Investing before a market correction

[Yossi Goldstein]

Hi y’all,

I was talking to my partner today about moving forward with new deals, but he wants to wait until the correction/recession/depression swings in and prices drop (we are in the PNW, so I’m in general agreement — prices could drop a little:))

However, I still think there’s cash flow to be had before and while going through the correction. While we may lose significant equity, owning cheap housing during a crisis seems like a decent train of thought. After all, there will always be a renter in the $700-$1000 range. I think overall, we’d be “safe” (of course we would lose in some way, but I’m thinking net positively) since if a renter would move, another from a previously higher tax bracket would move in.

What do you think?

[Geordy Rostad]

@Yossi Goldstein

You can't time the market. Instead, you have to look at market factors that cause demand.

If you think the PNW is in for a drop anytime soon, you might look at some of the driving forces that have caused it to run up to where it's at now. I was at a commercial real estate broker's meeting the other day and saw something that was absolutely mind blowing:

When you compare us to those other three markets, you see that we look really cheap. Amazon HQ2 is not moving out of state now. It's going to be in Bellevue. Everyone else such as Facebook, Google etc is moving in or has already moved in.

There are not a lot of new houses here because there aren't really any big lots left to subdivide. The money is getting pushed out to Tacoma and Everett now.

The PNW could get knocked down again like it did in 2008 for reasons not specific to this market but no one really knows or can predict that. Instead of sitting around waiting for a correction, you should be trying to find a deal where you're into it so well that a correction won't really affect you. No matter what the interest rates do or politicians do, housing demand is not likely to drop here any time soon. Prices may fall but the demand will likely still be there. Buy deals that can weather a crisis.

I am still finding deals that could BRRRR every week here in Marysville, Spanaway, and other areas like that. Here was a good potential BRRRR I found a couple weeks ago as an example:

https://www.redfin.com/WA/Spanaway/6317-200th-St-Ct-E-98387/home/2732559