Warnings of Recession

Member since 2019 · 5 posts · 29 votes

I'm currently renting in Los Angeles and the rents are super high. I want to buy a property, but I am a little afraid especially after the treasury department said we are looking at early signs of a recession. I was working on buying a duplex for my first property, but the news stopped me. What should I do? Should I wait to see what happens? or Should I still buy? As a first-timer what do you recommend I do?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

If you dont have the courage to buy during the hottest economy ever, why do you think you will have the courage to buy during a recession?

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Tim DelaneyPro Member
Buffalo, NY · Member since 2018 · 790 posts · 530 votes
7y
If you are buying a duplex that you plan to live in then it doesn't really matter if a recession hits - in fact, even if the home loses some value you would still be better off than if you just keep renting. Use those payments to earn equity instead.
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Jonathan Soto
Lender · Newark, NJ · Member since 2016 · 695 posts · 252 votes
7y
Jump in, make sure you find a good deal and you'll be fine. It will take time for you to find a deal but pull the trigger once you find it. Think long term and you'll be fine
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Shannon Rice
Member since 2019 · 4 posts · 1 vote
7y
@Gadiel Del Orbe
My answer is going to be a lot less technical and easier to understand than every one else that has posted ... Here you go ... Being a Real Estate investor in many ways is like making a decision to have kids .. There are unknowns but if you believe and have a desire to put the hard work
In you will be proud to be both a dad and a successful investor
1 Reply
Randy Gutierrez
Investor · NY · Member since 2019 · 171 posts · 80 votes
7y
There has been a mention of a recession every year since 2012. If anything it's a trumpcession, all it takes is for a trade deal to be made and back to the moon we go. We are a long ways from the overall GDP contracting two quarters in a row.
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Long Nguyen
Rental Property Investor · fresno · Member since 2019 · 15 posts · 4 votes
7y
So how much of a depreciation in value are we looking at for multifamily homes if a recession does occur? Does it depend on the area? Just trying to gauge the number so i can factor this into my next purchase as I am in the process of buying
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Rodger Wilson
Real Estate Agent · San Antonio, TX · Member since 2019 · 21 posts · 13 votes
7y
2008 was terrific for my rentals. It really saved my bacon.
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Marisa R.
Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
7y
Wish I had a crystal ball.....
This is what I do, don't feed the debt monster, in other manage debt, and make sure your cashflow is sufficient to cover the bumps along the way
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Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
7y
When I bought my first investment property in 2013.. these same threads of worrying about a recession started popping up. Now, after lots of amazing life experiences, lessons learned, and a modest 7 figures or so of equity / profit net has been created, I'm still seeing the same threads. Coincidence?
Invest.
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Gabriel GraumannPro Member
Real Estate Broker · Phoenix, AZ · Member since 2019 · 165 posts · 100 votes
6y
The first post should be a FACT and CRAP game:

FACT: There WILL BE A RECESSION again....numerous recessions in fact, over the coming decades. It's a natural part of most economies. This is based on the FACT that the definition of a recession, economically speaking, is simply a fall in GDP in two successive quarters. You just need to be educated on what a recession is to get over the FEAR of what you believe it to be. There have been 10 recessions since the 1950's. Nearly 50 of them since the early to mid 1800's.

Here is the CRAP: Media is based on the philosophy of "if it bleeds it leads" and FEAR talk provides a better news cycle of drawing an audience in than "hey, a downturn in the economy may be coming, get ready for deals!" This is why all of the talking heads on the news keep spitting out recession, recession, recession. They are playing to peoples fears of what they may have experienced in the last one.

Reality: The type, severity, and length of a recession is near impossible to predict or time. Not all recessions are a real estate recession like 2009/10. Not all recessions hit the same communities and metros the same. Rates may be up OR down in recession periods. Jobs do tend to be effected, but not equally across all industries, locations, or employee type.

So, all I can recommend @Gadiel Del Orbe is that you focus on what you can control. Do your research, analyze more deals, beef up your credit, save money, cut expenses, and when you find or make a great deal, act on it immediately! You can make deals happen in any market, that's the beauty of real estate investing. Hope this helps.
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Victor Saumarez
Investor · Lahaina, HI · Member since 2012 · 47 posts · 35 votes
6y
Well, here is the recession some of us were talking of—not necessarily predicting—not long ago. You could argue Covid-19 was the catalyst for a recession-in-waiting. It amazes me how pundits completely ignore this possibility. It seems such an obvious assumption.
It can't have escaped anyone's notice that financial markets have brushed off fears largely due to monetary stimulus and tech stocks remaining bullish. Real estate, though, is more firmly grounded in the fundamentals, so unemployment, rent and mortgage forbearance, and welfare support are things to watch. Since RE data is lagging, we won't see the results of the damage for a few more months. I expect the first leg will be an increase in price reductions and listings, followed by missed payments, then foreclosures. According to CNBC, 36% or rents and 30% of mortgages were late or missed in July. Renters are more likely to be working in industries hit the hardest.
I'm not investing in this market. In fact, I had been liquidating investments since I felt valuations reached their zenith a year or two back. Looks like that wasn't a bad call, but from the fixed income perspective, I think RE is still outperforming securities. That could all change, and I suspect the new $400 CARES Bill will, in part, determine the outcome.
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