Epic Real Estate Investing - What I'm Doing in Preparation for the 2020 Recession | 746

Episode Date: August 16, 2019

In today’s episode, Matt talks about what he is doing in preparation for the 2020 recession. Furthermore, he shares the actions that he took in the last 2 economic adjustments and explains why you should pay attention to whom you are listening to. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-Aase.com.

Here's Matt. Lots of fun, exciting stuff to talk about. And what I wanted to talk to you about today is specifically what I am doing in preparation for the 2020 recession. And if you've been listening to the news at all, seems big things are coming, right? It's all the headlines are all the economic indicators or some significant economic indicators are pointed towards a recession in the year 2020. And the Federal Reserve just cut rates last week. The banks are laying off people in considerable quantities. Mid-sized companies are starting to see their credit ratings drop with their lenders.

And the job growth has seemingly hit a wall. Lots of stuff in the news. And there's even more to come. And, you know, we've been hearing about this a lot over the last several years. There's a lot of very smart people making their predictions. You know, 2013 was, you know, if you were on YouTube, that was the year it was all coming to a head. And then everyone digested. No, well, maybe not 2013.

It's actually maybe 2014. And then 2014 passed. No, it's really 2015. And then everyone went all in on 2016. And here we are in 2019. And finally, maybe there's something. The truth is most people just don't know, including the ones that we would consider experts.

They don't know. Here's my prediction. This is what I predict. Over the next six to 12 months, You're going to hear a lot more about this. You're going to hear a lot of doomsdayers. You're going to hear a lot of, I told you so. You're going to hear from a lot of finger waggers.

I mean, if you say the end of the world is coming and you say that often enough, at some point, you're probably going to be right, right? But most, they've been way off the mark, as they've all predicted, the end of the world was years ago. So be very careful who you're listening to. Protect your mind. Take everything in with the grain of salt. because the truth is nobody really knows. And is there going to be a recession 2020?

Nobody really knows, not even me. As much as you would like to think, I would know. I don't. I don't have a crystal ball. It's still at the shop. They haven't been able to fix it. And so I have no idea what's around the corner. But I'm certainly not going to be blind to it.

I'm not going to act like nothing is going to happen. We've been in a very comfortable economy on a really good run for a decade or so, more than a decade, right? working 11, 12 years. So something's going to happen. Is it going to be a giant explosion? Is this bubble going to burst? I doubt it.

You know, if you look back at what the banks have been doing, they've probably written their most impressive book of business ever in history. So I don't see that imploding. I mean, we've watched with our cash flow savvy clients how many or what they've had to do to the hoops they've had to jump through to get their conventional financing approved. And so they've been doing that for a really long time. So I don't see any weak paper out there potentially collapsing. But something is going to happen, right?

So during this time, there'll be probably a lot of embellishers and a lot of hyperbole going around. So watch out for the opportunity seekers that are going to take advantage of the environment, going to take advantage of the marketplace to take advantage of your fears and your insecurities during this time. You're going to find no shortage of people doling out advice and telling you what to do. And much of this advice, this is what I find very interesting, Much of this advice that you're going to be hearing is going to be coming from people that have yet to even live through an economic adjustment. So I would say a good rule of thumb is any advice from people under the age of 35, be very careful. In fact, I'd ignore it all together.

Or at the very least, confirm their advice with someone with some life experience under their belt before taking any considerable actions. All righty. I'm going to be, yikes, I'm going to be, do I dare say this? 50 years old next month. And that's a big milestone. And I can't believe I'm here. I still feel like I'm 18 sometimes. I still feel like I think that way. Just ask Mercedes. She would confirm that. But I'm going to be 50 years old. And I remember the 2007 shift, collapse, bust. I remember that very well. And I remember the 2000.com crash very well. And those 35 and under, they've got no experience. Certainly they could read the books. They could listen to their own mentors or coaches.

They could read the charts. There might be even, I'm sure there's plenty of people that are much more smarter than I am in that arena, but they don't have the real life experience to go along with it, what it actually felt like, what it actually meant, and what you had to do to pull through, what you had to do to adjust, and what you had to do to survive, right? They didn't feel it. They weren't there. So I think I'm somewhat qualified to dole out some advice or share some really valuable opinions, but I'm not going to. Nope. I'm not an expert in economics, and I'm even less of one on the global macroomics. I have no insider information or any idea of what really goes on behind the scenes of Wall Street. I have no idea what goes on behind the scenes or

behind the curtain with the government, and I'm not going to pretend to. I'm not going to hear it from somebody at a seminar or on a talk radio station or read it in a book and all of a sudden think that I am in the know because likely their information is secondhand information as well. So unlike so many people that you're going to be hearing from over the next several months, I'm not going to pretend to have that information. So here's what I am going to do, though. I'm going to look back on the actions that I took in the last two economic adjustments. And I'm going to analyze the consequences of those actions.

And I'm going to do more of what worked. And I'm going to not do what didn't work. So I'm not going to give you any advice. I'm just going to tell you what I'm going to do. And I'm sure there'll be some people listening to this that are much smarter than me that totally disagree with my actions. And there'll be some people that not as smart as me that totally disagree with my actions. I'm sure they'll comment and they'll chime in with their opinion. But understand, I really don't care what they think.

I'm operating based off of my life experience, having gone through two of these adjustments. And who knows if we're even going to have it at this adjustment again or if we're even going to feel. it. I don't know. But I'm going to take my own experience. I'm just going to tell you what I'm going to do. You can take my information and then you can go do what you want to do. All righty? So I've got two things, two strategies. I've got a defensive strategy and I've got an offensive strategy. So my defensive strategy, number one, going to stop buying dumb stuff. That's scientifically. I came up with that with scientific analysis. See, I looked at all of my expenses and I spend probably a foolish amount of money on Nike tennis shoes. And I've developed a, a sunglass habit over the last few years.

And those aren't cheap. And I've also developed a wine habit. I've become a wine collector. That hasn't been that inexpensive either. So I'm going to stop buying that stuff. I considerly got enough shoes to where I'm not going to be walking barefoot and I'm still going to be looking good for a long time to come. And I've got great sunglasses. Those aren't wearing out. And I could probably have a couple bottles of wine a day and be good for a couple years. So no more of that.

So I'm going to stop buying dumb stuff. Next thing I'm going to do, I'm going to eat in more often. Not going to eat out as much. We've actually probably my waistband will probably thank me as much as my pocket book will. But there's a big difference there. And there's some ancillary benefits of eating in more often, too. Three, I'm going to pay off my high interest consumer debt. I don't have a lot of it, but I do have some.

And it's not like I can't afford to pay it off. I just don't. But I'm going to be paying off all debt that doesn't pay me. I'm still holding on my good debt. And I'll explain why in a second. But I'm going to pay off all the consumer debt. I'm going to work on that. I do have a six-month emergency fund.

I'm going to go ahead and just bump that up to 12 months just for an emergency. You never know. So I'm going to do. And then the other things I'm going to do, and this doesn't really apply it to me. But I look back at what I did. I want to make sure that I wouldn't do this again. And this might be a little piece of information I can share with you. If you have other investments, alternative investments outside of real estate,

you may be in the stock market. I don't know, wherever you're invested in. Don't panic sell. And don't panic sell. The biggest source of losses during economic adjustments is when people sell all of their investments down at the bottom because they feel like they're going to lose it all. And then they don't get back into the market or back into investing until, the market has risen above the point of where they sold it all at.

So I wouldn't make that mistake again. It's not going to impact me too much. I don't have too many ancillary investments like that. But I wouldn't do that again. So if you do, be strong. Stay firm. Hold out. Okay, so those are my defensive strategies.

My offensive strategy is you can't win unless you're scoring points, right? So you don't want to be 100% on defense. You've got to take the offense too or else you're not going to score. You can't play not to lose. You got to play to win still, regardless of what the economy throws at you. regardless of what life throws at you. Number one thing I'm going to do. I'm going to refinance the equity as much as I possibly can,

the equity out of all of my real estate, to a point where I still have the ability to comfortably cash flow. If the market does adjust and real estate prices or values drop a considerable amount, I want to have all that cash with me. I don't want credit lines because we saw what the banks did. They took those credit lines. They reduced those credit lines. I'm actually going to take cash out and I am going to stash it.

And I'm going to do that to preserve my equity and preserve my cash, but I'm also going to position myself to take advantage of any opportunities that the economy would throw at somebody. Basically, when things go on sale, I want to be in a position to go ahead and make some really good acquisitions. So that's one thing I'm going to do offensively. Second thing, I'm going to network more. There's a great book.

I read it years ago. I hardly remember the contents, but the title pretty much says it all. That book is Dig Your Well Before You're Thirsty. and what that really means is the best time to find opportunity is when you don't need that opportunity. And I'm in a position right now where I don't really need any new opportunities. I'm all opportunity out. But when things go beyond your control or what things beyond your control start to shift, you never know. And I've been a little bit of a recluse the last couple years, haven't been as social the last couple years.

And I think it's time to go out and rekindle some relationships and create some new ones. and just, I don't know, get back into life, start interacting with humans again. Three, I'm going to keep buying real estate. That is not slowing down. That hasn't slowed down and it's not going to slow down. I will continue to buy real estate for the purpose of cash flow. But not going to be so eager, not as eager. I won't be doing deals for the sake of doing deals.

I'll be saying no thank you a lot more often, specifically to the time. tighter deals, the deals that are tight in equity, the deals that are tight in cash flow, be raising my standards for stronger deals. I don't know, maybe not necessarily raising my standards, but not being as flexible as I have been. And I'll just be going to be sticking closer to my existing deal standards. The fourth thing I'm going to do, and this kind of goes with number three with regard to buying real estate of how I'm going to buy it.

I'm going to be leveraging the news and leveraging the market data in my negotiations. the best way to get discounts in real estate in an enjoyable way and an easy way to do this business is to align yourself with the seller, to be on yourself, be on the side with a seller, right? And so how do you do that and still get discounts? I mean, if you're aligned with a seller and you're both after the same thing, you know, they want as much money as they can possibly give for their house, how do you get at a discount and still be on their side? But what you do is you make the market the bad guy, right?

You make the market the bad guy. And over the last several years, when it's been such a strong seller's market, the market hasn't been that bad to sellers. So it's been a little bit more of a challenging position. But Mr. Bad Guy, the market is starting to rear his ugly head. And I think there'll be no shortage of headlines to use and leverage in your negotiations. I can already see over the last couple months and all the markets that were in. Inventory is expanding.

Inventoring is getting bigger. And that's suggesting that buyers aren't buying as quickly as they used to or more sellers. are trying to sell and cash out. I don't know what it means, but it's making this shift. It's taking the power out of the seller's position and shifting a little bit more towards the buyers. So I'm going to be using that information to my advantage

to build my portfolio. I'm going to be very comfortable walking away from deals. But this is the time to be really strong in your follow-up. You want to still do your marketing. You still want to set your appointments. You still want to submit offers. But be much more. comfortable and confident in walking away from deals that don't meet your standards.

If you and the seller can't both get what you want, then you just have to wait until the market adjust so that you can. And that market, if it does go down and it continues to go down, a lot of the predictions are that it's going to be slow and long. And if that's the issue, then you want your follow-up to be really, really strong because you're going to get calls three months from now. Hey, remember that offer you gave me three months ago?

I say we go ahead and do it. And I say, oh, Mr. Sell, I would love to. But that was three months ago. Have you seen what the market has done since then? I mean, I could still put something together for you, but it's probably not going to be in the same ballpark. Right. And so just gruntle that.

Okay, well, we can do that now, or you can call me in three more months and see where we're at then. So you want to have a really strong follow-ups system. I'll be following up with letters, personal letters, personal notes. I'll be following up with text message blasts. I'll be following up with the ringless voicemails, our stealth mail through RIA Solutions. I'm going to be following up with offers, just sending offers.

Hey, this is what it was and this is what it is now. Be following up with three optional letters of intent. So, we want your follow up to be really strong. So that's number four. And then number five, and I think this could potentially be the big confession of mine of where I really missed the mark in 2000 and 2007. And I'll just be, I'll just come out and say it. This is not the time to cautiously regress, watch,

and wait to see what happens. This is not the time to do that. Fear during a time like this is the absolute enemy. And it's going to keep you from everything that you really want in life. Fear, it's going to breed inactivity. And that's really the worst thing you can do is nothing, right? You don't want to go into inactivity. You don't want to go into hiding.

You don't want to go into watch and wait and see and wait until you start seeing other people come up and other people start to get good results. And then you decide to jump in. You don't want to do that. It's time to double down on, focus. It's time to double down on your activity. Keep investing in yourself, make yourself even more valuable, strengthen your knowledge, strengthen your skills, and stay active with what you learn. You know, there's a guy I used to be in business with a long time ago, and he was a

good friend of mine, and we just decided to go different ways in business. And he had said something to me, he started to do some business with people over in Russia. He was doing some real estate seminars in Russia. To this day, I still don't know how he actually did that. He He had never been to Russia, but he went to Russia to talk real estate. Anyway, he came back with some really good stories. And one of those stories that I found very interesting is when the Soviet Union collapsed, the only people that pulled through and survived were the business owners and the real estate owners, the owners of real estate.

And that has been something that's been in my mind for a long time and has just confirmed that I am in the right place at the right time always, because we may go through. a recession, we may go through a depression. We might not go through any of it. And when the times are good, real estate investing, that's where you want to be. But there's even more evidence and evidence within my generation in our time frame, in our lifetime, that when a country collapses, not going to be easy. It's going to hurt. It's going to suck. It's going to sting. It's going to be really painful. and a lot of devastation can happen as a result. But the people that pull through are the business owners and the real estate investors.

And that's what we do for people over here, is we help people build part-time or full-time real estate investing businesses. It's what I do. And as I didn't give you out any advice here today, I just tell you what I do. And that gives me really confidence and comfort moving into this exciting time of this time of uncertainty. We don't know what's going to happen, but whatever happens, I know whether good or bad, we're in the right business. And if you really want to position yourself to withstand whatever the economy throws at you, I created a brand new video training that lays it all out for you.

And you can watch how we do that, how we build real estate investing businesses for our clients. And you can watch that for free over at r. ReiIACE.com. All righty. So that's it for me today. God bless to your success. I'm Matt Terry, or living the dream. Take care.

Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home world, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.