If Recession Comes, Here’s How to Move Forward

Economists have been suggesting a looming recession for several months now. You might even be of the mind that we are already there. But assuming we are not, recession could still be right around the corner. The possibility doesn’t necessarily have to worry you as an investor.

Property investors have weathered recessions before. So have the hard money lenders that support them. If investors and lenders both just commit to relaxing and taking a long-term view, there is no reason we cannot all move forward successfully.

If recession does come, here is how to move forward:

Sit On Your Equity

Times of recession are not the right time to spend frivolously. But they are the right time to leverage your equity for new investments. Sit on your equity when there are no attractive investments to look at. Let it be. Let it strengthen. Then, when you do see an opportunity that’s too good to pass up, put that equity toward executing the investment.

Equity is what makes the difference between investors who grow during recession and others whose portfolios remain stagnant or shrink. We know, sitting on your equity during recession is tough. But doing so is what lets you leverage it when you need it.

Prepare for Higher Inventory

It is no secret that inventory has been pretty tight for the better part of two years. If the next recession holds true to historical norms, that’s going to change. Property owners already on the edge of affordability are almost always pushed over the edge during recession. They sell because they need the money.

Recessions tend to increase property inventory and simultaneously reduce prices. Be prepared for it by increasing your savings or getting a hard money loan. Get all your financial ducks in a row now, so that you’re ready to secure investments when inventory opens and prices fall.

Keep an Eye on Off-Market Properties

Oftentimes, the best opportunities for property investors are found in off-market properties. These are distressed properties often being sold to avoid default. They are also auction properties, repossessions, and even short sales. Off-market properties are where you get your best deals.

Just remember to still pay close attention to the amount of money you will need to put into a property to make it profitable. If you need a hard money loan to close the gap, consider that ahead of time sos you’re not caught off guard. Sometimes an off-market property has a ridiculously low price because it requires too much work. Even in times of recession, you must pay attention to that sort of thing.

Utilize Your Funding Wisely

In times of recession, all financial markets suffer to some degree. Some markets fare better than others. Hard money has traditionally done pretty well during recession, but you may find that your access to lenders is not what it used to be. We say all that to say this: utilize your funding wisely.

Make sure every deal you reach with a hard money lender is good for the bottom line. Make sure you work only with reputable lenders who have a reputation for doing right by you. And whatever you do, be extremely careful about overextending yourself. During times of recession, an investor’s eyes can certainly get bigger than their stomach.

Hard Money for Your Next Project

We are not prepared to say whether the U.S. is already in recession. We can say that another recession is coming, whether it is later this year, sometime next year, or even five years down the road. We will be ready either way.

If you are in need of hard money for your next project in Salt Lake City or throughout Utah, let us talk. We are eager to invest in strong projects with good return potential.