Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
Quick! Sell me your house before it’s too late! :)
Are you optimistic or pessimistic about this upcoming recession?
I’m optimistic about these next few years, I hope there is a massive price correction. I’m running around trying to gather as much capital together as possible to buy bigger deals. Am I the only one seeing this silver lining?
If I remember correctly - the best time to invest is when everyone is selling. But what do I know I’m just a millennial.
Who knows when and how it will affect housing. If you purchased right and know what you are doing this would be a investors dream. Recessions and downturns transfer money from the impatient to the patient. (Warren Buffet)
My strategy is to keep doing what I am doing and playing my edge. In the meantime, I am building a just in case fund. Every investor needs to look at their portfolio. Can you withstand rents going down 20%? Can you withstand a year with no rents? Can you withstand 1yr with no personal income?
If there is a stress test with banks. Don't you think you should do the same?
Rental Property Investor · Saddle Brook, NJ · Member since 2017 · 82 posts · 36 votes
7y
@Ola Dantis you mention strong markets. What’s your take on Northern NJ? Close to NYC, bus and train. Tons of commuting tenants already. I would know, I am one of them.
Los Angeles, CA · Member since 2019 · 512 posts · 301 votes
7y
@Nick Rutkowski. Yes buy low and sell high also involves buying the crap out of real estate during a recession. Yet again stocks bought at the low point during the recession has phenomenal returns.
I am very optimistic about the next few years.
We have a president who understands economics for once. All worries state by the media could be worse but they aren’t
Mike Bean. Have you had anyone do a debt to income ratio for a commercial loan. From your comments, or unless you have partners, it looks circumspect to me that you would make it through underwriting.
Vancouver, WA · Member since 2014 · 127 posts · 60 votes
7y
@Nick Rutkowski I think a recession will occur at somepoint but I think as it relates to real estate it will be much more location based vs. the previous recession which was centered around real estate across the entire country. The upcoming recession will most likely be led my businesses not being able to fulfill their debts. The corporate debt bubble is what will pop and that will impact jobs and have a huge impact on commercial real estate in the areas and sectors impacted the most. Continue to invest in the migration trends of mild climates and low taxes (state income and property) and you will continue to make money if you buy prudently in those areas.
When a recession occurs I agree that if you have access to capital you will benefit greatly if deployed correctly. More importantly you need to be in a position from a relationship standpoint to take advantage of any massive deals. There is still a lot of liquidity sitting out there that is waiting and also supports current pricing. So I recommend still doing deals to maintain and build the relationships that will help you do more business when the recession happens and you want to deploy massive amounts of capital.
Rental Property Investor · Member since 2018 · 78 posts · 11 votes
7y
From what I heard there will be a light recession , as the amount of data available making the government more able to change the directions of the market before it go in the wrong way.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
7y
I assume if it gets bad, I might have to drop rent 10-20%. If I can stomach that for a few years then I feel that I’m ok with real estate investing. Hopefully that won’t happen, but I plan for the worst and hope I have enough income to offset some tenants losing their jobs and having to evict and turn over some properties in bad times.
Curious about the earlier statement about rents and vacancies dropping during the recession....I would have guesses the opposite since a lot of people lost their homes and downsized. Could they just not afford it so landlords were forced to lower prices?
Depends all on your area. If your area lost jobs, lost employers, you got hit with higher vacancy and lower rents. Also it was difficult if you had a commercial loan come due. You couldn’t refi.
Thanks Syed. Where did all the people go? Move out of state? Into relatives homes? cardboard boxes??
All of the above. They moved in with family, people downgraded, if an area lost employment people moved to find a job.
Many of the people in foreclosure in judicial states got to stay in their houses for 5+ years without paying. So they didn’t have to move into a rental until they actually got forced out.
Curious about the earlier statement about rents and vacancies dropping during the recession....I would have guesses the opposite since a lot of people lost their homes and downsized. Could they just not afford it so landlords were forced to lower prices?
Depends all on your area. If your area lost jobs, lost employers, you got hit with higher vacancy and lower rents. Also it was difficult if you had a commercial loan come due. You couldn’t refi.
Thanks Syed. Where did all the people go? Move out of state? Into relatives homes? cardboard boxes??
All of the above. They moved in with family, people downgraded, if an area lost employment people moved to find a job.
Many of the people in foreclosure in judicial states got to stay in their houses for 5+ years without paying. So they didn’t have to move into a rental until they actually got forced out.
Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
7y
@Nick Rutkowski
Certainly not here in Phoenix. Houses being built left and right as well as apartment complexes being built. People are moving in from different states. Gas prices going up because circle k and frys are out lol
Investor · Cary, NC · Member since 2012 · 214 posts · 194 votes
7y
A correction may come at some point (who knows when?), and it's probably inevitable but I'd argue it's effects will be nothing like the prior downturn, which was actually caused by real estate financing (i.e. junk loans). The banks haven't been handing out junk loans since.
Investor · San Diego, CA · Member since 2019 · 131 posts · 116 votes
7y
Yea I’ve been hearing my colleagues, neighbors, and friends since 2016 talk about another market crash that’s coming. Colleagues have sold their homes and have since been renting waiting for housing prices to come back down so they can buy again. I have friends that have never owned, who are qualified to own, and have been waiting on the sidelines since 2016 for “prices to come back down”. If you truely study the fundamentals of our economy, you will see that there are no signs of a let down coming. Home ownership percentage is still very low as a country.
I live in San Diego, the population growth here is increasing by 30,000 people every year. The average household in San Diego has 2.2 people living in it. This means to meet the population growth, we need to build roughly 13,000 new homes per year...all costs aside it’s just not possible. (Ocean on one side and mountains on the other side).
There’s also the Pacific Pivot which is occurring right now. The Pacific Pivot is the relocation of our Navy presence. As a country our threat is no longer in the Middle East, but instead it’s accross the Pacific in China and North Korea. Because of this, the Navy is shifting the majority of its presence from east coast to west coast making San Diego it’s largest Navy base in the country. By 2025, San Diego will have 50 total Navy ships in the harbor bringing an additional 15,000 sailors into town. For every 1 sailor, this actually brings an additional 10 full time people to San Diego between family members, contract employees to support the Navy sailors, and also the the contract employees family members.
So on top of the already 30,000 annual increase in population growth were experiencing, an additional 150,000 people will be here by 2025, with a department of defense spending budget that spends money like there’s no tomorrow.
What we’re seeing right now in our country is more powerful than a market cycle. We’re seeing baby boomers move out of our work force and into retirement meanwhile the millennial generation is moving into the bulk of their working years and many of them will be working and making decisions in this country for the next 35-40 years.
Market cycles last 7-8 years, but demographic cycles last much longer. What if we’re just in a double header?
@Ola Dantis you mention strong markets. What’s your take on Northern NJ? Close to NYC, bus and train. Tons of commuting tenants already. I would know, I am one of them.
Hey Jonathan, I don't know much about New Jersey 🤗
Now, I can refer you to City-Data.com and search with the zips for the particular area(s) in which you are interested in.
This allows you to get an idea of the % of Renters, an indication of how quickly you may lease up 🏢
Of course, there are several data points on that site as well and if you are data junkie you'll be at home 😉