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Updated over 5 years ago, 09/03/2019

User Stats

7
Posts
9
Votes
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
9
Votes |
7
Posts

Buy Now or Wait for the much talked about recession?

Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
Posted

Good Day Bigger Pockets Fam, 

I'm 24 years old. I currently own 1 property (that I live in) in Virginia Beach, Virginia. I;m new to Bigger Pockets and I'm new to real estate in general. I want to invest in rental properties that cash flow in this area. I've been doing a lot of research over the past couple months about real estate and more specifically rentals. With all this talk about the market being out of control with high prices and the upcoming recession, do you feel its best for me (as a "newbie") to wait until then? Should I just keep growing my knowledge and saving so that I can buy more when/if the recession hits?

P.S: If you're in the Virginia Beach area or anywhere in the 757, send me a message I'd love to connect with you!

Thank You

User Stats

17,330
Posts
29,869
Votes
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
29,869
Votes |
17,330
Posts
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
ModeratorReplied

Nationally prices have retreted twice since the great depression. 1991 prices dropped about $1500 then the housing collapse from a decade ago. The other 10 recessions in that time period, housing prices continued to rise. 

Could prices come down? Sure. Could they continue to rise? More than likely. 

More importantly is how your local market operates. 

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User Stats

189
Posts
141
Votes
Bryan Richardson
  • Rental Property Investor
  • Indianapolis, IN
141
Votes |
189
Posts
Bryan Richardson
  • Rental Property Investor
  • Indianapolis, IN
Replied

@Shaquan Webster

If you have the knowledge,and ready. Just go ahead and buy something. I've been hearing talk about a recession for the last 2 yrs. It hasn't stopped me.

What if it doesnt hit for a few more yrs, and you just sat around and waited the whole time?

I know its probably going to come soon, but if I was you I'd just get out there and buy something. There are plenty of good deals to be had. You just have to look for them.

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User Stats

7
Posts
9
Votes
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
9
Votes |
7
Posts
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
Replied

@Russell Brazil Thanks for your reply. I 100% agree with you that I need to know more about how my market operates!

User Stats

7
Posts
9
Votes
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
9
Votes |
7
Posts
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
Replied

@Bryan RichardsonI get what you're saying, but I just want to make sure that I invest my money the best way/time that I can, especially if I'm just using my saved up money without a partner. But yea, I totally understand where you're coming from. You're right also. 

User Stats

2,953
Posts
4,475
Votes
Alexander Felice
Pro Member
  • Guy with Great Hair
  • Austin, TX
4,475
Votes |
2,953
Posts
Alexander Felice
Pro Member
  • Guy with Great Hair
  • Austin, TX
Replied

I was told not to buy anything in 2016 because the impending recession was going to crush my dreams

Since then I've bought 32 doors that cash flow 

If you learn from propagandists you'll always be making decisions on false narrative and little context. 

User Stats

7
Posts
9
Votes
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
9
Votes |
7
Posts
Shaquan Webster
  • Rental Property Investor
  • Chesapeake, VA
Replied

@Alexander Felice so what's your take on this upcoming recession? Do you think it'll happen?

User Stats

4,881
Posts
12,927
Votes
Mike Dymski
Pro Member
#5 Investor Mindset Contributor
  • Investor
  • Greenville, SC
12,927
Votes |
4,881
Posts
Mike Dymski
Pro Member
#5 Investor Mindset Contributor
  • Investor
  • Greenville, SC
Replied

No one knows when the next recession will come.  We have been discussing this topic since 2014...tens of thousands of posts asking this same question.

User Stats

118
Posts
102
Votes
Matt Pastier
Agent
  • Real Estate Agent
  • Central Florida
102
Votes |
118
Posts
Matt Pastier
Agent
  • Real Estate Agent
  • Central Florida
Replied

@Shaquan Webster I agree with what many have already said. I’ve bought 4 properties in the last 2 years. I spent a lot of time finding and negotiating them because they’re not easy to find right now. I had to walk away from most of them but that’s normal - it’s a numbers game. But deals are out there and those sitting on the sidelines worrying about a recession are missing out.

  • Matt Pastier
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User Stats

2,953
Posts
4,475
Votes
Alexander Felice
Pro Member
  • Guy with Great Hair
  • Austin, TX
4,475
Votes |
2,953
Posts
Alexander Felice
Pro Member
  • Guy with Great Hair
  • Austin, TX
Replied
Originally posted by @Shaquan Webster:

@Alexander Felice so what's your take on this upcoming recession? Do you think it'll happen?

I don't predict specific future events, doing so would make me a propagandist. 

Our economic system is complex, my suggestion is to learn as much about it from primary sources and listen to people on the internet as little as possible. You're asking people who DON'T and CAN'T know what is going to happen and then you're going to make decisions around those (potentially inept) opinions. This will not serve you well. 

Read a book called "Fooled by Randomness"

User Stats

17,330
Posts
29,869
Votes
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
29,869
Votes |
17,330
Posts
Russell Brazil
Agent
  • Real Estate Agent
  • Washington, D.C.
ModeratorReplied
Originally posted by @Alexander Felice:
Originally posted by @Shaquan Webster:

@Alexander Felice so what's your take on this upcoming recession? Do you think it'll happen?

I don't predict specific future events, doing so would make me a propagandist. 

Our economic system is complex, my suggestion is to learn as much about it from primary sources and listen to people on the internet as little as possible. You're asking people who DON'T and CAN'T know what is going to happen and then you're going to make decisions around those (potentially inept) opinions. This will not serve you well. 

Read a book called "Fooled by Randomness"

 That is Talebs best book. Written before he became the household name he now is and before his ego got in the way. 

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District Invest Group
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Account Closed
  • Rental Property Investor
  • Sacramento, CA
893
Votes |
1,233
Posts
Account Closed
  • Rental Property Investor
  • Sacramento, CA
Replied

Waiting for a recession is much harder than it sounds in theory. Consider these points.


1. Not all recessions were (or will necessarily be like) the last. With respect to property values, that was an event unparalleled in magnitude since the great depression. 

2. The previous RE crash was not just driven by the condition of the economy- there were highly systematic flaws in bank financing procedures that lead foreclosure (and therefore excessive supply) in a manner that a normal economic crisis would not likely cause to the same degree. Lending has since made significant changes to the qualification process and has generally stuck with this process. Mortgage insurance is now a thing as well, and homeowners are required to have this service for low equity loans. 

3. Markets don't go top to bottom overnight. Even in the last crash, which was extreme, it took two years to bottom out. A crash of lesser magnitude may feel like even more of a slow roll. That being considered- are you losing more money by paying more for a property today? Or by foregoing the returns you could be earning for another 2-4 years while you lie in wait?

Final thought: I think any serious investor plays all four quarters, but with a fluid strategy. The type of deal you do, market you choose, and/or asset you invest in may change through the phases of a market cycle. Mine certainly have. There's money to be made in all seasons though.

User Stats

2,053
Posts
1,591
Votes
Daniel Hyman
Tax & Financial Services
Pro Member
  • CPA
  • Milwaukee, WI
1,591
Votes |
2,053
Posts
Daniel Hyman
Tax & Financial Services
Pro Member
  • CPA
  • Milwaukee, WI
Replied

My guess is that by following the more experienced investors on this thread (which I am not one of), you could probably learn how to purchase properties that are relatively recession proof.

  • Daniel Hyman
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User Stats

7,695
Posts
7,856
Votes
Caleb Heimsoth
  • Rental Property Investor
  • Durham, NC
7,856
Votes |
7,695
Posts
Caleb Heimsoth
  • Rental Property Investor
  • Durham, NC
Replied

@Shaquan Webster if you use the BP search function you can find the many threads on this website that ask this very same (and extremely boring question).

If you then read those threads you’ll be enlightened with all the knowledge of those threads.

If the BP search function doesn’t give you the answers you seek, you can try Google and type in “BiggerPockets recession” and you’ll have all the threads you need.

If you don’t want to do that, no worries. I have done it for you:

https://www.google.com/search?q=biggerpockets+recession&ie=UTF-8&oe=UTF-8&hl=en-us&client=safari

User Stats

718
Posts
912
Votes
John Chapman
  • Investor
  • Dallas, TX
912
Votes |
718
Posts
John Chapman
  • Investor
  • Dallas, TX
Replied

These "recession" topics are kind of amazing at this point.  Setting aside the unpredictability of the timing of a recession or its effect on the economy and/or the real estate market, every single poster who inquires about "waiting for the next recession" presupposes they are actually going to have the nerve to buck societal trends and dire economic warnings, zig when the entire market zags, and buy properties when the market tanks.  Property prices went down a lot in the last recession because everyone was convinced the entire economy was doomed and it was a very scary time to buy.  That is, very few people were buying, those that did took risk, and they were rewarded as a result.  This 20/20 hindsight nonsense ("It was so obvious that real estate was a good deal back and next time I"ll get in on the party") is delusional.  With so many people "waiting" for the next recession, I don't see how prices will go down and, if they do, it will like because it's some new scenario that has everyone terrified about real estate (including, most likely, new investors) meaning that, once again, it would be a very small number of people buying.  Just my two cents on all this recurring "waiting for recession" question.

User Stats

58
Posts
41
Votes
John Cassel
  • Rental Property Investor
  • York, PA
41
Votes |
58
Posts
John Cassel
  • Rental Property Investor
  • York, PA
Replied

@Shaquan Webster I agree with most of other replies but depending on what type of investing you plan on doing, make sure you underwrite your deals and run scenarios for bad situations. If you are buying and holding maybe you see how the property will perform if rents drop 10-20% or vacancy goes up to 15-20%. You'll want to know if you can still cashflow even with those factors so you wont have to lose the property. If you are going the flipping route then maybe you could lower the projected ARV or selling price in case of a dip to see if you will still profit off the deal. It is always better to build a cushion in and be a little extra conservative with your numbers.

Generally the sooner you start the better.  So once you feel comfortable with your knowledge base and investing your money, dive in.  A common theme on Rod Khleifs podcast is investors saying they wished they would have started sooner.

Hope this helps!

John 

User Stats

323
Posts
224
Votes
Catherine Emert
  • Realtor
  • Bend, OR
224
Votes |
323
Posts
Catherine Emert
  • Realtor
  • Bend, OR
Replied

If only we all had a magic crystal ball to answer this correctly! 

User Stats

416
Posts
396
Votes
Bill Plymouth
  • Real Estate Agent
  • Philadelphia, PA
396
Votes |
416
Posts
Bill Plymouth
  • Real Estate Agent
  • Philadelphia, PA
Replied

@Shaquan Webster market does not matter.  Investors aren’t buying things for market price.  Find sellers in distress, solve their problem, buy at a deep discount, and rehab the property.  When I run my analysis, I make sure that the numbers can support a 20% drop.  Also, unless you have cash, or have access to partners or private lenders with a ton of capital, the average joe investor won’t be able to take advantage of a recession.  During a recession, traditional lenders don’t lend as much.  You’ll most likely get stuck watching on the sidelines.  

In short, now is the time to start.  If you buy correctly, you’ll be fine when a recession comes. 

User Stats

231
Posts
215
Votes
Jonathan Farber
  • Rental Property Investor
  • Medellin, Colombia
215
Votes |
231
Posts
Jonathan Farber
  • Rental Property Investor
  • Medellin, Colombia
Replied

@Shaquan Webster- if you buy a deal with decent fundamentals and plan to hold over a long period, what happens short term (10 years<) it doesn’t really matter. Rents typically remain and you only lose money if you sell.

User Stats

439
Posts
578
Votes
Tanner Marsey
  • Rental Property Investor
  • San Diego, CA
578
Votes |
439
Posts
Tanner Marsey
  • Rental Property Investor
  • San Diego, CA
Replied

If you’re a buy and hold, long term type of investor that is buying good deals then the next recession, whenever that may come, is a non-issue for you.

User Stats

29
Posts
5
Votes
Razak Amadu
  • Rental Property Investor
  • Hampton, VA
5
Votes |
29
Posts
Razak Amadu
  • Rental Property Investor
  • Hampton, VA
Replied

@Shaquan Webster

I'm in the 757 area. Let's connect. We might be able to JV on some deals.

User Stats

90
Posts
68
Votes
Haseeb M.
  • Real Estate Agent
  • Hoffman Estates, IL
68
Votes |
90
Posts
Haseeb M.
  • Real Estate Agent
  • Hoffman Estates, IL
Replied

@Shaquan Webster

We are seeing this question few times a week now.

Recession will be here in ______.

Your guess is as good as anybody else....

User Stats

282
Posts
180
Votes
Tyler Bushey
  • Investor
  • Biddeford, ME
180
Votes |
282
Posts
Tyler Bushey
  • Investor
  • Biddeford, ME
Replied

I'd recommend finding off market properties. I've been buying everything off market this year in a very hot, competitive market. Buying this way, I get deals where what the economy does is not a factor. I've got a connection to Chesapeake, VA I've strongly considered splitting my time between Southern Maine and that area it's so nice there! Any insight into the market there would be great!

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User Stats

102
Posts
95
Votes
Jim Chuong
  • Rental Property Investor
  • Toronto, Canada
95
Votes |
102
Posts
Jim Chuong
  • Rental Property Investor
  • Toronto, Canada
Replied

@Shaquan Webster the best way to identify newbs on BP is to look at “recession” topic OPs

User Stats

4
Posts
0
Votes
Christopher Keller
  • Rental Property Investor
  • South Bend, IN
0
Votes |
4
Posts
Christopher Keller
  • Rental Property Investor
  • South Bend, IN
Replied

With the huge military presence in that area i dont think it will be affected as much

User Stats

49
Posts
10
Votes
Michael Justice
  • Rental Property Investor
  • Nationwide Remote Wholesaler
10
Votes |
49
Posts
Michael Justice
  • Rental Property Investor
  • Nationwide Remote Wholesaler
Replied

@Shaquan Webster. When life gives no obtain traditional financing that's my focus , I even have a 100% free of charge credit repair and building program , for buyers because the higher thre credit score the more your mortgage note will bring!😀