The "Recession" is Supposedly Here. Why Aren't You Buying?

[Ryan D.]

Hi BP,

This is a long overdue intro post. I'm Ryan and I'm a victim of recency bias. See the thing is we all either got slaughtered personally or had friends/family get slaughtered in 2009 when that once in every ~70-year storm hit. Call it a Panic like we did the 1870s, or a Depression in the 1930s or a 'Great Recession' as we do in the 21st century - the end result is still the same. A global reset that comes with massive losses in asset values. This leads us as investors to being terrified that another downturn is awaiting us just around the corner - recency bias.

If you're like me, you've been telling yourself the past few years you're going to wait to for the market drop again before buying. I get that. I like to buy when things are on sale too. But what if this little dip we've experienced the past 6 months (market depending) is the sale? Who says where the bottom actually is?

It seems every day I log in to BP there's some new doomsday post about the market downturn or recession and how it's supposedly here. Sure, things have softened a little bit but this is by no means (in my market) a downturn. This recent dip in prices was more than enough for me to kick my deal analysis paralysis and pull the trigger. Here are the details of our first deal:

• Took 8 months to find
• Saw over 100 houses in person
• Made 20 offers on MLS properties
• Bid on 15 houses via Sheriff Foreclosure Auctions
• Wrote 5 direct mails (3 responses but no deals…yet)
• Saw 3 homerun deals. Got outbid on the first 2 but landed the last one with an all-cash offer, no contingencies w/ a 10-day close. Here are the details of the deal:

4 bed/1 bath Fishtown, Philadelphia, PA

Purchase: 205k

Rehab Estimate: 65k

Conservative ARV: 400k

Traditional Rent: $2,400/m

This is mostly an appreciation play if we rent it via traditional yearly leases but we are more than likely going to Airbnb the property once we are done living in it while rehabbing. We've operated a couple of Airbnb's on master leases that cash-flowed beautifully for a couple of years and helped us pay off all of our debt while testing our short-term rental strategy. We plan to refi once we complete the rehab, then BRRRR our way through this "downturn", and go find our next property. Hopefully a multi in a grittier part of Philly.

This is my first rehab so I'd love to meet local investors who have experience doing live-in flips or bigger rehabs (pop tops, rooftop decks, additions etc.) in the Philly/Riverwards area. Thanks!