filled with complex transactions and ill-liquid assets. Even most superstars go slow!
It’s a patience game that relies on compounding. Trying to force outsized gains at the command of one’s ego is dangerous.
The long game of real estate levels out lots of short-term instability. You need cash reserves to weather economic storms, and you need to buy based on good fundamentals.” – BiggerPockets
The Real Estate Guys – Q&A
The Real Estate Guys recently invited our Director of Sales, Steve Olson to host a webinar to answer questions about the effectiveness of multifamily investing (particularly new construction fourplexes) and the benefits/tax advantages they bring: