12 Influential Investors Weigh in on How to Survive the Coronavirus Crisis
Right now, in Spring 2020, we’re dealing with a lot of uncertainty in the market, in the economy, and in our personal lives. And I wanted to make a video to help share some thoughts on how to both survive and thrive during this time.
But then I realized, instead of just sharing my thoughts, I’d rather ask a whole bunch of other people that I look up to and see what their thoughts were on the topic.
So, I got back about 20 responses from those people I reached out to. And that’s what this post is—a collection of short pieces of advice from some of the smartest real estate, finance, and lifestyle influencers that I know.
Now, you can sit back and read about what some incredibly smart people think you should be considering doing during this crazy time of economic uncertainty.
Here’s what they had to say.
David Osborn, Tribe of Millionaires
I’m going to give you my one bit of advice for this downturn. Write yourself a 10-year vision and right at the top of the page is the year “2030.”
My last 10 years have been amazing. My wife and I are getting on better than ever. My health and fitness are incredible. My kids are all doing amazing. My daughter is in college, etc.
You can say, “Ten years ago today we had this crisis—the coronavirus. The entire economy came to a halt, and I’m so proud of the way I led and the character I developed and the man I became through that time period. I made great decisions. I cut overhead quickly. I could preserve cash, and then I took full advantage of the recovery. Because it was such a deep, sharp crash, that recovery was long and lasting, and there was a lot of money to be made. And that’s what really made my fortune and helped me get to a whole new level.”
Remember—the worst thing about a boom is that every day, you’re one day closer to a crash. And every day that you’re in a crash, you’re one day closer to a boom. The great thing about right now is we’re in a crash. So we’re going to ride this thing out, and then we’re gonna ride a big boom into the future.
We’ll be twice the people, twice the business people. We are twice the men and women we were—stronger fathers, stronger husbands or wives.
And the reason it’s valuable to write about your future from today is it puts perspective on it. In 10 years, you won’t remember the pain and fear that we’re living through today. You’ll just remember the abundance that came from it.
So good luck, and write out your 10-year vision.
A.J. Osborne, Keylock Storage
The way that you survive and thrive in economic downturns is by putting other people first.
Let me explain.
We all, of course, know cash is king, and you want to get rid of bad debt, cut expenses, and increase cash flows. But what people need during an economic downturn is solutions, and often, solutions to hard emotional problems.
It’s a time of turmoil and a time when people need someone to step up and lead the way. And this offers very unique opportunities to those who can put others before themselves—for those who can carry the burden and for those who will step up to the plate.
This was a way that we expanded our portfolio massively and had a lot of wonderful opportunity when working with banks, business owners, and developers as they were trying to solve problems during the real estate crisis in 2008.
Every crisis is the same—you need to solve complex problems. By forgetting about yourself and putting other people first, people remember that. It really does come back, and most of the time, it comes back tenfold.
Tarl Yarber, Fixated on Real Estate
I want you to remember that you are the greatest asset in your business. No matter what happens, you can get through this. I believe in you.
Emotion kills in this business. It has killed us before this crisis, and it will definitely kill us during this crisis. So if you have something that’s happening in your business that you feel is out of your control, please stop and think for a second.
Think about what you can control in the situation. When something’s happened to make you react, think. Make a plan. And when you make that plan, do the math of the plan, mitigate the risk, measure that risk, and then execute that plan.
It’s no different than when we invest in real estate. Every single day is no different now and no different in the future. We measure and mitigate risk.
The last thing I want to leave you guys with is that if you’re in this business for the long run, this whole time period that’s going on right now is just a bump in the road.
You’re going to look back on the situation, and you’re either going to say, “Hey, I overcame this and I achieved, “or “I crumbled and I failed.”
Which one is it going to be? That’s up to you.
Jay & Wendy Papasan, The Papasan Real Estate Team
Cut expenses immediately.
And the way that you guys are going to do that is you’re going to print out three months of your credit card statements and three months of your bank statements, and you’re going to do the hard work of going through them line by line.
Categorize it in four ways:
- There are mission-critical expenses—this is stuff that you can’t live without.
- There’s stuff that you’d really, really like to keep, so you’re going to hold onto that until you have to cut it.
- And there’s stuff that you absolutely can cut.
- You’re also going to find a bunch of stuff that makes you say, “What the heck is this?” And that stuff gets cut immediately.
You’re going to do all that in the next 48 hours.
Amanda Han, Author of Tax Strategies for the Savvy Real Estate Investor
Read a good book about investing or money-raising or tax savings—and don’t let this time off go to waste.
As some of you might already know, the IRS recently extended both the tax filing and payment deadline from April 15th to July 15th, so we can take our time to capture all of our legitimate tax deductions. And there’s not a reason to rush to get taxes filed by April 15th.
Of course, if you’re expecting a refund, maybe consider filing soon to get that money back into your pocket. You know, now that we have this rare opportunity to take time off from work and stay home to practice social distancing, now’s a great time to take control of your finances.
Contact your tax advisor, find ways to maximize your tax savings, and also do some proactive planning ahead for 2020 and beyond.
Brian Burke, Praxis Capital
Before you can thrive in this crisis, you first have to survive it. So, remember—you and your tenants are all in this together.
You’ve got to be able to work with people and keep as many residents as you can in order to survive in this market. It’s going to be a challenging time for everyone, but you’ve got to do what you can to work with your tenants.
Your lenders might even be working with you—there was just something that came out saying that the agency lenders on multifamily properties are going to be doing loan forbearance agreements for a period of time for multifamily owners who are willing to delay evictions for their residents that are affected by the COVID-19 virus situation.
So be sure to stay in touch with your lender, stay in touch with your residents, and you can make it through to the other side. Once you make it through, then you can thrive and take advantage of all that the market’s going to offer in the future.
Noah Kagan, Sumo Group
This is the time that you guys have all been waiting for, sitting on the sidelines, waiting for real estate to be an opportunity.
So, let’s talk about how to survive and thrive during these uncertain times.
How can you recession-proof your business? There are four things that you should go do instantly.
Number one, make a plan.
Make a Plan
Once I started making a plan for myself and for our company at AppSumo.com, I felt much better and I felt more control about everything going on.
We have two ways we’ve done our plans for a company. We’ve done a 30/5 plan, which means we’ve assumed our revenues are going to go down 30 percent, and we want a minimum 5 percent net income.
And we made those changes immediately (even though business hasn’t really slowed down at all for us—it’s actually gone up because more people are working from home). So, make a plan for your business and take action.
Second thing we've done personally is moved to a 70/30 cash-to-equity position, so that I don't really have to worry about the market. I have cash to do the things that I want to do.
Be Aggressive and Defensive
What can you cut? Which subscriptions? What SAAS subscriptions? You actually have to get aggressive.
There are a lot more ways that you can get out there, and there are a lot of opportunities (more than ever actually) with all the uncertainty.
I don’t want things to get more calm. I don’t want things to slow down.
I want the virus to go away. But the uncertainty is where the opportunity is.
So, there are too many opinions. There are people like me. There are all these pundits.
Who the hell knows?
Just go for a walk. Come home. Write down your plan. This is your bible. This is your Torah. This is your Koran.
Go follow this for yourself, and you’ll feel a whole lot better.
Especially for you in real estate, now is the opportunity that everyone was talking about, saying “I was sitting on the sidelines. I have cash to make things happen when things go down.”
Things have gone down.
Have they gone down enough? Who really knows?
But here are four things you can do to be creative and swift in making money with real estate.
4 Actions to Take Now
1. Get Creative
How can you get creative in renting your place out? Can you rent it out for short-term offices, packing distribution, video shoots? If people are doing more things online, maybe they can use it for that.
2. Make Crazy Low Offers
The weird thing about real estate is that it doesn’t cost you to make any offers. There’s a lot for sale that’s a million dollars nearby where I live.
And my buddy said, “Let’s just offer $850,000.”
I said, “Why don’t we just offer $700,000?”
Everyone is starting to panic—the fear hasn’t fully gotten to peak, but it will happen in the next week or two as everything slows down, as everything closes down. So make crazy offers.
3. Hedge Your Risks
I actually got nervous about making that offer and putting up $700,000 in cash, because I want to be cash strong so I can take whatever opportunities are coming out there.
So, I’m hedging it by assembling groups. So, if you’re thinking about real estate, but you’re a little nervous about it because you’re not sure if it’s overvalued, look into it and invest with a group of four or five (or 10) people. Use BiggerPockets to network. This will help you to hedge your risk.
4. Ask Renters to Prepay
Get your renters to prepay you. If you have renters in any of your properties, go to them and say, “I’ll give you 30 percent off if you pay me for the year.”
Then you don’t have to worry about your rent. You don’t worry about your place—about the money coming in or out.
So, if we’re thinking about real estate right now, the opportunity is in the chaos.
Look, there’s going to be winners and losers out of this. And which side do you want to be on at the end of it?
Thrive. Don’t worry just about surviving. Get past surviving—get your defense set up, go out and be aggressive, and take advantage of this opportunity.
Brittany Arnason, Investor Girl Britt
This might be a time where you have to be extra, extra budget-conscious.
This is how we’ve been able to make our renovation the nicest in our area, which in turn gives us the best tenants and saved us a ton of money in the process.
So coming up here, in these tough times, you might have to start thinking about doing things DIY.
You’re going to have these skills forever. It’s fun, and if you can get into it, maybe it’s something you need to consider.
J Scott, Scott Silver Concierge Realty
You should be putting together a fantastic team.
One of the biggest difficulties during a downturn is that there are so many opportunities, so many potential things that you could be capitalizing on, that generally speaking, you’re not going to have enough time and energy to do it yourself.
So, find other people who can help contribute capital to the team. Find people who can contribute time, energy, and expertise to the team. Find people who are willing to work with you, so that when these great opportunities come along, you don’t have to pick and choose one or two or three of them.
You can do a whole bunch of them, because you have a team around you that provides you the capital, the time, the effort, and the expertise to get it all done.
Start putting together that team now. Then when the opportunities arise, you can jump on them right away.
Marko Zlatic, WhiteBoard Finance
My two tips for surviving and thriving in a recession are:
- Build up your war chest (aka your cash reserves), so you can pounce on opportunities in an opportune time.
- Don’t panic sell. Whether it’s a property where you think the tenants aren’t going to be able to pay, or you just want to get rid of it because it’s a headache, or if it’s a stock that’s going down 20, 30, or 40 percent—don’t panic sell. Take a deep breath and reevaluate.
Lucas Hall, Landlordology.com
If you’re like me, you probably have tenants from all walks of life—some of which are in the hospitality and service industry. You can help them help you by giving them a little more time to pay rent.
Most mortgages aren’t officially late until the 15th of the month. Maybe you could give them the full 15 days. They would certainly appreciate it, and it would increase your chances of actually getting paid.
Another thing you can do is give them a weekly payment option—maybe for the next couple months. Tell them they can pay weekly, and maybe they’ll be able to pay the smaller, more digestible chunks.
Lastly, you could actually credit them the money temporarily. For example, you could say, “Hey, for the next two months, you’ll have to pay half rent. We’ll make up the rest later.”
Aaron Amuchastegui, Entrepreneur & Investor
Don’t waste the crisis.
Back in 2013, my company had major, major changes. A bunch of people entered the market. We lost a bunch of cash. Investors lost money, houses lost money, and we were stuck with a bunch of things that we had to deal with.
What I mean when I say “don’t waste the crisis” is that you’re going to have to have a bunch of uncomfortable conversations with people—sometimes for the first time.
You could be telling the bank, “Hey, I’m not able to make that mortgage payment right now.”
You could be telling an investor, “Instead of making money on this one, we’re going to lose money. Or instead of making as much money as we did, we’re going to make a little bit less.”
And so when you’re having those difficult conversations, you’re already telling them something that’s a complete bummer. And so take that opportunity to renegotiate the future.
Say, “Hey, sorry, we lost money on this. And actually, for the near future, I think it’s gonna be the same. So now the split needs to be this, this, or this.”
Or, “I’m going miss this mortgage payment, and I actually need a reduction in rates.”
There’s a whole bunch of things you guys can be doing right now. You can go renegotiate lease rates with landlords if you have an office somewhere. You could go have the tough conversations with employees, and maybe you need to lay some off.
Maybe you need to change the rates with people. Maybe you need to change how much you’re paying your contractors, how much you’re paying your painters. This is a great time to go out there and say, “Hey, there’s really bad news. We’re going to have to do a bunch of things to survive here. And here are the changes we’re going to make.”
Maybe in a month or two, this all goes back to normal. Maybe in six months, this all goes back to normal. But right now, fear is at an all-time high. Everybody is super stressed about this. So, it’s a great time to go take advantage of that.
There are all sorts of things out there. People are going to want to sell some of their rental properties after they miss a couple of payments. There may be good ones to buy.
You know, if you have a rental you're trying to get rid of, go look at your portfolio right now. You want to have a lot of cash going into this, so collect any cash you can. If you've got rentals with a lot of equity not making enough, go cash those in. Get as much cash as you can. Go out there. Be ready to pounce. Be ready for the options that are going to come out of this.
Again, don’t waste the crisis.
You’re going to have to have a hard conversation anyway.
If you’re gonna have to give somebody bad news, do it now. Do it quicker.
If you’re going to lay somebody off, do it right away so you can get out there and set yourself up for success in the future.
Carol Scott, Scott Silver Concierge Realty
Hug your spouse, your partner, your significant other—and go hug your kids.
Why? Because I really want you to feel the power and the importance of that human connection.
That’s what we’re all craving right now, right?
We’re told we can’t be out there. We can’t be social. We can’t do those things we’re accustomed to doing.
So, really understand the power of connecting in person, and then go pick up the phone.
I’m not talking about sending a bunch of emails. I’m not talking about a bunch of Facebook posts. Truly connect with people.
Pick up the phone. Call other people in your family who are far away, call business associates, call random leads you’ve had here and there.
Don’t do it to ask for business leads. Don’t do it to ask for advice, or to give advice. Do it simply ask, “How are you doing? How are you coping? Is there any way I can help?”
And why is this important?
Because again, establishing that human connection, especially in a time of need, is so massively powerful. People will remember that.
And when it’s time to go back to business as usual or to adapt your business—however it’s necessary—people are going to remember that you cared enough to pick up the phone, to reach out, to show genuine concern, and to lend a listening ear.
Bob Lotich, SeedTime Money
Figure out where your money’s going.
Warren Buffett has two rules about investing that he follows. Rule No. 1 is don’t lose money. Rule No. 2 is don’t forget rule No. 1.
And I would argue that most of us living in America, at least at this point in this pandemic situation that we have going on, we need to be paying attention to those rules, as well—regardless of whether or not we’re investing. The fact is that most of us are losing money, because we aren’t tracking our money and we don’t know where it’s going.
So call it a spending plan, a budget, whatever you will. Create something where you know exactly where your money is going and you’re not losing any of it to unnecessary purchases that you don’t really care about. That’s something that’s really important for all of us right now.
Philip Taylor, Part-Time Money
Recast your vision.
Something I think is important to do in times like this when things are sort of thrown out the window and everything’s now uncertain—especially for a goal-oriented person—is to make sure you recast a new vision for yourself.
Get specific. Write it down. What do you want your life to look like after this eight, 10, 12 weeks or however long this is going to take? What is that person coming out of this whole thing look like?
And then evaluating whether your life each day now is sort of moving you toward that spot. So we’re left right now without a vision, and you need to recreate a vision for yourself. So that’s what I’m going to be doing.
Joe Chantry, Instagram @your_first_million
One tip that I would like to give real estate investors as we approach a potential downturn is to make sure you have financial reserves for each of your investment properties.
Last year, we purchased a few properties in Kansas City. In one of the four-plexes that we bought, a couple of months after we closed, we ended up having to replace the sewer line.
We had it inspected previously, and it looked good. But some things happened that damaged it, so we ended up having to dig up the whole thing. It cost us about $8,000.
Now, that was completely unexpected—it could have been really bad if we didn’t have money set aside for that purpose. Thankfully, we did. We were able to replace it, and it sucked—but we were able to move ahead without it breaking the bank.
So make sure, in good times and in bad times, that you always have money set aside for things like that. You’re going to need things like a new roof, new siding, a new sewer line. And a lot of times it’s unexpected. So make sure that you have money set aside for unexpected costs.
Ryan Michler, Order of Man
It’s easy to focus on the uncontrollables—things that are beyond our grasp, things that we have no influence over. But if there’s one thing that I can share with you to keep you on track, keep you being productive, it’s to focus on you.
Focus on the one thing that you can control, which is yourself. And specifically, create a plan.
Every single morning, I write down what needs to be done. I review what I did yesterday, what needs to be done that spilled over from yesterday, what I’m going to accomplish, and how I’m going to attack my day.
I spend at least 20 to 30 minutes every single day—without hesitation—on focusing on how I’m going to control and dictate the tone of my day.
So, make sure in the midst of uncertainty and doubt and confusion and variables that you have a solid foundation for starting your day by planning it. What needs to get done, what are you going to accomplish, how are you going to accomplish it?
Track it, and look at it at the end of the day to ensure that you’re making the most of every moment, every opportunity. Make sure you’re focusing on the things that are within your control.
The beautiful thing is that you have control over the variable—yourself. And that makes the biggest difference. So don’t neglect this important component of your day.
Plan it out. Review it at the end of the day, and do that every single day.
Scott Trench, President of BiggerPockets
Develop healthy routines while you’re facing this situation.
Get up at the same time as you would on a normal workday, set goals, and take daily action toward those goals. Work out every single day, eat healthfully three meals a day, and eat healthy snacks.
Set goals and work toward them. Use this as an opportunity to do a hard reset on your routine goals, health, fitness—whatever it is—while you’re facing the pandemic situation.
Steve Rozenberg, Mynd Property Management
The first thing I would say is that it’s OK to be nervous and it’s OK to be unsure of what your next move is going to be.
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I know this is a crazy time. Nobody knows what’s going on. There’s a lot of stuff you’re hearing on the news and a lot of people are nervous. I’m sure you may be, as well.
Do not let fear and emotions drive your decision as to what you’re going to do.
Remember, at the end of the day, you’re running a business. Run it based on fact and decision, not on fear and emotion.
You’ve got to sit there and you’ve got to really think this through logically. If you do, you will come up with the right decisions. Sometimes sitting back and assessing the situation and seeing what’s going on could be the best move that you make.
When you are sure and you know what you’re doing, then take focused action with clear intention.
How are you dealing with the economic challenges of the coronavirus pandemic?
Let us know in the comments below.