Recession imminent? Should I sit on sidelines?

3 Replies

I was just in a cafe today reading how a recession is on the horizon in Fortune magazine. Many many factors, most notably the almost inversion of the yield curve (which predicts recessions with 100% accuracy.)

Right now I got a triplex, things are going great but rent could be improved (and would include some rehab.)

I've always thought about doing a BRRR (first one was minimal rehab), flip, etc. I do have access to private money (wealthy aunt offered to lend money.) However, my heart tells me time is not right. In my target market, I'd probably be close to meeting the 1% rule, but I'd want to do a little "value add" to juice returns. But I don't want to do anything major now given my newbie status (first property was merely to get my feet wet.) If I was doing my first rehab (which of course would come with cost overruns, mishaps etc) while the market/economy was tanking....haha ya that wouldn't be good.

On the other hand, some people do deals in good markets and bad. I could rehab and then hold it (BRRR), not necessary to flip... I'd hate to wait on the sidelines for 5 years with a tinfoil hat before acting.

What do you think?

Markets will always rise and fall. If you are buying right and cash flowing, a downturn will not destroy you. You just want to make sure you are not over leveraged and you can afford to drop the rents to cover the mortgage in the worst case scenario. You definitely don't want a $1500/month mortgage on a house that will barely break even or cash flow at a high point. If you wait around, it will be much harder to get loans once a crash happens. 

ALWAYS follow your gut. If you feel it isn't right, DO NOT DO IT! I personally am waiting for the crash, but I might be crazy and it might not happen. Worst case, I am wrong and I hold off on purchases for over a year (I've been waiting a while) but I haven't missed out on much because prices aren't increasing right now anyways (by me at least) and best case, I save myself some nights of kicking myself in the azz for going against my gut and buying at a peak before losing a ton of equity. Yes, as long as it cash flows then it doesn't matter, but I would rather it cash flow $2k a month than $800 a month. Esp if I can only afford 1 now (at 800 net) or 2 at the bottom in a year (?) at $2k net ea.