Predictions for the next recession
Hey, ya'll. This is my first rodeo (RE cycle) and I was just wondering what kind positions/companies would still be secure during slowdowns/recessions. I would assume analyst positions but would there even be anything to analyze if firms aren't buying? Or, what groups will be buying if lending gets a little too tight? Obviously brokerage positions would be the first to feel the effects. What kind of effects/opportunities have you veterans seen in previous cycles and if you're a broker, how do change your day-to-day in order to strive during these times? The more specific, the better!
[{"id": "ehl6reb", "text": "My boss told me once, \u201cduring a downturn, everyone becomes asset managers\u201d", "replies": [{"id": "ehl7d0w", "text": "Funny, on the lending side, everyone becomes workout experts", "replies": [{"id": "ejjj8fi", "text": "True started in workout in 2009 right out of college weathered the storm but now I\u2019m afraid of another. Since we sell all our loans I\u2019m going to have to find a new place to work out. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ehl8qkn", "text": "On the commercial/industrial side\n\nPublic companies with long term leases are safest.  Mom &amp; Pop's get hit very hard.  \n\nInvestors who deal with distressed real estate do well but courage is usually lacking.  \n\nA whole lot of brokers who came into the business after 2010 are going to quit cause they don't know how to sell in a tough market.  ", "replies": [{"id": "ehmfgf1", "text": "Great response, thank you. So what do you think will separate the surviving brokers from the quitters (other than referrals keeping them alive). Like do you just bang the phones twice as hard now or what? How do you sell in a tough market?", "replies": [{"id": "ehniecc", "text": "The reality is that in a recession the cost of capital gets much more expensive i.e. interest rates rise and fewer buyers can qualify. So, we transition from a liquid seller's market to a tight capital restricted buyers market. A good strategy would be to align your self with well-capitalized buyers who have \"dry powder\", a.k.a. cash reserves, sitting on the sidelines and will be looking to take advantage of distressed and overleveraged properties when they begin to hit the market. Transitioning from a seller's market to a buyers market is going to be very interesting in this next recession, as Fed interest rates were near 0 for 8 years. I would argue asset prices are currently very detached from their intrinsic value as investors have been able to access historically cheap debt for a historically extended amount of time.\n\n&amp;#x200B;\n\nMake relationships with bankers who get distressed inventory and align with well-capitalized distressed property buyers. Work with a senior broker who has navigated past recessions successfully and model his behavior. Start calling buyers and asking them \"What's your recession strategy? Are you ready to take advantage of firesale real estate deals when they become available?\" Just a few thoughts.\n\n&amp;#x200B;\n\nUltimately, in a buyers market, he who has the dough will run the show. You want to align with the $.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ehlierl", "text": "As someone that is graduating this May and no job lined up, the influx of recession talks scare the shit out of me. ", "replies": [{"id": "ehlj2e7", "text": "Don\u2019t be a pussy! Good luck! ", "replies": [{"id": "ehlvdj9", "text": "Thanks! ", "replies": [{"id": "ehmr4bj", "text": "Hey you're in a better position than us that graduated in 08 - 09 lol ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ehlswqr", "text": "Smartest guy I know said you make money in up cycles, but you build wealth in down cycles. ", "replies": [{"id": "ehlygpm", "text": "Could you expound on this? I\u2019m intrigued...", "replies": [{"id": "ehlyu2e", "text": "It's easier to find great deals when everyone is scared and prices are low.  ", "replies": [], "depth": 3}, {"id": "ehn052w", "text": "In a down cycle prices are cheaper and you buy for cheap to build wealth. Remember you make the money on a property when you buy, it\u2019s all about the price you buy at. In up cycles you actually make the money because your investment matures when prices rise. \n\nIn other words, right now could be an ok time to buy because prices could still rise, but it definitely isn\u2019t the best. At the true bottom of a down cycle is when you build your wealth with ease because investments properties are cheap. ", "replies": [{"id": "ehn1dgt", "text": "Wise not to time the market... just know what part of the cycle we\u2019re in and adjust accordingly. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ehlzslq", "text": "What happens to developers", "replies": [{"id": "ehn0i9p", "text": "Many smaller ones choose to flip distressed properties to make ends meet. \n\nEg. buying a rundown apartment building during a recession for nothing, fixing it up and letting the asset appreciate. ", "replies": [], "depth": 2}], "depth": 1}]