Thread by @Levijameshere

The next real estate downturn is not a matter of "if", it's "when".

I don't know more than the next guy about when the must will stop, but I do know is that there are ways that you can be prepared.

Here are 10 things that you can do to be ready 👇

1* Keep an oversized reserve fund for every asset.

Right now cash is plentiful, when things turn it will feel impossible to find the cash you need. Stockpile generously, and be willing to accept the lower returns.

2* Buy assets in areas that are organically growing.

Phoenix in the early 2000s was booming, turns out much of it was speculative buying by investors. Make sure the growth trend is going up long term, and that there are real warm bodies choosing to relocate there.

3* Choose your debt partners carefully.

When markets turn lenders do all sorts of crazy things to protect their downside. A long-term relationship with a local bank is far more likely to work with you to protect both your and their interest in the asset.

4* Location matters even more in a downturn.

Buy assets that are well located for their use. Pay up to be closer to the thing that drives demand in your market. e.g. The campus for university housing or the airport for distribution.

5* Watch your monthly $ commitments like a hawk.

If you always keep your monthly overhead costs far below your income you will be able to stay focused when things get tight for a while.

6* Don't sell, instead refinance and roll.

An ever-increasing basket of quality cash-flow producing assets is far preferable to a bunch of cash from a sale with big tax liabilities.

This strategy is slower at first but will win in the end.

7* Seek to be well known for conservative forecasting.

Don't plan on the market doing you any favors. When it does your investors will love you and they will want to invest more in your properties. When it goes bad you will have oxygen left in your tank.

8* Track all expenses as if each dollar is life.

I have seen many examples of investors who think that the music will never stop, and have no idea how much money is going out the door every month.

9* Don't get caught up in thinking that new price increases are permanent.

It's easy to think that because things have been doing well for so long that they never go down. Stay the course, keep a steady hand, and wait for excellent opportunities, then pounce.

10* Learn the difference between gifts that the market gave you and equity that you earned by executing well.

This one is harder than it sounds.

* music. 🤦‍♂️