14 Aug How to Prepare for the Next Recession
Is a recession on the horizon or not? Who’s to say? No one really knows the answer. But that doesn’t stop the media from sending everyone into a frenzy. After all, all you hear on the news these days is talk about the recession. It’s no wonder that perhaps you, like many other real estate investors, feel a certain unease about the real estate market. It’s safe to say most people are wondering how to prepare for the next recession.
When people wonder what the market will look like, they’re missing the point. It’s because there is no “one market”. For instance, you have different geographic areas and not all of them perform the same across the board.
And here’s something else – there’s a strong possibility that real estate markets will soften. Maybe they’ll pull back, flatten out, or even drop. There’s no way to know for sure.
But that doesn’t mean you can’t prepare for a worst-case scenario.
Don’t think for a second you can make recession-proof investments. However, you can strengthen your recession-resistant muscles.
By using a terms/creative real estate investment strategy. If you don’t know how to do that, then this article on how to prepare for the next recession should help.
The Four Tips
Tip #1 – Find a Mentor or Coach Who Has Already Been Through a Property Cycle or Recession
If you haven’t gone through a property cycle at least once, you won’t have enough experience to identify and make the best decisions to become recession resistant. Instead, you’ll react and behave differently based on the changing market conditions.
That’s why you need someone to guide you.
Now, the reason to pursue a coach or mentor is simple.
When you lack knowledge or experience in your niche, it’s challenging to filter the average information from the best stuff in the exhaustive online list of resources. A coach or mentor can help you block out all the noise and learn what’s absolutely crucial.
Keep in mind that you should not just go for the first coach or mentor who offers help.
The reality is that there are so many out there who claim to be able to lead you to success, yet they don’t have the results to show for it. That’s why the right coach or mentor is someone who’s been there – it brings some validity to their teaching and they can back up their claims.
Imagine having someone in your corner who’s been through a property cycle not only once, but maybe two or three times. That person knows what to expect since they have lived it all before. Also, they have historical data from which to extrapolate valuable information before planning their next move.
You can learn from them, all without having to repeat the same mistakes they did.
Tip #2 – Keep the Space Between Your Ears Strong and Growing
After a while, there’s only so much someone can teach you about real estate, financing, and so on. Does that mean that you’ve reached your ceiling?
There’s always room to improve. You may have become a wealth of information on real estate investing, but you can still work on yourself to grow mentally and personally.
Without great personal and mental development, your income won’t grow.
Never assume that you know everything just because you read some books, brushed up on terminology, and done 50 financing deals.
Self-improvement is also key here. Your mental and personal growth will enable you to put your real estate-specific knowledge to better use.
Tip #3 – Don’t Sign on Any Bank Loans or Private Loans
Are you willing to be personally liable for your assets?
The truth is that it’s not a good position to be in during a recession.
To understand why this is so, let me tell you about my experience.
A while back, we bought our office building and we did that on an owner financing deal. We went to a bank to get a line of credit, but the bank told us that they would have to refinance the entire building to give us a line of credit.
In that case, I would have to sign personally as the owner.
And that was the end of the conversation with the bank.
It was a bad deal because we were looking for a no-recourse loan based on the asset.
The lesson here is this – don’t sign on bank loans or investor private money loans.
Even more important, don’t take them out personally.
This rush to get money puts your family’s assets at risk. And it’s what probably caused millions of people to lose their life savings during times of recession.
Another noteworthy point here is regarding lines of credit. Don’t go out of your way to get credit when you need it. Banks aren’t inclined to give it to you at fair value.
It’s likely you already maxed out all your other credits. Thus, it’s money you need that the bank can’t use.
Instead, you can set up a line of credit when you don’t need it as you can get a great deal and a longer term. That's going to make you more recession resistant.
Tip #4 – Subscribe to Deal Structure Sundays
You can take home and apply the tips we’ve laid out so far by yourself. Maybe you’ll do a great job, perhaps you won’t. There’s no real way of knowing until you start.
And that’s where some guidance comes in handy – whether you’re looking to learn about real estate, financing, or growing the space between your ears.
The reality is that to achieve success in real estate investing and get the life of your dreams, you need to spend more time around people who have been there and done it all and offer advice.
And that’s the reason why we organize live online events and established our Deal Structure Sundays on YouTube.
Build Your Recession Resistant Muscles to Prepare for the Next Recession
Will a recession happen? It’s inevitable.
So, when will it happen? That’s a hard question to answer.
But whatever the case may be, you don’t have to feed into the media doom and gloom scenarios. You can survive and even thrive during and post-recession with the right mindset and strategies.
The good news is that real estate offers plenty of advantages. And growing and strengthening your recession-resistant muscles will help you meet your financial goals.
Remember to apply the tips in this article, and you’ll be in a much better position than a large percentage of investors who keep making the same mistakes of the past.
Ready to know more about how to prepare for the next recession and grow a sustainable real estate business? Enroll in the Wicked Smart Academy and develop new abilities that will last and benefit you a lifetime.