Originally posted by @John Warren:
@Morgan Madill in 2015 investors were saying the world was coming to an end, and I bought a screaming deal. In 2016, investors were saying the crash is coming and I flipped my home and bought a 20 unit. In 2017 investors were saying the crash is almost hear and I bought a gut renovation 19 unit in Berwyn where I am about to get most of my cash back using the BRRRR method. In 2019 everyone said the sky is falling and I picked up a screaming deal on a six unit. The sky still hasn't fallen and I have healthy cash reserves just in case... happy investing!
Morgan,
My experience is the same with John.
I was buying back in 2005, 2006, even in 2007 and 2008 - and even though the market crashed in 2008-2009, I made money on the houses, land and apartments I bought before the crash, during the crash and after the crash.
In fact, I made so much money during the Great Recession to me personally, there was no recession. I feel bad for the flippers because a lot of them went from flipping houses to flipping burgers.
Here are the 7 reasons why I made money buying properties before, during and after the Crash:
1. I focus on properties that generate cashflow like apartment buildings
2. I bought my buildings RIGHT - with enough discount to value that even if the market drops 20-30%, it does not really matter. Besides, since I bought properties that cashflow, it didn't really matter the market went down.
3. I was buying properties in low to middle income markets what people here on BP would call "C" areas. The rents in those areas did not really drop significantly during the Crash. However, apartments in the A areas were forced to reduce rents as people traded down during the Crash.
4. I have enough cash reserves. I allocate 3% of the rents I receive from my apartments for replacement reserves/capex in addition to a repairs and maintenance budget.
5. I built relationships with private lenders by being known as the guy who gets great deals and knows how to manage them. So when the Crash happened and other investors couldn't get bank financing, I was buying because I have private money behind me.
6. I focus on VALUE-ADD strategies, not on buying properties simply for cashflow nor I speculate and hope for appreciation. Ironically, doing value-adds, I increase the rents on my properties and that increased the cashflow and the value - meaning, I force the appreciation. So again, the recession really didn't matter.
7. I became very knowledgeable about my real estate market and I continually tweaked & adapted my strategies (acquisition, financing, value-add) based on what's happening in my local market.
You can choose to sit on the sidelines or you can figure out how to make money in real estate regardless of the market. I have just outlined for you the 7 things you need to do the latter.