Indicators Suggest a Decline - New Investors

[Nick Williams]

Im hearing from friends in the industry that the market is starting to shows signs of a decline. What suggestions do you have for new investors during a decline? What should a NI be looking for? Thank you 

[Grant Rothenburger]

@Nick Williams the market has been "showing signs of a decline" according to a lot of people for a couple of years, hasn't yet happened. 

We all know it will happen, but no one knows when. There are things you can do to make sure you are best protected in the event of a downturn. 

Buy for cash flow, not for appreciation

Don't be over-leveraged & have long term fixed debt

Have adequate cash reserves

Most investors who I've heard talk about losing their shirts in 2008, it was for one or more of these three reasons.

They were told to invest because "real estate only goes up" (buying for appreciation)

They were 90-100% leveraged - which was fine before the downturn, now they're mortgage payment was higher than anything a tenant could pay (especially when so many lost their job). And/or their interest rate was variable and went through the roof, or had short term debt and couldn't refinance into something affordable.

Cash reserves are pretty self explanatory, something goes wrong, you need cash to fix it.

IMO be safe and smart, don't worry about the market. In fact, if you're set up correctly, you can't wait for it to happen so you can scoop up some great deals from investors that weren't as smart.