Yield Curve Inversion - What's Next for You?

Question

Just curious to see how this may be affect your plans for the next year: https://www.cnbc.com/2019/08/1...

Wy Kay · Answer

@Benjamin Molnar

Too many are struggling to find deals because markets are so overheated right now. If someone can wait until the next downturn, even if it's 24 months away, they will be rewarded greatly for their patience. Warren Buffett is sitting on a pile of cash about $122 BILLION, waiting for prices to collapse so he can go on a major buying spree. That takes some serious discipline and a long term outlook.

Robert C. · Answer

@Benjamin Molnar, As a multifamily investor, I'm actually less concerned with a recession right now, and more concerned about what happens afterwards in the following recovery. If anything the lower interest rates are going to help my portfolio. I wonder about after that, like if the Fed realizes they actually need to raise interest rates a great deal during the next recovery so they have tools in the tool bag for the future. Or maybe we'll hit a period of inflation, which will force their hand.

The obvious thing that would break current heavy investment (and cap rate compression) in real estate is a rise in interest rates. I think some investors were concerned about this leading into 2019, but I for one am breathing a sigh of relieve now that it's seemingly off the table in the short term.

Taylor L. · Answer

I don't see this impacting my plans at all, at least directly. I always stress test my investments to predict whether they can weather an economic storm.

At the end of the day, this might be an indicator, but it also might not. If we run for the hills every time an important number looks bad, we'll never do any deals.

Andrew Hogan · Answer

Like you said Ben, market corrections mean more opportunities! The hardest thing right now is finding deals that make the numbers work, if/when a recession hits, it will automatically double or triple the deal flow!

Benjamin Molnar · Answer

@Taylor@Taylor L. I agree with your approach.  I think there's a right time for everything regardless of the market, you just have to pick your spots and make sure your projections hold up.

Benjamin Molnar · Answer

@Robert C.  My wife and I listen to the podcasts often and we're motivated but, we always feel like we missed the boat back in 2007-2008.  We're not necessarily wishing for hardship but if rates go to zero, there's obviously opportunity there.  We're looking for our next investment now but, we're going to slow walk it going into next year.

Also, we may look at new construction rental instead of BRRRR or flip.  Call it a NCRRR?  Doesn't quite have the same ring to it though, does it?

Yield Curve Inversion - What's Next for You?

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