"Recession-durable RE investing for non-accredited investors"

[Michael Kelly]

"Recession-durable RE investing for non-accredited investors" 

How do you defend against recessions, without sacrificing ambition? What are your favorite loan products and LLC strategies to optimize scaling in times of economic uncertainty? Rapidly grow portfolio and maximize leverage, but mitigate risk, build durability and avoid pitfalls. Access equity without losing properties.

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The market moving forward 

What's going on today? The Bull market continues, though new market forces raise questions. Higher interest rates. Bank deregulation. More retirees. Geo-political pressures. 

Real Estate, like the stock market, has seen a boom from 2014 to present. Artificially low interest rates and lower prices incentivized investment through healthy appreciation. Will it continue? Price acceleration seems regional at this point and still accelerating, but interest rates are rising and corporate and national debt will feel some pain.

(Cautiously) Optimistic!

Despite these risks, I am optimistic. There are diverse investing strategies. Demand for living quarters is universal. Governments rightly look to private sector to provide and manage housing supply, bringing tax incentives for both parties. 

It's a strange time. Wages have been stagnant, but employment is relatively better, even if it's part-time or subsidized work. At least logic of the metrics is comparable since 1994, I think. 

Why not lock in low interest rates? Historical averages are still 75% higher in many cases (4% vs 7%). Is this correct? 

The solution

I like fixed rate loans, even if you have to pay for it. In 2008 new investors felt the squeeze when Balloons, ARMs second mortgages exploded, lockstep with rising interest rates. People lost jobs and speculators lost out. Today's environment is different, but there's certainly ways to avoid pitfalls. 

I don't favor products that greatly vary in 5 year time frame. What are the products you avoid? Products you recommend? How about scaling? My banker suggested HELOC loans are often pegged to treasury rate. Are these ever capped? Are there better alternatives?

Your experience? Your predications? Feel free to share past experiences and scenarios you prepare for. Do you see the past repeating or will things be slightly different next time? 

Thanks!

Michael