How To Anti-Time The Market

Let’s talk about the 3 Pillars of a Great Investment.

Specifically how they apply to current multifamily reports and forecasts.

This was something I was taught by my mentor, Joe Fairless. In his article The Three Immutable Laws of Real Estate Investing, he shows how to successfully invest in nearly any market, at any time in the market cycle...

Because I can’t think of a more destructive long-term investing strategy than trying to time the market.

Instead, you master your emotions and see through the white noise of a lot of real estate news, whether good or bad.

Of course we have to keep up on current events.

But we don’t have to let them make us act out emotionally. Instead, we’re going to stick to sound, proven concepts that don’t just blow in whatever direction the wind is going.

Steady Execution Of The Business Plan Will Protect You From Market Changes

Left, right. Up, down. Hot, cold.

I doubt you’re reading this because you want to treat real estate like day trading.

And the safest time to deal with an economic downturn is before it happens.

That’s why the best investment strategy is to prepare for a downturn even when the fundamentals are not showing any signs.

How do we do that?

With a little will-power and some common sense, it’s fairly easy:

1. Invest For Cash Flow
2. Don’t Over-Leverage
3. Have Reserve Capital

What does this mean, in reality, when you are looking for the next hot multifamily deal?

It means you should see a property that has massive potential for forced appreciation, particularly in a submarket that can handle increased rents and that contains a lot of renters.

You should see a financing structure that involves 20% or more equity at purchase, with a loan term longer than the exit date of the business plan. Even in a major economic upheaval, this can weather the storm.

And finally, there should be room for adequate cash reserves. This protects you against unexpected expenses.

When you seek deals that account for those 3 pillars, your investment portfolio essentially gets bulletproofed.