What effect will the war in the Ukraine hon our economy?

What effect will the war in the Ukraine hon our economy?

Jerry W.Pro Member
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Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes

The most significant event in my not so short life was in 1989 when the Berlin Wall was torn down.  A country that had been divided for decades by a concrete wall and machine guns simply ceased to exist.  People were killed trying to escape across that wall, and no one wanted to enter.  Everyone knows about World War 2 and the cold war that came out of it.  Very few who are investing now had to worry about a global nuclear war that might erase all life on earth.  The fall of the Berlin Wall signaled to many of us, that other than some small country getting their hands on a nuclear weapon the threat of nuclear bombs had passed.

Now that threat has been resurrected by Putin in the invasion of Ukraine.  We are all horrified at the complete lack of concern shown by bombing and invading a country that is quite similar to ours in many ways.  Nuclear arsenals have been placed on high alert.  None of us know how far this war will go, how long it will last, and whether it will spiral into World War 3.

I do not mean to lessen in any way the seriousness of the invasion, but we all must face that it could have massive impacts on our investments and may present opportunities or dangers to our livelihood.  It is my opinion, not backed up with any facts that it could dwarf what occurred with Covid if it continues to grow.  It is my assumption that in times of great danger that people become more careful, spend less and think more about security than luxury.  It could mean fewer homes bought, fewer vacations, less money spent on consumables and more money saved.  Governments tend to spend more on military budgets and overseas aid and less on domestic expenditures.  While I hope for a quick resolution, even the economic measures being employed are affecting everyone of us right now.  I hope it works and we can see an end to the bloodshed and misery.  I fear it will not.

What do you foresee for our country, our economy and real estate investing as a whole.  I am not seeking to capitalize on the misery of others, but I do not want my family to suffer from my lack of planning from this earth shaking event.  Please share your thoughts and facts without creating political division, and please suggest things we can do to help the unfortunate victims in this.  One thing I have heard is booking vacation rentals in the Ukraine to send money to the hosts even if you obviously will not be going.

Thank you and keep the people of the Ukraine in your prayers.

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Michael K GallagherBusiness Member
Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
4y

Interesting sentiment @Jerry W. I too believe there will be some impact somewhere in the economy, if that impact is truly a free market reaction/natural occurrence driven by free competition, or if the change is already determined and the powers at be are simply creating the distraction they need... is yet to be seen.  I think our mindset is the most important thing at this moment in history and that agility and comfort within change is the most important thing we can practice. Real Estate in my mind remains a basic need that will remain in demand regardless of global economic developments, and it is simply up to us the investors to manage, and control those assets in the most beneficial way to our circumstances.  

I'm a firm believer that regardless of economic conditions or global crisis, there is a way to add value and creative income with real estate.

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  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    Interesting sentiment @Jerry W. I too believe there will be some impact somewhere in the economy, if that impact is truly a free market reaction/natural occurrence driven by free competition, or if the change is already determined and the powers at be are simply creating the distraction they need... is yet to be seen.  I think our mindset is the most important thing at this moment in history and that agility and comfort within change is the most important thing we can practice. Real Estate in my mind remains a basic need that will remain in demand regardless of global economic developments, and it is simply up to us the investors to manage, and control those assets in the most beneficial way to our circumstances.  

    I'm a firm believer that regardless of economic conditions or global crisis, there is a way to add value and creative income with real estate.

  • Jerry W.Pro Member
    Moderator
    OP
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    4y

    @Michael K Gallagher, thanks for your insight.  I try to keep a pretty upbeat and grateful attitude, but for some reason reviving the ghosts of the cold war hit me pretty hard.  I had honestly believed that we had left most of that political garbage of live the politics I tell you or die or I will melt the world in an atomic fireball stuff was behind us.  Maybe it is the nearly identical actions and reactions to Hitler in world war 2 that makes it so eerie.  

  • Real Estate Agent · Eastern Wisconsin · Member since 2018 · 10 posts · 6 votes
    4y

    I pray for the citizens in both countries. They are bearing the brunt of this while the global "leaders" duke it out over things they keep hidden from us. Tell me there isn't more going on behind the scenes. I was around for the Berlin wall coming down and I know that the government lies. Anyway, this is pretty much what I was asking in my post, so I'm glad I found this. I am new to this platform and am still figuring it out. It's a tough call. Especially when they were so willing to give the moratorium on evictions, even when people were getting plenty of stimulus $$ and unemployment increases. It made no sense. The investor got hosed. I was poised to make a purchase, but I might just sit it out right now or shelter cash in tangibles like land, steel and lead

  • Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Quote from @Jerry W.:

    The most significant event in my not so short life was in 1989 when the Berlin Wall was torn down.  A country that had been divided for decades by a concrete wall and machine guns simply ceased to exist.  People were killed trying to escape across that wall, and no one wanted to enter.  Everyone knows about World War 2 and the cold war that came out of it.  Very few who are investing now had to worry about a global nuclear war that might erase all life on earth.  The fall of the Berlin Wall signaled to many of us, that other than some small country getting their hands on a nuclear weapon the threat of nuclear bombs had passed.

    Now that threat has been resurrected by Putin in the invasion of Ukraine.  We are all horrified at the complete lack of concern shown by bombing and invading a country that is quite similar to ours in many ways.  Nuclear arsenals have been placed on high alert.  None of us know how far this war will go, how long it will last, and whether it will spiral into World War 3.

    I do not mean to lessen in any way the seriousness of the invasion, but we all must face that it could have massive impacts on our investments and may present opportunities or dangers to our livelihood.  It is my opinion, not backed up with any facts that it could dwarf what occurred with Covid if it continues to grow.  It is my assumption that in times of great danger that people become more careful, spend less and think more about security than luxury.  It could mean fewer homes bought, fewer vacations, less money spent on consumables and more money saved.  Governments tend to spend more on military budgets and overseas aid and less on domestic expenditures.  While I hope for a quick resolution, even the economic measures being employed are affecting everyone of us right now.  I hope it works and we can see an end to the bloodshed and misery.  I fear it will not.

    What do you foresee for our country, our economy and real estate investing as a whole.  I am not seeking to capitalize on the misery of others, but I do not want my family to suffer from my lack of planning from this earth shaking event.  Please share your thoughts and facts without creating political division, and please suggest things we can do to help the unfortunate victims in this.  One thing I have heard is booking vacation rentals in the Ukraine to send money to the hosts even if you obviously will not be going.

    Thank you and keep the people of the Ukraine in your prayers.

     Do not dispair my friend. Putin does not know about the fine city of Thermopolis. You will not be nuked. 

    And life is more than money or prosperity. The home you own is much larger than your parents, you now drive two cars instead of one. You have refrigeration, Air Conditioning, a smart phone, the internet, Air Jordans, two computers, take vacations, go to college, 37 flavors of ice cream, have 365 channels of TV (I didn't say they were worth watching ;-) health insurance, life insurance, fire insurance, auto insurance, home owner's insurance, SDIRA, 401(k), plastic surgery, viagra, fast food and can call the shots of just about anything you want to do or be.

    I grew up in a 790 sq ft house with 4 brothers, a cousin & aunt and my folks. I've lived through the Cuban missle crisis, the assassination of John Kennedy, the assassination of Robert Kennedy, the assassination of Martin Luther KIng, the Cold War, the "Jump the Shark" of Fonzi, the gas lines of the early 1970's, the Watergate crisis, the end of Gilligan's Island, hyper inflation, Jimmy Carter's "Malaise", race riots, hurricanes, earth quakes, 9/11, 2000 crash, 2008 crash, good grief, I can't go on, too many to mention.

    Yep, the economy survived, I'm still here, the world moved on ( except for walkmans now selling for $32,000) and nowhere was I promised a free ride or an easy life.

    As they say in "Men in Black" "

    Kay: "There's always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they do not know about it!"


    There is far, far more to worry about in the upper echelons of the Good Ole USA government that you aren't thinking about, than anything Russia will ever throw at us.

    And we will survive and carry on. (And make a profit while doing so!)$$

  • Jerry W.Pro Member
    Moderator
    OP
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    4y

    Thanks for the upbeat words @Account Closed.  I have seen plenty of significant events, some I was old enough to understand some not.  I remember the helicopters leaving Vietnam as we pulled out with people trying to cling to them to get away, and the fall of Vietnam only a week later.  I knew the draft was no longer going to scoop me up after my 18th birthday, even though we still had to register.  The idea of global thermal nuclear war was pretty traumatic.  That was really the reason for Vietnam, and Korea where my dad served.  I know it affected my dad fairly hard, but he only occasionally talked about it, usually when he and his brother got together, since they served in Korea together. 

    I wonder how the economic fallout will be.  Oil has obviously skyrocketed.  I talked to my father and mother in law and heard their tales of World War 2 and rationing.  We have been blessed to only having police actions where we don't really worry about if we will lose and be invaded, we just don't like hearing about deaths of our soldiers.  I am sure most of us are torn between not wanting World War 3, but wanting to stop violent dictator from taking over large parts of the world even if it means war.  Hitler invaded and took over several countries without intervention of other countries to appease him.  It didn't stop his aggression, it just gave him fewer enemies to fight when the rest of the world finally realized he was never going to stop, and he would never be satisfied until he ruled the world.

    I didn't mean to bring about a political discussion, but wanted to know what the effect of war on our investing.  I am a history major, but none of my history studies told me anything about how people made lots of money other than those making war supplies like guns, ammo, planes, tanks, jeeps, medical supplies, etc.  I wonder what it did for land values, demand for rentals, and other things.  I suspect that it depressed the value of land and rental rates.  Now after the war ended the economy boomed and land prices and populations boomed.  Anyway, hopefully this will end soon and the Ukraine can recover without more loss of life and economy.  Even if they repel Russia, which is not likely, the scars to their country will be deep.  What will it's effect be on our economy?

  • Developer · Youngstown, OH · Member since 2019 · 129 posts · 121 votes
    4y

    We're going to see gas go up more, the fed is going to raise interest rates, home buying will slow but there will still be a demand for rentals. However, rents have increased more than wages, which means we'll be seeing young ppl live with their parents longer rather than renting or buying. 

    Investors need to buy smart - buy for today, but be able to pivot if conditions and situations change (make sure you have enough room to lower your rents if you need to and still make your profits, don't over leverage). If you have enough rentals, maybe sitting back and watching until things get more stabile is a good idea. If you're a flipper, maybe getting a few rentals is a good idea.  The key is to (always) buy  with the worst case in mind, so if things go south for a while with the economy, etc, you're still in a position of having income, even if it's decreased somewhat.

    Remember, when housing goes bust, more ppl need to rent. So IF the housing market were to worst case on us, the need for rentals will remain. 

    Right now I don't think I'd be doing much building, but rather focus on existing properties. Take less risks, negotiate a little more conservatively.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y

    the nuclear plants and bombs are what scare me..  I remember having the drills and getting under my little desk in grade school like it was going to protect us.

    and of course I lived through all the things M. Hern mentioned I was pumping gas with the gas lines..

    If you watch the show on chernoble (sic) we were damn lucky there .. and now the bozo's are attaching those facilities.

    as for real estate it will boil down to consumer confidence and CREDIT  if both of those remain viable I dont see a big issues in our business and could be a run to the hard assets for long term growth and safety.. 

  • Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Quote from @Jerry W.:

    Thanks for the upbeat words @Account Closed.  I have seen plenty of significant events, some I was old enough to understand some not.  I remember the helicopters leaving Vietnam as we pulled out with people trying to cling to them to get away, and the fall of Vietnam only a week later.  I knew the draft was no longer going to scoop me up after my 18th birthday, even though we still had to register.  The idea of global thermal nuclear war was pretty traumatic.  That was really the reason for Vietnam, and Korea where my dad served.  I know it affected my dad fairly hard, but he only occasionally talked about it, usually when he and his brother got together, since they served in Korea together. 

    I wonder how the economic fallout will be.  Oil has obviously skyrocketed.  I talked to my father and mother in law and heard their tales of World War 2 and rationing.  We have been blessed to only having police actions where we don't really worry about if we will lose and be invaded, we just don't like hearing about deaths of our soldiers.  I am sure most of us are torn between not wanting World War 3, but wanting to stop violent dictator from taking over large parts of the world even if it means war.  Hitler invaded and took over several countries without intervention of other countries to appease him.  It didn't stop his aggression, it just gave him fewer enemies to fight when the rest of the world finally realized he was never going to stop, and he would never be satisfied until he ruled the world.

    I didn't mean to bring about a political discussion, but wanted to know what the effect of war on our investing.  I am a history major, but none of my history studies told me anything about how people made lots of money other than those making war supplies like guns, ammo, planes, tanks, jeeps, medical supplies, etc.  I wonder what it did for land values, demand for rentals, and other things.  I suspect that it depressed the value of land and rental rates.  Now after the war ended the economy boomed and land prices and populations boomed.  Anyway, hopefully this will end soon and the Ukraine can recover without more loss of life and economy.  Even if they repel Russia, which is not likely, the scars to their country will be deep.  What will it's effect be on our economy?

     Here is the unfortunate truth. Wars are started by those who benefit from them. 

    It is rumored that the U.S. had Bio Labs in Ukraine. I partially believe that. We'll have to wait to find out for sure. The U.S.A. has a "black budget" of billions of dollars and some of those dollars have found their way to Ukraine. (According to Donald Rumsfield, previously Sec of Defense)

    We, in the good ole' U.S.A. were producing more oil than we need in 2021 until Biden shut the process down. Not being political, just stating history. That oil is still there ready to come out of the ground.

    Personally I think that we should provide assistance to any side that has refugees but keep in mind that it isn't our fight.

    There is a huge difference between Chamberlin saying in 1938 "Peace in our time" about Hitler and the current situation.

    1. Putin has no interest in occupying the U.S.A. We are not a target the way the UK was for Hitler.

    2. Our military is way overboard powerful. I could give you the stats but it isn't even close.

    3. We would see them coming. The ocean is a very big place and it takes a long time to move troops. Ask General Swartzkof how long it took to move troops to take Kuwait from the Iraqis. Weeks. We'd see them coming.

    4. Russia & Saudi Arabia are trading partners and friends so there would be no disruption in oil from the middle east which we import.

    6. All real estate is local. Phoenix for instance, one of my target markets, has doubled in it's prices and now requires the highest amount of a person's income ever, to apply to housing. It's simply not affordable for the average family. And some think it's headed for a crash.   https://www.youtube.com/watch?v=5_muaO-TRz4

    7. The Lamb of seven horns and seven eyes of Revelation 5:6 hasn't shown up yet, so we have to keep buying properties and make them profitable. So, get out there and Buy, Buy, Buy!

  • Jerry W.Pro Member
    Moderator
    OP
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    4y

    I have been buying properties as aggressively as possible for the past 2 years now. Opportunities have dried up, but even properties that are breakeven I have gone hard for. I reached a conclusion that housing would not be going down for several years so I see now as the time to buy despite prices being so high. I currently have more houses needing fixed up than I have time to handle, so I am making deals with contractors to JV some fix and flips. We will see how that goes.

    I forsee inflation running hard for a few years.  The price of fixing up the properties I have bought is pretty steep compared to a few years ago.  Despite gas prices skyrocketing I think vacation rental demand will be strong.  Fewer folks flying to Europe for vacations.  Trips to National Parks will stay high, and interest rates will probably climb a little.  Time will tell.  Thanks for sharing your thoughts.

  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    4y
    Quote from @Jerry W.:

    @Michael K Gallagher, thanks for your insight.  I try to keep a pretty upbeat and grateful attitude, but for some reason reviving the ghosts of the cold war hit me pretty hard.  I had honestly believed that we had left most of that political garbage of live the politics I tell you or die or I will melt the world in an atomic fireball stuff was behind us.  Maybe it is the nearly identical actions and reactions to Hitler in world war 2 that makes it so eerie.  

    "Eerie" is the perfect way to describe it I'd say also.
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