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Learning, Sharing, and Teaching => Investor Alley => Topic started by: PDXTabs on August 27, 2019, 11:03:17 AM

Title: Investing in real estate right before a recession
Post by: PDXTabs on August 27, 2019, 11:03:17 AM
For the sake of argument, let's assume that the US will sink into recession in the next 12 months.

What does this mean for real estate investing? During the last recession real estate went on super sale. However, I have read that this isn't actually typical?

I'm very curious to read mustachian thoughts on the matter.
Title: Re: Investing in real estate right before a recession
Post by: ecchastang on August 27, 2019, 11:33:52 AM
Real Estate is very local.  A good deal is a good deal and is set up to handle a recession.  If you can't handle a drop in rent or increased vacancy, then it probably wasn't a good deal to begin with.
Title: Re: Investing in real estate right before a recession
Post by: ChpBstrd on August 27, 2019, 11:34:36 AM
I sold a $50k house in a D+ neighborhood of a LCOL area in the summer of 2008. Its value supposedly declined about 7% and then stayed flat for a decade.

I put the proceeds (half my NW at the time) to work in the stock market throughout 2008-2010 which one might think would have set me for life but unfortunately I engaged in stock picking, dividend chasing, speculation, etc. through the early portion of the recovery. Timing = perfect. Execution = squandered.

In hindsight, it is cash you want going into a bear market, because with cash at that time you can buy far better earnings yields than RE offers. For example, the ROE of that house was 5-6%, but near the bottom you could buy REITs yielding 10-15%. You’d hate to be locked into an illiquid asset when such deals appear.