Recession Proofing Tips To Weather The Storm
According to Bloomberg's recent economic model projection, a recession is all but certain within the next 12 months.
Recessions are a natural part of the economic cycle and do not necessarily mean doom and gloom.
Some of the greatest innovations and businesses are formed during recessionary periods.
Regarding real estate, I believe there will be more opportunities come up over the next 12 months than we've seen over the last 2 to 3 years.
Meanwhile, there are a few things that you should do to protect your family and your business for economic uncertainty:
- 1. Reduce Expenses: When the times are good it's easy to justify additional expenses. Take account of your expenses (especially recurring expenses) and rank them by necessity as related to revenue. Expenses not tied to revenue should be strongly considered for elimination. The leaner you get without sacrificing revenue the less financial risk you will face when times get tough.
- 2. Reduce Debt Liabilities: Carefully review your debt liabilities and consider paying off or refinancing high-interest debt from credit cards, credit lines, and bridge loans. Keep in mind that paying off or refinancing debt frees up cash flow while also reducing much needed cash reserves.
- 3. Increase Cash Reserves: Stockpiling cash is not the best investment strategy, but having a well funded cash reserves account will help carry you through difficult times. Extra funds can be used for reinvestment when the economic environment improves.
- 4. Diversify Revenue Sources: Look for additional revenue opportunities that don't require much cash investment. This may be harder to do during a recessionary period. Small increases in revenue from new sources will be very helpful if your primary income stream declines. You might even find newer opportunities that can take your business to an entirely new level.
Recession or not, be prepared, stay flexible, and remain diligent.
MARKET OBSERVATIONS
GDP grows faster than expected in Q3 at 2.6%
Roofstock reports first single-family home sold as NFT
Multifamily concessions declined YOY in August with 5.3% of units offering incentives
Single-family home resales slow to lowest level since 2012
Average 30yr fixed mortgage rates up slightly to 7.08%
Originally Posted on Invested Agents.
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