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3 Tips for Recession-Proofing Your Real Estate Investments

3 Tips for Recession-Proofing Your Real Estate Investments

1 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Sterling attended the University of Indianapolis.

Instagram @sterlingwhiteofficial

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There’s a lot of talk about being due for another recession. While no one knows what’s truly going to happen or when, I’m going to go over the ways I am recession-proofing my holdings and portfolio.

How to Protect Your Investments From a Market Crash

1. Buy on cash flow.

This is why I love the Midwest—like markets in Ohio, Indiana, and Kentucky. Here I’m able to ensure the property is kicking off the necessary cash and underwriting on a worst case basis. If occupants see dips below a certain standard and rents start dropping, we’ll still be fine. We’ll be able to cover our mortgage and be able to make money.

2. Don’t bank on appreciation.

Most people are doing this these days in order to make the numbers work. Those who are banking on appreciation think that they’ll sell the property in two or three years, and that’s when they’ll make the money. But until then, they will be in the red. From my perspective, that’s a no-no. I wouldn’t recommend it.

Related: Banking on Property Appreciation is Risky & Unwise

3. Go direct to owner.

This has been a crucial thing for us. By doing this, we’re avoiding overbidding and overpaying for property, because that’s when people are most inclined to do the other things—like banking on appreciation and assuming the rents are going to steadily grow. By going direct to owner, we’re controlling our own destiny and are still able to get properties at a discount, where the numbers actually make sense.

These are the ways I’m personally recession-proofing my portfolio. Hopefully you can take something away from my strategy!

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What are you doing to protect your assets? 

Share in a comment below!