Is Recession looming?

Rental Property Investor · Henderson, NV · Member since 2017 · 16 posts · 4 votes

Looking to buy another multi unit. It cash flows well 12% about. I need to put down 25% for this. So far I haven't had much luck doing any BRRRR properties so most of my properties I work hard and save the money to put down. I'm slightly concerned that if I use up a lot of my reserves I won't have anything in case a correction/recession comes or a potential BRRRR. Thoughts?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

There is always a recession looming.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
There is always a recession looming.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
7y
Yes.

No good answer for your question. Only you can determine if you're adequately capitalized and have access to liquidity if needed. You can post specifics up here if you want (cash reserves, access to cash, leverage, number of properties, gross/net rents, etc) and you'll probably get some tailored answers.
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David Van
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Rental Property Investor · Henderson, NV · Member since 2017 · 16 posts · 4 votes
7y
Russell are you still buying ?
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y
Originally posted by @David Van:
Russell are you still buying ?

Yes, Im looking to make a purchase right now. I buy roughly 1 property per year. (My typical price point is $400k so I can really only do about 1 per year). I buy regardless of market conditions, although the drop in interest rates makes me a little more excited now than my last couple of purchases.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
7y
We're in the longest boom in American history... so probably
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y
Based on the "experts", there should be a market crash/recession any day now...for the past 10 years...plus or minus.
Good deals are good deals...in any economy. Also, you should never ever spend your own cash...use it to infinity, but never spend it.
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Account Closed
Member since 2018 · 214 posts · 175 votes
7y
@David Van
Yes, all the statistics data are pointing to the direction of recession is very closed, within 1 to 2 years.
Also, the housing data are weaker every month, not a good sign.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
They’ve been predicting the next housing crash longer than the next stock market crash. Because if they’re wrong for 10 years straight, when they’re finally right they’ll ignore how long they’ve been wrong...
Ps. Dirty little secret, they aren’t selling their stocks or their real estate. It’s almost like they down believe it themselves. Can you imagine being all cash for the last 5 years? You’d never catch up.
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Account Closed
Member since 2018 · 214 posts · 175 votes
7y
In the past years, I never agree their next housing crash prediction because the statistics data were strong; however, starting a few months ago this year, I sense and smell the recession is very closed to us from the statistics data...
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
7y
Originally posted by @Account Closed:
In the past years, I never agree their next housing crash prediction because the statistics data were strong; however, starting a few months ago this year, I sense and smell the recession is very closed to us from the statistics data...

You could be right...this time. You could be wrong...again.
Bottom line in REI is this: Good deals are good deals...in any economy.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Bill B.:
They’ve been predicting the next housing crash longer than the next stock market crash. Because if they’re wrong for 10 years straight, when they’re finally right they’ll ignore how long they’ve been wrong...
Ps. Dirty little secret, they aren’t selling their stocks or their real estate. It’s almost like they down believe it themselves. Can you imagine being all cash for the last 5 years? You’d never catch up.
Bill I don't know if you know of Bruce Norris however he is a well followed investor/hml and economist out of inland empire CA.
he gave a key note 2 years ago at an event I was speaking at as well.. of course two years ago that was the hot topic when is the crash coming.
I thought he had some great insight.. he said
you will know your in a recession when 20 to 30% of the listings on MLS are short sales.. and when foreclosures spike way up.. right now we just don't see that.. foreclosures are at all time low just about.. and the short sales have left the building.. financing in the last 10 years does not generally allow for over encumbering properties these days.. millions bought at the really low prices of the last 10 years and historic low interest.. so you just don't have the toxic loans.. now this of course as it relates to Real estate we could have a recession from some other means or industry.
Much of the data about slowing construction or house sales is due to inventory.
I just got an offer yesterday from Lennar on a 90 home community we are getting ready to launch their proposal was a JV with us and their model called for 3 sales a month. when I purchase I modeled at 2 to 2.5 units a month.. so it is regional for sure.. But the big boys are just like everyone else hurting for land to build on and shovel ready lots..

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David Greiner
Rental Property Investor · Ann Arbor MI · Member since 2018 · 58 posts · 43 votes
7y
@David Van
Yes and its going to be bad. But I've been saying since for 3 years now.
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Jonathon Weber
Member since 2018 · 110 posts · 109 votes
7y
Nobody knows when it will come, but it will come. It always comes and goes. Buy when it is low, sell when it is high. You can buy in any market condition if the numbers work.
The economy does seem like it is starting to slow. Corporate refinancing is on the rise and small business hiring is slowing.
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Jim Chuong
Rental Property Investor · Toronto, Canada · Member since 2012 · 102 posts · 95 votes
7y
@Russell Brazil That's fantastic! How long have you been buying 1 $400k property a year and what kind of product is ideal? (SFH, duplex, etc)
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
Exactly Ran. That started about 3-4 years ago. When people didn’t like the facts they started using their feelings instead. It doesn’t matter if a government program has good or bad results, they made the lawmakers feel good. It doesn’t matter if capitalism has helped more poor people than all the governments in history, the uneven results make people feel bad. I guarantee if the Facts and statistics supported their opinion we were in a recession they would be quoting them and making fun of anyone that said they didn’t “feel” like they were in a recession.
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Thomas Meyer
Rental Property Investor · Simi Valley, CA · Member since 2019 · 53 posts · 42 votes
7y
@Jay Hinrichs
That Bruce Norris is a smart guy...
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Brent Paul
Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
7y
The way I look at it everyone needs food and shelter. When 2007-2009 hit here we did see a lot of shortsales and foreclosures. However that only seemed increased the demand for rentals as people were losing homes. A ton of apartment buildings were built in 2010+. The ones snapping up those homes and keeping them as rentals made a decent living.
If you have a heloc you should be able to leverage that to your advantage in the event of a downturn to make purchases. The ones that I know of that lost properties were because they paid way too much with very little cash flow.
Everyone will have their own strategies it's just finding what works for you. I met an investor at an event a few months ago and he bought 8 properties with decent cash flow. Now he is in the process of paying them each off. Once he pays one house off he buys 1 or 2 more. He has a fully paid house that he can leverage if needed.
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Meghan McCallum
Specialist · CHICAGO · Member since 2015 · 680 posts · 650 votes
7y
@David Van The Bears have lost to the bulls who will be running here for a bit. I don’t think this is the “big” one everyone sees coming but I do think it will be a retraction. The big dump would happen if Trump loses.
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Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
7y
Originally posted by @David Van:
Looking to buy another multi unit. It cash flows well 12% about. I need to put down 25% for this. So far I haven't had much luck doing any BRRRR properties so most of my properties I work hard and save the money to put down. I'm slightly concerned that if I use up a lot of my reserves I won't have anything in case a correction/recession comes or a potential BRRRR. Thoughts?

I can guarantee you with 50/50 accuracy that there will be a recession in the next 120 months.

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Nathan Hui
New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
7y
I hope. Everybody says if the numbers work, they work. I agree, but “working numbers” seem to be somewhat of a unicorn.
What do you guys think about the current yield curve? It’s flat, even inverted, right? Some say it’s a unanimous indicator for recession if it last. Hasn’t it been lasting for a bit?
0 Reply
Lore Postman
Rental Property Investor · Charlotte, NC · Member since 2019 · 57 posts · 53 votes
7y
Recession? Hard to say. A rocky 15+ months? Absolutely! Here's my logic: 1. The treasury bill inversion historically has been a good bellwether of recessions. Don't know why it wouldn't be now. 2. Some (many?) global companies are beginning to crack down on unnecessary expenses, like employee travel, and are taking longer to fill job openings, if they even fill them at all. Of course, handwringing about corporate expenses is nothing new... But it usually happens later in the year. 3. Political ads are already heating up for the 2020 elections, and many are already ugly with name calling and worse. It's hard to be surrounded by negativity and not feel like the world and the economy are falling apart. Such feelings drive uncertainty, and uncertainty drives worry and hesitation, which in turn can cause people to shift spending patterns. 4. Precious metals are on the rise. 5. Fewer shopping carts in the cart corrals outside the big box stores during peak times. Translation: people are buying less, which they can carry out by hand, or shoppers with items being returned are using the buggies on the way back in, or a combo of both. 6. More high-end items with "Special order sale" clearance stickers on them at Lowes. Translation: maybe now isn't a good time for the super-duper fancy fridge/sink/faucet/vanity. 7. The dry cleaning racks look less full these days. My cleaner says the clothes are coming in a bit dirtier than usual. Translation: wear items a couple of times between cleanings in order to save a few bucks. That's my 2-cents worth. Could be wrong... Probably am wrong. But it's certainly fun to put my guesses in writing, which I can look back upon later.
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Daniel Evans
Flipper/Rehabber · Nashville, TN · Member since 2018 · 11 posts · 1 vote
7y
@Ran L.
What data you are looking at?
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Account Closed
Member since 2018 · 214 posts · 175 votes
7y
Originally posted by @Daniel Evans:
@Ran L.
What data you are looking at?

I look at the following data:
Core Logic data for Las Vegas, LA, San Francisco, San Jose, New York.
Local data from Greater Las Vegas Realtor Association.
All media news.
Past history show that recession is coming when yield is inverted.
Yield has been inverted for a few months.

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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
You need to have at least 6 months of saving for living, financial obligations. What is left over is what you can do with investment. When that day arrives a fair amount of investors will not be active. IMO the peak price has been over 12+ months and there will be more surprises and adjustments to make. The election year can be the triggering point something happens.
3 Reply
Kris L.
San Antonio, TX · Member since 2019 · 930 posts · 836 votes
7y
@David Van
There are some warning signs out there, particularly when it come to the negative interest sovereign debt in Europe ($14T or so). The US is still chugging along, but asset classes across the board seem to be at very high valuations right now. There might still be a couple years left in this economy, but storm clouds are on the horizon at least.
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