Are you prepping for the crash?

Investor · Kennesaw, GA · Member since 2018 · 98 posts · 127 votes

I'm curious what investors are or aren't doing in relation to the impending market crash a lot of people (smarter than me) are saying will happen in the next 2'ish years.

I'm selling a house in the next few months and contemplating just paying the capital gains instead of doing a 1031 exchange. Probably won't, but it's a thought I had.

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Russell BrazilBusiness Member

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

Much more money has been lost by investors preparing for market corrections than has actually been lost in market corrections.

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Brandon P.Pro Member
Investor · Paradise, CA · Member since 2015 · 102 posts · 15 votes
8y
@Max Petrov for sale by owners signs and condos going up significantly
0 Reply
John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Michael H. I am cautiously optimistic, and continue to buy apartment buildings that make sense. I think the people who got burned last time primarily had cross collateralized properties, over leveraged and/or had low cash reserves. I just recently acquired an apartment building locally in Berwyn, and I will continue to acquire deals that hit my minimum criteria. With rent growth of 4-5% annually in the area, how could I not buy more? We may never see an opportunity like 07-09 again where fabulous assets are selling at 40-60% of their intrinsic worth while interest rates are historically low. A lot of folks got rich, and a lot of folks look smarter than they are due to this opportunity.
3 Reply
Anthony R.
Property Manager · Lakewood, OH · Member since 2015 · 250 posts · 258 votes
8y
"... and a lot of folks look smarter than they are due to this opportunity."
@John Warren got me all figured out hahahaha
0 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
8y
I don't have a bunker with food in it but my cash reserves and deal structure would reflect being prepared in the event of a market softening.
1 Reply
Rj D.
Investor · Chicago, IL · Member since 2017 · 79 posts · 62 votes
8y
@Jason DiClemente i just have to ask how a broken clock is right 2x a day :-)
0 Reply
Todor Ialamov
Real Estate Agent · Burlington MA · Member since 2018 · 113 posts · 142 votes
8y
I think a market correction is very likely to happen in the next few years. However I don't believe will be anything close to 2007-2008. The biggest difference in my opinion is the ease mortgages were given back then (we all know how tough it is now). I bought my first condo in 2006 at the top of the market. I was working in a restaurant and showed $12K on my W2. Took a loan for $265K with no money down.
If a property is cash flowing nicely now it will easily survive the "crash" !
0 Reply
Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Rinee John de Leon I'm old and still use analog clocks 😂
0 Reply
Javier D.
Investor · FL · Member since 2017 · 266 posts · 220 votes
8y
Im selling off all my assets and building a bunker. Trying to finish it before september 12, 2019 which will be day of market crash. Trumpian 12:10 for he will lead the lamb to the slaughter.
2 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
I believe a correction will definatly happen, no way of telling when or how major it will be in each geographic area. Regrettably mu plans are retire and sell all my holdings in 3 years. Depending on the markets it may or may not be possible or I may win or lose. I am not yet positioned to sell everything off at this point in time so in my position it will simply be a wait and see situation.
We will see.
0 Reply
Holly Williams
Rental Property Investor · New York City · Member since 2014 · 208 posts · 271 votes
8y
I actually just wrote a blog post about this. "Why I'm not Afraid of a Market Crash."
It's all about leverage....not too much of it please!
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David Wright
Lender · USA · Member since 2013 · 186 posts · 97 votes
8y
The information is only as good as the source. Check the source of the information and ask yourself; what is their track record for predicting market crashes? Not saying they are right or wrong, but I need to know what makes them reliable. Too many so called "experts" have been wrong in the past. Just my humble opinion.
2 Reply
Brian Ellis
Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
8y
I'm prepping for a crash by buying Real Estate.
5 Reply
Peter StewartBusiness Member
Real Estate Broker · Indianapolis, IN · Member since 2018 · 160 posts · 168 votes
8y
I'm not. I've been in the business a decade now, and although I'm aware there are market cycles, I'm not going to turtle up and stop buying (or slow down) because people think it's "coming soon". I've been reading these types of articles my entire career - someone always thinks doom and gloom is coming. Also, if you listen back on old BP podcasts from 2015, guests were talking about the crash coming then. 3 years later and guess what, no crash. Had you listened to them, you would have missed out on many great opportunities. You can't time it. We'll only know the crash is here once it's too late.
Also, you can buy great deals in any market, so the crash is somewhat irrelevant. Especially if you're doing buy and holds. If you're a flipper, especially in the higher end markets, then I understand being much more cautious. I'm mainly buy and hold, but for the flips I do, I focus more on the lower end, which will be impacted much less when the next downturn hits. I'm also in a very stable market that won't be affected quite as much as volatile markets like CA, Vegas, FL, etc.
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Kate J.
Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
8y
@Matt Millard I feel the same as well. Modulo that some markets will feel more recession that others. I am somewhat worried of hyperinflation, but dont really expect it will happen.
1 Reply
Phillip LanierPro Member
Uvalde, TX · Member since 2016 · 141 posts · 45 votes
8y
@Michael H. I'm no expert; nor do I claim to be. But I have been listening to podcasts, reading articles, etc. and I've been hearing good points on a crash, no crash and just a market adjustment. I'm not going to let it affect me on investing now. I think as long as I keep buying low, I'll be fine. If we stay within the 70% rule, and the market dips 30%, we should be fine. If the market crashes 70%, than God help us all. If there is a crash or an adjustment, that means opportunity.
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Chris Armstrong
Realtor · Charleston, SC · Member since 2016 · 229 posts · 159 votes
8y
Buy property, pay it off quickly and collect rents. You can't go broke if you don't owe anyone money. You also don't need a job if your cash flowing property pays you enough, so I say if you have a big enough portfolio of assets you own outright or that cash flow significantly let the crash or correction happen.....I need to buy some more good deals anyways. People freak out and sell at high discounts and i have open arms for them..and cash.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Chris Armstrong:
Buy property, pay it off quickly and collect rents. You can't go broke if you don't owe anyone money. You also don't need a job if your cash flowing property pays you enough, so I say if you have a big enough portfolio of assets you own outright or that cash flow significantly let the crash or correction happen.....I need to buy some more good deals anyways. People freak out and sell at high discounts and i have open arms for them..and cash.
Lets take Charleston for an example and all that is going on there.. why would Charleston Crash.. with Boeing Volvo Mercedes and the hotel and travel industry … ??? I think in my little work a day world of building infill in the older parts of downtown by the Citidel and AShly and such.. even on the north end by the Cigar factory.. ( especially right by the cigar factory) that was the hood 10 years ago. now look at it.. but we are seeing a pricing ceiling and that seems to be 500 to 600k.. I sold my one at 7 new st off market with someone just calling us before we even put it on the market.. so for now not going crazy but like you said we pay cash for the dirt.. so if we cant go vertical we just ride it out. But when you have a city like that surrounded by water on 3 sides limited land.. bunch of old leaner houses that have title issues which further keep inventory down and a world renowned destination .. Me thinks this is a good bet to ride through any type of storm and we were blessed to miss the last hurricane :) I will be out there mid Oct to check on our projects I love it there if I was 20 years younger I would pack up and move there its so vibrant for real estate development.. Just follow the JOBS
Also got cold called on two on Reid st that are vertical in framing stage now.. and a 4 house one I am doing on Aiken.. when retail buyers go to the effort to look us up on the land records then go to Oregon to look up the LLC and the managing owner and then find me.. they are doing more than average leg work.. and just to get a shot to buy these pre MLS.. that's usually an indicator that a market has legs.. And this is not the low value asset yellow letter crowd the Reid st is going to sell for about 1.2 for the two houses.. etc..
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John Fairbanks Miller
Member since 2018 · 5 posts · 5 votes
8y
All of my real estate positions can survive a large correction. As someone with PTSD from 2008 I won't invest without 30% down and on my two personal houses I paid 50% down. I realize all of the Rich Dad Poor Dad soldiers think this is dumb, but understand I might not be the traditional investor on here as my entrepreneurial efforts net me a substantial income and real estate is my hobby/retirement vehicle as I don't do a 401K/IRA, etc. While I do not think we are headed towards a major crash, I have been suspecting a correction as I have seen a lot more "for sale" signs popping up tipping the supply and demand scales towards a buyers market. So to answer your question, I am preparing by having a lot of available cash to scoop up property if prices fall.
3 Reply
Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
8y
Originally posted by @Michael H.:
@Max Petrov here is one article discussing it.
http://time.com/money/5235032/just-around-the-bend...
I tend to go with the experts on this because I’m not one. I’m just starting out as a real estate investor.
The stock market and the real estate market are 2 different things. In the early 2000's the Dotcom bubble burst, causing the stock market to crash, real estate did not. This happens quite frequently and will happen again.
How am I preparing? I am building vertically integrated businesses that will perform well during an expanding market and will compliment well during a market that is weakening/weak, where I will be buying a lot.
Right now, I would still buy every deal that is out there as long as it fits my underwriting. The only problem is that 99 out of 100 don't.
2 Reply
Michael Kistner
Rental Property Investor · Lodi, CA · Member since 2018 · 206 posts · 115 votes
8y
@Michael H.
The Fed Chairman just spoke yesterday about how strong the economy is and no crash in sight. With that said I still always have the possibility of a crash or bubble in mind, I think if you look for solid value add plays that cash flow well you'll always be ok.
It's only if you over leverage or take on too much risk that you should be worried.
- Mike
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Frank Wolter
Rental Property Investor · Cleveland, OH · Member since 2018 · 191 posts · 432 votes
8y
@Michael H. I've read and thought about this crash for about 7yrs. From what I've read it will be similar to the Depression. I read a book called "AfterShock". I believe this to be how things will go down. It said the collapse will happen to the next president after Obama. If this happens there is nothing that will keep your investments safe. NOTHING. SiLver and gold is an option. But silver is heavy and gold is very expensive. Also most people cant afford either. In addition you'll eventually run out. To me more valuable than gold and silver is ammunition. If it gets as bad as it might. Your gold and silver cant take my ammunition. But my ammunition and guns can take your g+s. Another thought process is that America is the biggest gangster. If we fail then America pulls its guns out (via military) and forces a reset of debts and goes to war with anyone that doesn't comply. Either way unless your a billionaire or an elite there is NO SAFTEY. ANYWHERE. NONE. You can not keep your investments safe. I have amount 4m in unleverage real estate. Probably a great position. But its nothing. That's not even a drop in the bucket. There is no answer. But the weak will fail and the strong will survive.
1 Reply
Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
8y
Originally posted by @Michael H.:
@Max Petrov here is one article discussing it.
http://time.com/money/5235032/just-around-the-bend...
I tend to go with the experts on this because I’m not one. I’m just starting out as a real estate investor.
"Inflation will follow faster than expected, Jones told his shareholders in a February letter, forcing the Fed to increase rates quicker than stated. “This market’s current temperament feels so much like either Japan in 1989 or the U.S. in 1999,” he told clients, according to Bloomberg."
If you read the article, then you noticed this. What does that mean for Real Estate? Well I would argue that Real Estate is a great hedge against inflation. This could play into a very large increase in property values.
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Robert Forbes
Real Estate Investor · Jacksonville, FL · Member since 2012 · 8 posts · 0 votes
8y
CHANGE is the only thing promised during life. There is no reason to fear a crash or a recession, as I have read and know it to be true, millionaires are made during recessions. We as investors just have to learn to adapt to the markets. The ability to buy low can never be a bad thing it just depends on your approach.
0 Reply
Steve S.
Lender · Los Angeles, CA · Member since 2015 · 800 posts · 229 votes
8y
This is not 2008... this is not 2008 ... this is not 2008. Loans are not built on fiat BS, inflated appraisals, and pay option arm negative amortization death marches. Every loan since 2010 has had verified income. Home prices are bolstered by demand, inflation, jobs and earnings.
Did you know there are 1,000,000 more people living in Los Angeles than in 2008? All those people are buying gas, snicker bars, beer, lap dances, newspapers (still), water bottles, BBQs, TVs, and Lakers tickets. They also need places to live and homes. This is the real cause for increase in home values in my local market. So no... we're not in a bubble. No we're not going to see a crash in Real Estate here.
We have Lebron James, two new NFL football teams and the 2028 olympics to prepare for. Plus a resurgence in film made in LA. We might flatten out with the rest of you, but we will push through and we will not go down. LA has too much going on, too much draw from the entire world, too much good weather. And we always have 60,000 new wannabes getting off the bus to become actors with daddy's money and the $2,000 they have saved up pumped right into our local economy. What a beautiful thing.
6 Reply
John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Anthony R. love it! We all looked good for buying at the right time! As long as we know we aren't that smart, we should be fine going forward!
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