How TO FACE A POSSIBLE RECESSION?

[Jose Ortega]

Hi BP, This one is for investors that had purchased properties in last 2 years. How are you guys preparing for a possible market collapse?. For example in my area I've seen SFH the were sold in 2012-2013 for as low as 35k, now the same properties are been for sale for 160k/200k. With this inflation seems to me that there's not much room for this properties to increase their values and applying the BRRRR method. The market in my area is at the highest point since 2006. If the market crash again, those who are buying now will be in a pretty deel hole. Point is... BAD or GOOD time to invest in Real Estate RIGHT THIS MOMENT? Would like to know your opinions, thanks everyone!!!

[Richard Sherman]

@Jose Ortega   Any market has opportunity, and the markets are hyper-local, so it is hard to have a broad statement for every market.    Those 2012-2013 prices you mention are due to CRAZY mispricing due to huge amounts of fear that I doubt we ever see again.  Do I think prices will dip in many markets, sure...because interest rates are increasing and demand is coming on...this is nothing new, this is just the market cycle.

We are aggressively buying and here is why demographics for our market (greater Portland OR) are very favorable, it is the most affordable major city on the west coast...even still with massive amounts of people moving in vs. moving out.

The second reason is those interest rates...we are long-term buy and hold owners, so I WANT those lower rates, if I wait I might bet a lower price (or I might not) but I WILL pay higher rates or possibly not be able to finance at all.  Even during the last downturn where many assets tanked many markets still saw stable or growing rents.   People have been calling the next downturn every since the last one...and still waiting.  YOU CAN NOT TIME THE MARKET...you can only be defensive and have an investment strategy that is time neutral..i.e. I do not care what someone says my apartments are worth, I care that return the bring me which is driven by rents and management, not by asset price for something I do not intend to sell.

:)  Different answer for flippers/wholesalers etc I am sure.  When the down cycle comes a LOT of people operating on appreciation only or highly leveraged or in inventory business (flippers specifically) are going to go out with the tide...naked..