When the s#%t hits the fan

14 Replies

hey guys I have a question for investors with experience. When times get hectic as it did in 07, are there any changes you guys make as far as investing? When there's a reccesion, stock market crash or if the country is just ready to collapse. Is there any real estate investment that is somewhat reccesion proof? Rental, flipping etc. and is there thing you do different? 

@Carlo Torres Lending guidelines tighten when that happens. So you just need to make sure you always maintain good credit and available cash to make it easier for you to borrow.

I just buy what I think is the best asset at the time.  During the financial crisis....I started buying stocks heavily in 2009. I didnt catch the bottom, but I caught a lot of the bounce back. In 2010 I started buying real estate heavily...I bought before the bottom, so my investments lost money for the first 9 months, but I was confident they would come back, and they did.

You need to be diversified in both asset classes.  Any one stock may not come back, but the market will. Any one piece of real estate may not come back, but the market will.

@Russell Brazil I hear ya. Thanks for the info. I ask this question because of how the future is looking and a lot of talk about big market crash coming, the dollar collapsing etc... And I am just starting out trying to gain as much knowledge as I can I figured I would start learning about when the times are hard. I always hear the rich get richer in these times...

Learn how to run the numbers and let that guide your strategy. There are flip numbers (profit = ARV - rehab costs - hold costs - transaction costs) and there are hold numbers (cash flow = rental income - PITI - PM - Maintenance - CapEx - Vacancy). The quick nickel and the slow dime. I run both numbers for all my purchases and make sure they both work ... one is for plan A and one is for plan B. It doesn't matter if the market is hot or if there is blood flowing in the streets or what happens next, if you let the numbers be your guide you will tend to make rational investment decisions with profitable exits.

People need a place to live, even when the SHTF. Ever watch the show "Naked and Affraid"? What do the survival experts on that show always do? They find a suitable, well located plot of land and build a shelter 1st. Then they find water, then food. Shelter, water, food, always in that order.

Of course, if it really hits the fan, then the military may show up at your door and say they now own your home, in which case your REI portfolio will under perform. If that happens, then guns & ammo will be the best investment class ... but never bet on a zombie apocalypse; even if you're right, you can't collect, unless of course you want to take your payment in BRAINS :)

Yes - institutional lending does tighten.

THAT is when you learn to approach private lenders and make THEM "rich" instead of the banksters.

Originally posted by @David Faulkner:

Learn how to run the numbers and let that guide your strategy. There are flip numbers (profit = ARV - rehab costs - hold costs - transaction costs) and there are hold numbers (cash flow = rental income - PITI - PM - Maintenance - CapEx - Vacancy). The quick nickel and the slow dime. I run both numbers for all my purchases and make sure they both work ... one is for plan A and one is for plan B. It doesn't matter if the market is hot or if there is blood flowing in the streets or what happens next, if you let the numbers be your guide you will tend to make rational investment decisions with profitable exits.

People need a place to live, even when the SHTF. Ever watch the show "Naked and Affraid"? What do the survival experts on that show always do? They find a suitable, well located plot of land and build a shelter 1st. Then they find water, then food. Shelter, water, food, always in that order.

Of course, if it really hits the fan, then the military may show up at your door and say they now own your home, in which case your REI portfolio will under perform. If that happens, then guns & ammo will be the best investment class ... but never bet on a zombie apocalypse; even if you're right, you can't collect, unless of course you want to take your payment in BRAINS :)

 Oops ... in my excitement talking about the numbers, I forgot purchase price in the flip numbers:

profit = ARV - rehab costs - hold costs - transaction costs - purchase price

Kind of an important little detail there, lol :)

@David Faulkner "Of course, if it really hits the fan, then the military may show up at your door and say they now own your home, in which case your REI portfolio will under perform. If that happens, then guns & ammo will be the best investment class ... but never bet on a zombie apocalypse; even if you're right, you can't collect, unless of course you want to take your payment in BRAINS :)"

Not sure if SoCal would be a good place to be if any of that happened. Lol.

Originally posted by @Mike J. :

@David Faulkner "Of course, if it really hits the fan, then the military may show up at your door and say they now own your home, in which case your REI portfolio will under perform. If that happens, then guns & ammo will be the best investment class ... but never bet on a zombie apocalypse; even if you're right, you can't collect, unless of course you want to take your payment in BRAINS :)"

Not sure if SoCal would be a good place to be if any of that happened. Lol.

 San Clemente Island ... the trick is getting to your boat and getting it out of harbor in time, that and lots of guns & ammo; just watch any zombie flick. LOL :)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you