Rethinking Your Investment Strategy in this Recession?

Rethinking Your Investment Strategy in this Recession?

Don’t Let Economic Uncertainty Sway Your Investment Strategy

Fears of a recession are all around. The S&P is down roughly 16% since the beginning of the year, cryptocurrency is down almost 60% from its peak, and the Federal Reserve raised interest rates again on Wednesday to combat the persistent inflation.

It’s only natural to have moments of uncertainty and to re-examine your investment strategies.

The Good News is that the market fundamentals of apartment investing are still present:


🏆 Multifamily is a historically recession resistant asset

🏆  Apartments hedge against inflation because leases are renewed yearly, keeping up with inflation

🏆 There is a home ownership affordability crisis- pushing our country into a Renter’s Nation

🏆 There is a lack of supply of apartments projected for decades, and building costs are going up

🏆 Unemployment is historically low

🏆 Texas is still exceptionally strong with high job growth, occupancy, organic rent growth

🏆 Tax Benefits for real estate are amazing with Bonus Depreciation at 100% through 2022

🏆 Over time real estate appreciates in value ...LOVE this quote by Will Rogers… 


Don’t wait to buy real estate. Buy real estate and wait.



Your money is safest when it’s invested in real estate

It’s not safe in your savings account…

It’s not safe in your retirement account… 

It’s not safe in your stock account… 

It’s not safe in cryptocurrency….

but it is SAFE in apartments.

5 Keys to winning in a Recession

5 Keys to winning in a Recession

Recessions can be scary. But they don’t mean you should “sit this one out”.
The “wait and see” strategy guarantees you might miss out on amazing deals!

Here are FIVE Keys to winning in a recession

  1. Pick the BEST Markets 

How do you do that? Look for GROWING markets. Population growth is key!

We also want multiple economic drivers. We want markets where many  employers are moving and there is diverse job growth!

Another important thing we look for is diversity of employers. The last thing you want is one factory employing most of a city, then it shuts down, and the tenants all move out of your apartments.

Dallas, a market we heavily invest in, has diverse employers like Toyota, McKesson, Abbott, Lockheed Martin. These are all huge companies in different spaces, different industries.


  1. Debt Selection 

When purchasing during a time with economic turmoil, it’s important to choose the right loan. There is no “one size fits all”. But if the interest rates are fluctuating, consider the importance of either a fixed rate debt and taking less leverage (Loan to Value  of 65%).

Don’t assume there isn’t risk with a fixed rate debt, there is. For example, if you have fixed rate debt and then interest rates drop,  that could equate to hundreds of thousands of dollars in debt payments that you’ve left on the table!


  1. Conservative Underwriting

Underwriting is the financial analysis and plan for the business. It’s when the sponsors are trying to predict rent growth and net income over the life of the project. It’s important to use conservative numbers and not “generous” ones. It’s important to estimate tax growth projections appropriately and understand that expenses go up.

All of those factors need to be baked into the financial plan


  1. Cash Reserves

When investing during times of uncertainty, make sure that you have “just in case” funds. Experiences sponsors will plan for cash reserves in order to be able to financially address the unexpected.


  1. Strong GP team- Strong operators

During uncertain times, you can see people’s true colors and their values do matter. You want your sponsorship team committed to the project and ready to do anything for the project, even fall on a sword for the project.

You also want a team that has experience with different market downturns and cycles. You want operators who can think strategically and can address problems head on.

Believe it not, this isn’t as common as you might think it is!

BONUS:   Be on the lookout for Great opportunities!

Real Estate is ON SALE!


Properties are trading at significantly lower prices than they were months ago…on sale!

But of course, this isn’t the new norm either. Just like in stores, sales do end. You want to be ready to look at properties and keep analyzing, especially in times of uncertainty….because that’s when you find great deals!