How to Protect Yourself from a Real Estate Market Downturn

How to Protect Yourself from a Real Estate Market Downturn

hey what’s up guys Nicole Purvy here
real estate investor and the founder of the better than success real estate
league so I’m not sure if you guys have heard as of the recording of this video
maybe about a week ago Bank of America came out and said that
it is a 1 in 3 chance that we will move into a recession and it just is what it
is recessions happens so whether it happens or not like we as real estate
investors house it figure out we need to know how to figure out how to roll with
the punches if you are in Philadelphia it has been predicted for quite some
time now that we will go into a market downturn our real estate market has been
on an upward trend for quite some time now and everyone’s been predicting that
within the next year two years that we are going to go into a market downturn
it hasn’t happened so it hasn’t happened yet so let’s talk about like it’s going
to eventually become the bubble is going to burst it’s going to official
eventually come let’s talk about how to position ourselves in the event that a
recession happens in a real estate market downturn does happen
I shouldn’t say if it happens in the event that it happens when it happened
how can we protect ourselves today to make sure that we can take advantage of
it right like I said with sessions and market downturns they’re not all bad
right you just have to make sure that you are at a prudent investor and you
know how to position yourself to take advantage of it
yes some people will be affected negatively let’s make sure you’re not so
the first thing is you don’t want to be over leveraged right when your
properties so you guys know that I’m a big fan of using hard money which is
borrowed money and using the BRRRR strategy but you guys know that also
when I teach it that’s how you not to be over leveraged you don’t have to pull
out all of the money that the bank is telling you that they will lend you on
the property why do you not want to do that because if there’s a market
downturn this means that rents are going to go down if your rent does not cover
the rental income that you’re getting in does not cover your mortgage and your
expenses then you have a huge problem like you have
asset that could be costing you money or if your spread isn’t enough if you’re
not making enough money after expenses in your mortgage and it could be a huge
problem so how can you affect your expenses in your mortgage don’t take out
a huge mortgage on your properties simple as that so that when you do have
to lower rents if there is a market downturn when you do have to lower rents
it doesn’t affect you to the point where you’re now in the red in terms of your
actual income the second thing is this is really really really important right
now mortgage rates are really low they are
really low so do not or try to avoid going into mortgages that have a fixed
rate typically when the market downturn interest rates go up so if you have a
variable rate mortgage rate you want to get into a fixed rate mortgage of um I
don’t think I may have misspoken you wanna have being a fixed rate mortgage
if you go into a variable rate or adjustable mortgage when rates go higher
your mortgage rate will go higher and you’re into it and your mortgage payment
will go up so try to lock in now while rates are low it’s really important that
you do that if you are you have a mortgage that is a variable rate
mortgage tries to refinance to a fixed-rate mortgage more rates are
extremely low right now and you want to make sure you take advantage of it and
you don’t want to be in a variable rate mortgage when you’re a rental property
that goes up and then the rental income goes down that is a huge problem that
you could potentially have on your hand and the last thing is I’m gonna refer to
my notes oh this one is really important is what is the biggest one when the
market fails and this is how you really think advantage when the market downturn
you want to make sure that you have cash to buy up everything when the prices go
down so position yourself right now so store up some cash so that when the
prices go down when real estate values go down you
can’t grab up everything cuz the markets gonna turn back up again make sure you
can read this is when you go on your shopping spree while everyone is selling
you go and buy this is really really really important so position yourself to
make sure that you have cash when and if the market downturn that one is the
biggest one that one is the ones that you can really just take advantage and
that can set you up in the long term to end up winning so take my advice you
guys love you all and until next time happy entrepreneur

2 thoughts on “How to Protect Yourself from a Real Estate Market Downturn

  1. Great Info! Keep it up.

  2. thank you for the video, great update

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