NEXT Recession - Can't come fast enough???

[Joe Kim]

Anyone out there just salivating for recession to come?  

+  Cheap/discounted prices!

+  Incredible low mortgage/lending rates! (already started?)

+ Cheap and excellent staff and partners (I'm especially excited about this one.   Finding good help is tough in this low unemployment economy)!

+ Recession is a sort of a death and rebirth for many people for lots of reasons and taking many different but  similar paths.

Questions:

1)  What are you doing right now to prepare for recession?  (Defense)

My answer:

I'm selling 3 homes in 2019 and 2 homes in 2020 not just because I believe we are at peak or near peak or just beyond peak market values, but also because I am consolidating my equity.  I like to call my portfolio of SFR rentals as little piggy banks.  I'm breaking them open (selling the homes).  Also, I'm running out of time so I don't want any distractions from my goals (see #2)

Once I pay down my primary mortgage, I plan to get the largest HELOC I can get so I have sufficient "debt capital"  (money can use but it's also in the form of a debt in a HELOC line of credit) - big tax savings using your HELOC for REI.   Having capital is a HUGE asset when recession comes.

2) What are you doing right now to prepare for recession?  (OFFENSE)

Answer:

I'm focusing on what produces the maximum profits with minimum time commitment.   For me that is buying another home in Atlanta to continue increasing my Airbnb portfolio to #7.   I'm also buying in 2019 with "defense" in mind - considering my exit strategies or pivoting if serious recession hits or sweeping regulations turn the STR/Airbnb business upside down.   Also, I am confident I can weather the storms based on reserves and diversified portfolio in 3 different markets - California, Indianapolis, Atlanta

3)  What  NEXT LEVEL plans or CHANGE would you like to accomplish in your REI when deep recession hits?

Answer:

Combination of large multifamily + Short-term rental + university market.    I'll leave it at that.   Don't want to spill all my secrets.

My Background:

I've been doing REI since 2013 when I bought my first "turnkey" rental property in Houston texas. I had some idea how special a time it was to be an investor back then. I knew that the "brave" and "prescient" investors who started scooping up properties in 2009-2013 were already seeing huge profits and I felt "late to the party". So I bought as fast as I was able without special financing (all conventional loans at 20% and 25% downpayments) and got to 13 total rental properties (going on 14th right now). I also sold 6 homes (selling 1 more this month).

In 2018, I made a dramatic change to STR (short term furnished rentals) via Airbnb (and VRBO) and it has altered my real estate investing dramatically. I grossed over 240K in my first year doing STR and I've already surpassed that amount for 2019. See my post about the first year in Airbnb : https://www.biggerpockets.com/forums/223/topics/632364-200-000-rents-in-1-year-10x-cash-flow?page=1

Paradoxically, I want to be MORE active and MORE passive at the same time. I got into REI with traditional turnkey rentals thinking it was a "passive" investment but honestly nothing that is worth anything is passive. So I went the complete opposite direction to a more active business- Airbnb. Now I'm selling off traditional rental properties that cannot be airbnb or does not make sense in my strategy.

I've also done several truly passive ventures in private lending (18%, 15%, 14%, 12% annualized returns) and participating in a syndication as well. I see that this passive part of REI is crucial as you mature in your porfolio.

Since I have a very busy full time day job, I'm juggling the time vs. money vs. excitement for REI strings and sometimes failing to find that right balance.

Hope to hear your stories and your recession related dreams!