Is it a bad time to invest with the upcoming recession?

Question

Good afternoon everyone, just wanted to introduce myself. My name is Idania and I'm new to bigger pockets as well as to real estate investing. I am currently working with a bank to get my finances in order to start on my first flip. However, a lot of people keep talking about the recession and how i shouldn't invest. The comments are all well intended but they did get me some what worried. Regardless I'm still motivated and just looking for some type of confirmation that investing is still a good idea in spite of the recession, thank you.

Russell Brazil · Answer

There is always a recession on the horizon.

Steve Vaughan · Answer

A good purchase is a good purchase in any market.

If you plan on combing the MLS, standing in line with and competing with other retail owner-occ buyers, I'd say that is too risky.

If you are finding that off-market, motivated seller and solving a problem at a discount, timing doesn't matter.

Whether to flip or not is a good idea will depend on the asset and neighborhood.  Remain open to a holding strategy and open to creative purchases like seller financing for tired landlords.

Flipping is just a high risk job at a high tax rate with super high transaction costs for most. Realtors, lenders, title co's, the county/state and Uncle Sam make the most with flips.  Keeps the economy going at least.

Welcome to BP, Idania!

George W. · Answer

The problem with the logic of always fearing economic turndowns is that you can be wrong on timing by years. Then it's easy to get in the mindset of not investing because it's coming soon. The best thing to do is not speculate but to invest and use caution when leveraged

Idania Mendoza · Answer

Pearly Tan this is a great article! And thanks to everyone who commented on my post. This is exactly what I needed to hear :-)

Matt Hulsman · Answer

A down market can happen any time. My advice - don't buy a house that is negative cash flow, and don't invest solely on appreciation. History has shown as markets go up and down rents usually hold true. So instead, focus on properties with positive cash flow (if you're renting).

For flips, I think if you do a good job then you'll be OK but remember most people purchase and move in the spring and summer so it will be more competitive in those months.

Darius Ogloza · Answer

Next time someone swears a recession is coming, ask to see the crystal ball.

Pearly Tan · Answer

Check out this article:

https://www.biggerpockets.com/blog/real-estate-investing-timing-market-bad-idea

Kyle Zdrojewski · Answer

@Idania Mendoza.

I am a newbie investor and working on building up some education before I make my first purchase. I have been listening to the BiggerPockets Podcasts and one thing sticks out that might help. You should define multiple exit strategies for your flip. If it doesn't sell can you hold it and rent it until market conditions improve?

Christian Rojmar · Answer

People have been talking about a recession since 2012ish and will always keep talking about it. With that said, the run we have been on since the 08/09 crash is unprecedented and eventually we will see a correction/recession (when? your guess is as good as anyone else).

I am also new to real estate investing and I personally believe we are not too far away from a correction or recession. That as well as the fact that it is extremely difficult to find cash flow positive properties in my focus area (I am focusing on rental properties rather than flipping) have started making me focus on building a bigger war chest and expand my knowledge for when the next opportunity shows itself. If I find a good opportunity before the next correction/recession, I will be ready, but I will certainly not buy something just to buy in today's market!

In the end, it is impossible to time the market. As such, as long as you are comfortable with the risk/reward of whatever property you buy, someone telling you that a recession is coming shouldn't scare you away because then you would never invest.

Just my opinion as a newbie in real estate investing.

Is it a bad time to invest with the upcoming recession?

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