Preparing for and profiting from a crash

[Ben S.]

I have a few predictions about the economy, and am looking for the strategies of those who have a similar views. I'm not looking to discuss differing views, just if you agree with this view.

First, I believe the economy will crash in the coming 2 years (likely within 1 year). This is due to the stock market being far overvalued, the usual 8 year economic cycle, and the economies of other countries that will likely crash first and then domino around the world (China, Japan, EU). I do not expect a zombie apocalypse or any such thing, but a situation as bad overall or maybe worse than 2008. 

Due to this, I would like to both be prepared for such a crash to not lose anything, as well as be able to profit from it. 

I am currently focusing exclusively on rentals as I believe the demand will remain or grow stronger, though prices may drop a bit. I want to not only be able to live on my rental income, but have plenty of extra in case prices drop more than i expect.

Regarding debt during a crash, is there any advantage to having loans through big banks versus small banks? I don't believe interest rates will increase during this time, as the central banks will continue their strategy of lowering rates to try to help the economy. 

I want to keep a fair amount of cash reserved to cover possible extra vacancies.

For the profit side, I plan to keep some money in gold and silver, as they generally go up during a crash, and are not dependant on currency (i'm not really sure what the dollar will do during this time). I think it's too risky, but I could keep more debt on the rentals and purchase more gold/silver or have more cash on hand, as it may be harder to borrow during/after the crash.

Once the economy has stablized a bit, I want to sell the gold/silver and pool my cash to purchase more real estate at a discount, likely rentals homes, a mobile home park, or a small apartment building. I could also purchase homes with more focus on the appreciation as the market goes up again than the monthly cash flow.

[Jay Hinrichs]

@Ben S.  OK lets look at the other side of the coin

stock market crawls back  investors sell and flee to real estate.. real estate strengthens with this new infusion of capital.  ??? possible ?

there are always deals in real estate  Always  it does not take a crash to create opportunity.

and why would real estate crash in the next 2 years.. just because the stock market crawled back?

unless you had big unemployemnet like in 08 to 2010.. and you have folks who have bought homes in the last decade that actually qualified and are locked in at historic rates.. just because their market stops appreciated or retracts a little .. those folks don't sell they just ride it out.

there is and will always be the US citizen that can't manage debt no matter the market.. gets divorced .. has bad health issues... dies intestate... so there are always deals.

Each market cycle I have personally lived and invested through was unique  no two the same.

And now with Foreigners grabbing a huge share of our investment properties for cash and hedge funds doing the same.. why would those folks cut and run especially the cash buyers.

coming into 09 40% or more of all sales were for CASH... so cash buyers don't panic sell generally speaking.

I do see certain markets leveling off the appreciation run up.. we are seeing that big time in Dallas right now the herd mentality of that market has cooled down a bunch.

and here in Portlandia higher end is just holding to little move up.. but middle price range still moving up.  Charleston another market I am active in has seen 20% move up in 2016 alone.. unbelievable there. and thankfully I got in 4 years ago.  now I look like a freaking real estate genius  identify a market all the way across the country pulling the trigger and having properties I thought would be a great exit at say 400k and now I am selling for 550k... LOL.. but I have been on the other end of this as well.