How I’m preparing for the 2021 housing market correction.

Question

As I've stated on numerous occasions, we’ll see a wave of distressed Real Estate assets up for grabs for pennies on the dollar. I am taking my preparation levels to the maximum extent. I desire to come out of this market correction with triumph.

Lately, I've been primarily focused on expanding my network of local investors, brokers, property managers, contractors, and most importantly, the small community banks. These small community banks are extremely vital in this scenario because they are willing to do everything in their power to help you achieve in your endeavors. It's inevitable that a majority of these community banks will possess a great number of high-potential, distressed assets in these next 6-8 months. And I know they won't have any intention of keeping these properties on their books so they'll most certainly be letting these go for pennies on the dollar. It's best that I build these relationships with the banks now so when that 6-8 month mark arrives, I've already got exclusive access to these discounted properties without having to budge. And on top of that, expanding my resources of property managers, contractors, brokers, and investors will only provide me so much creativity to utilize in this opportunistic process.

When April of 2021 hits, I will be sure that I've performed the necessary market analyses and due diligence, assembled a competent crew, and secured an abundance of investment capital.

My advice to you all: Don't be late to the party.

Mike Dymski · Answer

You have the wrong idea about real estate investing...and about conditions determining your success.  I recommend analyzing real deals, making offers, and purchasing properties that meet your criteria (regardless of conditions).  Otherwise, you will wait around for conditions that may never happen...and then, if they do, you won't be able to capitalize on them anyway without actual experience.  Banks provide exclusive access to actual investors with portfolios.  Sorry for the tough love.  Keep taking action...just point it in the right direction.

Joe Splitrock · Answer

@Jalen Chanthaboury even during the housing crash, most properties didn't go for pennies on the dollar. My state is offering mortgage assistance to catch people up, but realistically most people here are not even behind. Our state unemployment is pretty much back to pre-COVID levels. I am not saying some markets won't have troubles, but there is not a national real estate crash pending. People have cash and are waiting ready, which means even if there are deals, they will not sell for pennies on the dollar. You are saying don't be late for the party, I am saying get in line for the party.

Also keep in mind during the housing crash that venture capital firms came in and swooped up cheap properties in mass. You need some serious cash to play that game.

Account Closed · Answer

Ok. Lets pretend just for a moment you are right. Do you think you are the only buyer in this scenario? All of your "network" are in business to make money. How will you keep them engaged for the next 6 months without throwing them any business? Secondly when these wonderful properties are available for pennies on the dollar do you think investors sitting on millions of cash on the sidelines are going to let you come in with your sad 20% down financed offers and let you scoop up these sweet deals? As others have said, get your head out of the clouds, buy something and then let discuss.

Mike Dymski · Answer

Focus on deal flow and your criteria.  BP members have been prophesizing a market correction since 2014...thousands of posts.  It's just noise.  At some point it may happen and the experienced investors will take advantage of it.  And, in the meantime, they have made six, seven, or eight figures in profits.

Pivot with conditions by selling the marginal properties, keeping the good ones, adding select properties that meet your criteria, bolstering reserves, having cash flow and prudent debt, and sleep well at night.

Zachary Beach · Answer

@Jalen Chanthaboury

Odds of pennies on the dollar widespread is lower than the odds of getting stuck by lightning. Double digit drop in majority of markets is in my opinion also highly unlikely. I think double digit increase is more likely than decrease in my market.

I don’t think anyone claiming a crash is coming can fathom the amount of money pumped in the economy right now. The money supply is around 20% more than last year.

Alexander Szikla · Answer

There is no timing the market, only time in the market.

It is always a good time to deploy capital if you are discipline and make good deals.

Account Closed · Answer

Another market correction thread.. Is it 2015 again? 2016 2017? 18? 19? 20?

All of these BP wizards have been wrong for the past 4 years.

Pennies on the dollar? wishful thinking.

"Aspiring real estate investor"

And my advice to you- get in the game kid. You can regurgitate market corrections, crashes and flashy buzzwords all you want- I am glad you're preparing for something that was supposed to happen years ago without having an egg in the basket.

Oscar Cardenas · Answer

By the time the crash comes, the market would have appreciated enough to offset any declines to come. You cannot time the market so its best to keep making money at all times. If you buy at a 10-20% discount now through networks and the crash happens tomorrow, instead of following the decline just sell at break even or keep it as a rental. I know some people who are still waiting since 2018.. well my market has increased about 25-30% since then so they have lost much more money in opportunity costs than they will save from a crash.. Then of course if you are new and have no experience, good luck finding money to fund the deals during a crash. Money gets tight for everyone during a crash.

Troy Weaver · Answer

@mike dymski Thank you I appreciate the game.

the game.

Steve Vaughan · Answer

Good advice to anyone in in any part of the market cycle if in accumulation phase.

I would recommend having private sources of capital.  When the market collapsed last time my favorite community banks weren't 'lending until the dust settles and there is less regulatory uncertainty. '

When RE is being listed for 'pennies on the dollar', regs change.  That takes time. Banks don't lend when things are uncertain.

How I’m preparing for the 2021 housing market correction.

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