Are you prepping for the crash?

Buying & Selling Real Estate
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Are you prepping for the crash?

Michael H.
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
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y

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

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  • BJ Ralphs
    Flipper/Rehabber · Huntington Beach, CA · Member since 2017 · 42 posts · 13 votes
    8y

    I don't think we are in for a "crash" as much as a slow down. I've ready many articles the latest from BofA talking about this. The demand is slowing but the inventories are also still low. it seems like the conditions are not remotely similar to the crash of 08...but one thing similar that I see is lots of folks taking out equity to make large ticket purchases such as cars or paying off credit cards. Is the economy really that much better for the average american or is it that the housing market is better allowing for these loans. When everyone is maxed out and there are no raises, the economy will stall. 

    1Reply
  • James Mercure
    Realtor · New York, NY · Member since 2018 · 27 posts · 21 votes
    8y
    @Ron Gallagher Me too!
    0Reply
  • Erwin F.
    Rental Property Investor · Seminole, FL · Member since 2014 · 85 posts · 68 votes
    8y
    @Russell Brazil, I definitely agree with you! Timing the market seems too emotional driven. I prefer to dollar cost average over a long period of time. I’m dollar cost averaging by continually buying index funds every two weeks, funding my real estate reserves every two weeks, and analyzing small multi to buy.
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Rich Senyszyn:

    I’ve been around long enough to recall the 79 opec embargo, 87 crash, y2k, twin towers going down, the housing crash in 07-8, and other crashes. If you are worrying about any of these, it could be you are over-leveraged, don’t have adequate property reserves, and don’t have a personal 6-8 month emergency reserve.  

     don't forget the S and L crisis and 18% interest rates as well us old dogs went through.

    and of course if you look at each one it was a vastly different reason.. .. so what is the next thing.

    student loans??? auto sub prime ???  like some say.. currency devaluation...   

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  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    In 1984 we were excited when we assumed a 11.5% adjustable rate mortgage. 

    2Reply
  • Biekhal Alkhaleefa
    Flipper/Rehabber · Chicago, IL · Member since 2018 · 7 posts · 2 votes
    8y
    @Michael H. I believe it won’t be a crash if evryone is prepared for it.
    0Reply
  • Mahdi Hemmat
    New to Real Estate · St Louis · Member since 2018 · 12 posts · 7 votes
    8y

    Stock Market: I have switched up my investments in the stock market to reflect safe and conservative choices so that I do not get hit as hard as I would if I had not done it. I also am ready to buy when the crash happens as well. The last time the crash happened was freshman year in college. 

    Real Estate: Some areas have been hyped up and overvalued even these past few months after the election. I think depending on what kind of deal you got when you purchased your property there won't be that big of a dip. It would really vary state to state and even city to city. I love comparing the prices from '08 to now when I look to purchase a home. 

    0Reply
  • Thomas Carroll
    Baltimore, MD · Member since 2016 · 14 posts · 6 votes
    8y

    A quote I love is buy real estate and wait, don't wait to buy real estate. Ray Dalio made a great video that is published on YouTube titled "How the Economic Machine Works." Worth a watch. 

    1Reply
  • Account Closed
    Member since 2018 · 3 posts · 1 vote
    8y

    I'm of the strong opinion that there wouldn't be a market crash anytime soon. What is your evidence that there will?

    1Reply
  • Frank Wolter
    Rental Property Investor · Cleveland, OH · Member since 2018 · 191 posts · 432 votes
    8y
    @Joe Splitrock lol but that was a joke. But seriously all my opinions are based off of leaders in the investment industry. The ammunition vs. Precious metals opinion is actually a Dave Ramsey theory. He doesn't believe in precious metals because if things get that bad again ammunition and guns shall rain supreme. I bounce off of Dave Ramsey, Hary Dent and Peter Schiff. The jury is still out on what's about to happen. So I diversify myself along the 3 opinions.
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Frank Wolter:
    @Joe Splitrock lol but that was a joke. But seriously all my opinions are based off of leaders in the investment industry. The ammunition vs. Precious metals opinion is actually a Dave Ramsey theory. He doesn't believe in precious metals because if things get that bad again ammunition and guns shall rain supreme. I bounce off of Dave Ramsey, Hary Dent and Peter Schiff. The jury is still out on what's about to happen. So I diversify myself along the 3 opinions.

     if its that bad it will be about WATER  ground that can produce food..  cant eat metal or ammunition.. 

    I have a client that is a tad eccentric.. he was president of a aerospace companants company in LA.. made huge bucks.

    came up to Oregon when he retired. has a nice big house on the ocean and another one on a lake just south of that.

    but he also has this 120 acres up in Idaho that is total self sufficient its where he is going in the melt down.

    it has been a challenge working with him.. he will only use the phone and US mail.. no e mail no fax etc.. 

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  • Steve K.
    Honolulu, HI · Member since 2017 · 247 posts · 315 votes
    8y
    Originally posted by @Frank Wolter:
    @Joe Splitrock lol but that was a joke. But seriously all my opinions are based off of leaders in the investment industry. The ammunition vs. Precious metals opinion is actually a Dave Ramsey theory. He doesn't believe in precious metals because if things get that bad again ammunition and guns shall rain supreme. I bounce off of Dave Ramsey, Hary Dent and Peter Schiff. The jury is still out on what's about to happen. So I diversify myself along the 3 opinions.

    I always say if it is that bad, it will come down to who has the B's

    booze, babes, bandages, and bullets

    I cheat and count medicine with bandages

    cigarettes will be valuable too

    as will be fuel, and methods to transfer it

    there is a good blog about hurricane katrina and another, I think it was about the Czech republics that are really informative about how things can get. oh, there was another I remember about Venezuela that was great too. they are too off topic for me to post, and probably even against site rules.

    1Reply
  • Frank Wolter
    Rental Property Investor · Cleveland, OH · Member since 2018 · 191 posts · 432 votes
    8y
    @Jay Hinrichs I hear you. But if it gets that bad again guns will out weight everything. People will rob people. Look at any natural disaster. New Orleans for example. That's what happened.
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Frank Wolter:
    @Jay Hinrichs I hear you. But if it gets that bad again guns will out weight everything. People will rob people. Look at any natural disaster. New Orleans for example. That's what happened.

    ya I hear ya with certain parts of the US>. but look how the Japanese handled the tsunami  pictures of all those folks politely standing in line for their water.. 

    but no question in gun happy America and in the inner cities were they shoot each other like crazy right now with out any disasters I can for sure see it.. I am not selling my rifles and shotguns anytime soon  LOL>. 

    but we do have to eat.. and we need water.. 

    I was down on the MS gulf 2 weeks after Katrina.. and I had a friend in New Orleans  and the amount of shootings and killings was vastly under reported ..according to him..  

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  • Omar Khan
    Rental Property Investor · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Frank Wolter:
    @Joe Splitrock lol but that was a joke. But seriously all my opinions are based off of leaders in the investment industry. The ammunition vs. Precious metals opinion is actually a Dave Ramsey theory. He doesn't believe in precious metals because if things get that bad again ammunition and guns shall rain supreme. I bounce off of Dave Ramsey, Hary Dent and Peter Schiff. The jury is still out on what's about to happen. So I diversify myself along the 3 opinions.

    Only one of those 3 eminent folks are reliable and put their money where their mouth is. No surprise that it's Dave Ramsey. The only guy who says what he means and means what he says. 

    Harry Dent and Peter Schiff have been predicting hyper-inflation, recession, hunger, famine, end of times (the works) since time immemorial. Eventually, they might be right. We just might not be around to see it. 

    Most of Peter Schiff's funds lost a ton of money while the market has been going up and up. You know who made money? Peter Schiff! All that sweet AUM fees are making the guy rich as he preys off the insecurities of others. Harry Dent is renowned for selling snake oil.  

    100% agree with the precious metal part. I've always wondered how are folks going to use their stash of gold when the zombies take over? Ammo and guns still make sense.

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    8y

    @Omar Khan I don't pay enough attention to Harry Dent to know how many times he is wrong. I have noticed that when he is right it seems like coincidence. The reason he gave for his prediction was nowhere close to the actual cause of the result.

    1Reply
  • Frank Wolter
    Rental Property Investor · Cleveland, OH · Member since 2018 · 191 posts · 432 votes
    8y
    @Joe Splitrock lol your the best
    0Reply
  • Heath Clendenning
    Developer · Los Angeles, CA · Member since 2015 · 48 posts · 12 votes
    8y

    I do not have a lot of time to read the other replies. There is no expert calling for a crash in 2 years. If they are - an expert they are not. 

    I don't even know how to formulate a clear response without getting frustrated at the question. We, the modern world, go through long term and short term debt cycles. We are nearing the end of a short term debt cycle. How our (and other) governments handle it will make some difference but we:

    - have raised interest rates

    - have not used a big infrastructure spending button yet

    - have low inflation

    - tighter rules on mortgages 

    Sure, we may see a leveling off. China or Europe problems can also impact us to some degree. Our own national debt needs an eye as we have new tax cuts without spending cuts, but there is no data for any impending crash. Recessions happen, expect them and don't over-leverage your positions.  

    But please let us stop with the hyperbole. 

    Data:

    Oil price spikes have predicted 10 of the last 11 recessions. One of these was a depression, 2008. There is a significant difference in the term and we are talking about recessions here. 

    Stay focused on the Federal Funds rate and the 10 year yield. We want them to not cross if possible.

    3Reply
  • Eric Jacobs
    Specialist · Fort Lauderdale, FL · Member since 2016 · 187 posts · 128 votes
    8y

    Most of the major companies that forecast this are bracing for the correction to be at least palpable out of the gate in 2019.  Obviously that is an over-generalization but I would fully expect and all indications are in my mind that New York, California and Florida will certainly see something next year.  Usually these things have a way of starting in the West and moving their way east so I'll be monitoring West coast real estate very closely as we close out this year.  

    0Reply
  • Jason Woods
    Rental Property Investor · Bellevue, WA · Member since 2016 · 35 posts · 11 votes
    8y

    Here in Seattle I've seen market is clearly slowing down, somewhat flat and maybe a bit of dip, however I don't see a crash coming any time soon, economy is doing well, job market is tight, and for Seattle there has been net in flow of people, so I just don't see real estate market crashing. However it's unlikely we will have double digits appreciation either, as we have seen in the past few years here.

    I actually thought about crashing and even the urge to sell before crash, then I realize I'll have to pay 8% in transaction cost and capital gains, market will have to crash at least 10% AND I'll have to time the market right to make it worthwhile. I don't have confidence that I could predicate either of these two events, so I decided to sit tight and stick it through.

    0Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    8y

    @Michael H. prepping and have switched up our underwriting to longer holds.

    0Reply
  • Frank Boet
    Miami, FL · Member since 2015 · 84 posts · 69 votes
    8y

    The stock market is not the real estate market, but homebuilders are behaving very similar to how they behaved from 2005 thru 2012. Look at any homebuilder, (Tol, KBH, LGIH,Etc) chart pattern and you will see almost an exact pattern when they peaked in 2005 and three years later real estate crashed. This time, HB's peaked in  January 2018 and have been declining since and they are going even lower. Will there be a crash or just a small pullback like 10-15% in the next 2-3 years? No one knows. I'm sure most of you are finding great deals, but I have not been that fortunate here in Miami so I'm just staying in cash for now. I'm actually doing extremely well in the stock market by trading Options and collecting income by selling Puts and Call Options which are a lot more liquid then rental income and this is working for me. All this is my humble opinion and every at the end has to do their DD and do what's best for them.

    0Reply
  • Sid Naik
    Real Estate Investor · San Ramon, CA · Member since 2014 · 67 posts · 28 votes
    7y

    Going by history ,at least in the san francisico bay area there has been a correction in real estate prices by 20%  every decade . 1991 , 2001 , 2009 . 2009 being more severe of 30-40% .

    I am expecting a correction in the next 2-3 years by above stats . no reason why we should be different this time :-)

    I am preparing by selling one of my properties just because I will have more cash . remember 200k cash is equial to 1 million of purchase . If you just take cashout or line of credit ur still paying interest on it which will reduce cashflow and ur ability to borrow by that much . The risk to it is what if the property appreciates by 20% more than what you sell . This late in the real estate cycle I am prepared to take that risk by having more dry powder . any thoughts ?

    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Rich Senyszyn:

    I’ve been around long enough to recall the 79 opec embargo, 87 crash, y2k, twin towers going down, the housing crash in 07-8, and other crashes. If you are worrying about any of these, it could be you are over-leveraged, don’t have adequate property reserves, and don’t have a personal 6-8 month emergency reserve.  

     don't forget the S and L crisis and 18% interest rates as well us old dogs went through.

    and of course if you look at each one it was a vastly different reason.. .. so what is the next thing.

    student loans??? auto sub prime ???  like some say.. currency devaluation...   

     I would guess in our lifetime one the major crashes we will experience will be due to climate change and its impact on cities/industries. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tim G.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Rich Senyszyn:

    I’ve been around long enough to recall the 79 opec embargo, 87 crash, y2k, twin towers going down, the housing crash in 07-8, and other crashes. If you are worrying about any of these, it could be you are over-leveraged, don’t have adequate property reserves, and don’t have a personal 6-8 month emergency reserve.  

     don't forget the S and L crisis and 18% interest rates as well us old dogs went through.

    and of course if you look at each one it was a vastly different reason.. .. so what is the next thing.

    student loans??? auto sub prime ???  like some say.. currency devaluation...   

     I would guess in our lifetime one the major crashes we will experience will be due to climate change and its impact on cities/industries. 

     I am sitting here In Charleston SC today  which is blowing up.. we are building new construction downtown area.. we have to raise them 9 feet off the ground in many areas.. but this is not stopping this hot market... but its easy to see if 1 foot rise would have major impact.. but there is billions being spent today on hotels  ports  huge auto factories ( Volvo Mercedes BMW)  and airplanes  Boeing.. so I don't know in my lifetime.. but I suspect by 2100 there will be massive public works projects to raise the sea walls.  ???? in the mean time its business as usual

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