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This will be a thread on how I shelter myself from recessions:
I have probably ten questions in my inbox asking me "Should invest because of a looming recession"
I tell them all the same thing:
I don't care about recessions and I still buy deals
Let's get into it
I have probably ten questions in my inbox asking me "Should invest because of a looming recession"
I tell them all the same thing:
I don't care about recessions and I still buy deals
Let's get into it
This conversation will be focused on Real Estate, not equities.
My only note on equities:
If you can't afford to hold an equity for 5+ years during a downturn then you should not be investing in it.
My only note on equities:
If you can't afford to hold an equity for 5+ years during a downturn then you should not be investing in it.
Should I invest if I think there will be a recession:
This is one of the largest fallacies in investing.
Many people believe they can time the market but this is not true.
I have been hearing about a looming recession for the last 2 years yet I still don't see one.
This is one of the largest fallacies in investing.
Many people believe they can time the market but this is not true.
I have been hearing about a looming recession for the last 2 years yet I still don't see one.
The most elite investors in the world don't try to time recessions either.
Instead, strong investors buy based on fundamental strategies and value principles.
Instead, strong investors buy based on fundamental strategies and value principles.
Fundamentals:
The main reason I am not worried about a recession is that I invest in what makes fundamental sense.
I am not worried about a recession because I am not overextending and I pay attention to the fundamentals.
I stay away from $1,000 PSF buildings.
The main reason I am not worried about a recession is that I invest in what makes fundamental sense.
I am not worried about a recession because I am not overextending and I pay attention to the fundamentals.
I stay away from $1,000 PSF buildings.
Type of Building:
Also, I mainly focus my portfolio in lower-income areas with a few exceptions.
I stay away from very high-income places where rents have reached 70+ PSF.
I do this because the first decline in growth during a recession comes from luxury goods.
Also, I mainly focus my portfolio in lower-income areas with a few exceptions.
I stay away from very high-income places where rents have reached 70+ PSF.
I do this because the first decline in growth during a recession comes from luxury goods.
This is the basis of not overextending. I am purchasing buildings with strong financial fundamentals and that are not in overvalued areas.
I try to stay away from "Hotspot" locations because in my opinion there is more risk there during a recession.
I try to stay away from "Hotspot" locations because in my opinion there is more risk there during a recession.
Leverage:
When acquiring a property you must make sure to buy with a healthy DSCR and a healthy portfolio leverage amount.
Inevitably wherever you are there will be slow down in a recession.
The key is buying so when the downturn happens you don't default
When acquiring a property you must make sure to buy with a healthy DSCR and a healthy portfolio leverage amount.
Inevitably wherever you are there will be slow down in a recession.
The key is buying so when the downturn happens you don't default
Why Many go Bankrupt:
Many Real Estate investors go bankrupt because they purchase overpriced deals in these types of markets
In markets such as these fair priced deals are harder to find therefore many investors will buy regardless of fundamentals
Many Real Estate investors go bankrupt because they purchase overpriced deals in these types of markets
In markets such as these fair priced deals are harder to find therefore many investors will buy regardless of fundamentals
Cash Flow:
Many who buy also go bankrupt due to poor cash management.
If you are barely breaking even now that is not a healthy statement of accounts.
If there is no recession and you are barely breaking even then I am sure you will be insolvent when the recession hits.
Many who buy also go bankrupt due to poor cash management.
If you are barely breaking even now that is not a healthy statement of accounts.
If there is no recession and you are barely breaking even then I am sure you will be insolvent when the recession hits.
Conclusion
If you make smart investment decisions and make sure to pay attention to the fundamentals then you should not be worried about a recession
Pay attention to these things and you will be fine
Leverage
Cash flow
Purchase price
Property Type
Sound investment principles
If you make smart investment decisions and make sure to pay attention to the fundamentals then you should not be worried about a recession
Pay attention to these things and you will be fine
Leverage
Cash flow
Purchase price
Property Type
Sound investment principles
