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Possible Recession - what does it mean for investors


I was watching CNN and the Fed mentioned that this country can experience a recession. What does this mean for us the newbies and pro investors? Should we hold off or should we be looking for certain props?

Please enlighten me on this matter. Not many of us have experience a recession so that is why I am asking.

Thank you so much for your inputs.

I think it is great news...

Here are my thoughts on this. I never want to be doing what the public is doing. Whether it is investing in stock, real estate or even something as simple as gambling. Here is a great simple example. I go to a poker night once a week with my buddies. Well, after a couple of games and a few beers later everyone starts getting the itch for blackjack. My friends are always afraid to be the "house" or the dealer and I am always eager to take that role. The reason is because I spread my risk out over 6 players where each one of them is betting on only one hand. Guess what? I make more money every single week than anyone else at poker night and it has nothing to do with poker- it is because I always am up in blackjack.

I know that may not be the best analogy but here is the point that I was trying to prove. I never want to be doing what the public does. The public/majority of the population are like sheep and play follow the leader. This is great for people that jump out of the pack. It gives you the opportunity to make huge profits off the majority or "sheep". Here's why.

Think about when the real estate market was going crazy and people were buying houses and watching them go up in value like crazy. What were the investors doing at this point? They were the ones selling their property that they had bought 5 years earlier when the market wasn't as hot and making huge profits. The people that got hurt in this market were the "sheep" that were buying the house blind thinking they would just increase in value. I can't remember where I saw the stat but I remember seeing that approximately 25% of the homes bought in 2004-2005 were purchased by first time investors. That is scary. These people were really not educated investors rather people that took equity out of their own home because they had the false notion that no matter what happens to the market- real estate always increases 20% a year and you can live off your house. So, they took out a HELOC or a 2nd mortgage and bought another piece of property that they really could not afford.

I am sure you are aware of all of this and that is why our country is in kind of a mess right now. That is why the government has stepped in to help. That is why the news everyday is about how the housing market is horrible.

What this says to me is that it is TIME TO BUY. When everyone thinks one thing and you are doing the opposite that is when you have the ability to find great deals, be picky and negotiate hard. That sounds like a great market to me. I know right now I am starting to buy and I am hoping that the public thinks the real estate market is getting worse and worse. I know all of my seasoned investor friends have the exact same thoughts. We always joke around that the best marketing tool for real estate investors right now is the news because it is scaring all of the newbies out of the game. People with the stomach to buy right now are going to be the ones getting filthy rich in the next 5 years. The real estate market is cyclical and this happens every time. People run away scared and it leaves great deals for investors.

Here is the key in this type of market. You just need to make sure that the property cash flows (that the rent is higher than the mortgage). If that happens then you have made a great investment. That is all that I care about- CASH FLOW.

I hope this helps. Let me know what you think after reading this Smiling

i agree!!!!!!!!

sully's picture

I agree with rpatten right now is prime time baby! the time is NOW,I would comment further but,rpatten wrote a whole sheet on my thoughts,pretty much.

Wow! Sounds a lot better now!

Thank you so much rpatten, I will definitely be looking for this cash flow too.