Incoming Recession Preparation

[Osama Mayassi]

Hello everyone,

In light of the coming recession that can happen within the next few years, how are you preparing? What strategies are you implementing to protect your investments?

Should investors pump the breaks on buying and wait until the recession? Why or why not?

Hoping to start a friendly and informative discussion.

[Brandon Roof]

Hi Osama!  This topic, unfortunately, does not draw friendly and informative discussion.  It's one that's been addressed in countless posts that are generally ripe with criticism.  Valuations may feel high, the cycle may feel stretched, but in the end, it all comes down to the work we do when first buying a property.

We want to buy in areas that will remain as robust as possible, regardless of the climate, and buying them at a price that makes sense within our calculations.  If you are concerned that the property you are about to buy may not be immune to a recession, factor it in then by dropping the rent you expect to receive per month or ratchet up the vacancy.  Build in your protection then, not when the storm is directly overhead.

Trying to time market cycles will likely be a fruitless endeavor.  Sometimes you'll buy at the top, other times at the bottom.  If we could, every investor would be filthy rich.  Bumps in the road are part of the experience.  If we pull off to the side and wait it out, we will likely never catch up to those that forged ahead.

Some will inevitably leverage themselves too much or invest in properties more susceptible to pain, but as long as we develop sound criteria, it shouldn't matter if the next recession is tomorrow or 10 years from now.