I hope you all follow information about the economy and demographics in addition learning about real estate investing. It’s important. Economist give clues when a crash is about to happen so you can better prepare. They are already giving warnings!
Of course, real estate is local. So, you need to monitor your local newspaper or news for indications of an increase in foreclosures, jobs being lost & more people moving away from the area. These are all indicators that things are headed in the wrong direction.
If you read Jack Miller’s previous newsletters you’ll learn how, in the past, real estate markets were red hot. Prices were going up and up and up. There were multiple offers on every house that came on the market for sale. Then… almost like someone flipped a switch… sales stopped, prices dropped like a brick, foreclosures went through the roof. That’s what you call a real estate crash.
We’ve had many real estate crashes before. They usually happen about every 8 years. It’s been TEN years since the last real estate crash. So, even though it seems like everything is going great right now, that switch could get flipped this year or next year.
There are things you can do to prepare for the next real estate crash happens. Here are a few examples:
1. do not do skinny deals
2. get out of debt (especially bank financing)
3. start doing deals which produce CASH so you will have $$ take advantage of opportunities to come
4. Use Options often (reduce risks)
5. Do Master Leasing to produce cash flow without the risk of ownership. Insurance against job loss too.
What advice would some of you other veteran investors offer about real estate market changes?
Here’s a great article by Chad Carson paraphrasing Jack Miller’s article about how you can protect yourself with the three-legged stool approach to protecting yourself against a real estate crash, recession or even a depression: