Is The Next Recession Near? What you can do to prepare just in case.

Recessions are 2 consecutive quarters of decline in growth in an economy they can be national or market specific. A recent article from the wall street journal presented a statement at a conference by Sam Zell the real estate magnate. He stated that "the US economy is now in the ninth inning". The good news is that he also stated that the next recession will be milder than the last one. In contrast at the same conference Johnathan Gray Global head of real estate at the Blackstone group stated "growth will continue to be there. Just not as strong as seen in the past". What does this all mean? Who do you believe? I say both of them and neither of them. There are a few points to consider. One, take both arguments evaluate them and come up with your own conclusion. Two, prepare your financial and investment houses for a hit. Three, make sure you are buying right.

Anytime someone says something that will impact my business I need to give it some consideration. The higher the credibility of the person the more consideration I will give it. The previously mentioned quotes are from some of the top people in real estate in the US and the world so it carries heavy weight. It is my responsibility as an investor to study the market that I'm investing in and to be aware of the future possibly holds within that market. Ways to stay on top of the market include evaluating trends. Look at recent sales comps, unemployment rates, rent prices and much more. Always ask yourself where the trend is going. Are jobs coming into the area? Talk to local lenders are they bullish or bearish? Ask why?

Make sure you’re financial and investment houses are in order. Focus on liquidity, cash is king all of the time especially in a recession. An emergency fund is a must. Also use credit cards with large limits as a backup plan I keep several at a zero balance just in case of a cash crunch. If you own property consider having a line of credit available and drawing on it often to keep it open by the lender. Sell before the market gets too hot so you are not holding the bag and are stuck with an asset you can't sell. Don't hold out for all of the highest offer leave some meat on the bone and it can save you some headache and aggravation if the market turns. If you have cash available when the storm passes you can be the one capitalizing on all the opportunities.

The most important thing is to buy right. Buying right consists of not buying on speculation. Buy either for cash flow in the present or what the property is worth today. Do not assume it's worth 100k today and next month it will be worth 125k just because the market is hot. I like buying property when I can walk into equity the day I buy that means I already have made money. Consider market appreciation a bonus. If you are investing in commercial evaluate the terms of the loans as the loan terms are often shorter than residential. DO NOT buy on pro forma income. Have a couple of lenders as backups for the refinance if that is your exit strategy. If you’re selling help your buyer by recommending lenders they can use that can get the job done. Commercial financing can be challenging to navigate so being proactive can only help you cash out faster and move to your next big investment. Talking about big investments don't get over your head, if you’re in uncharted waters bring on a partner or find a mentor paid or not.

In the end you must be aware of where you are investing to watch for signs of what's to come. Having cash on hand will help calm the storm. Remember that buying right is the smartest thing you can do. Recessions are cyclical they are not necessarily all bad. For the astute investor the recession is my definition of luck when preparation meets opportunity. Get yourself lucky and be prepared.