Steven, can you make money when the market is crashing?
- Absolutely and we're going to talk about exactly how to do that right now.
- You know, it's interesting when people say that sky is falling, the stock market is crashing,
it's the end of the world, the interesting thing is that the people that run the world,
the people that have the money, the people that know, they understand that that's nothing
more crash equals biggest opportunity.
- Yeah, I want you to for a moment to start thinking counter-intuitively, counter-cyclicly
in other words, when everybody else is freaking out and they're selling their properties,
what's the right thing for you to be doing right now?
- If everyone is selling, you got to be buying.
When everyone's buying, you got to be selling.
That's Warren Buffet's play but that's the playbook out of what the wealthy simply do.
So we're going to talk about market cycles, we're going to talk about how to make money
in the crash.
But let's just back up first and get super big picture.
Right now, economy is just like human development.
We have spring, summer, fall, and winter and we never go spring, summer, fall, spring,
winter, fall.
They move in a predictable patter and right now we know that we are in out last biggest
fall out in 2007, before that was 1999 and the market is always going to be moving in
these cycles and you're either prepared for it, anticipating it and working in tandem
with it or you're behaving like a consumer that gets crushed by it because by the way,
people that just have the money in the stock market get crushed.
People that buy real estate without having rules for protection when a market crashes,
they're going to get crushed.
Majority of people get crushed because they don't know how to play the market.
Now, Steven, before we go dive deep into this, we're two young guys, we're on our 30's, people
might be like, "Who are you guys to talk?"
Well you're talking to two guys that help thousands of people after the 2007 crash,
purchased thousands of properties in the worst crashing markets and we were buying homes
that were selling once for $300,000, $250,000 for $70,000 or $100,000.
We helped our clients make literally tens and tens and tens and tens and tens and tens
of millions of dollars and so, here's what we know, it's going to happen again and either
you're prepared for it or you're not and we hope this video will get you prepared for
it.
- So for me, there's like 2 different scenarios that we want to talk about.
Number one is, you have real estate in a certain market and it's crashing or it's crashing
and you haven't bought homes in that market and you want to get into it or figure out
how to handle this crashing market so I'm talking about the first.
Let's just say that you owned a property and all of a sudden you find yourself in a situation
where the market is crashing, what do you do?
Well I think the mentality of most individuals is when the market is crashing that means
I need to pull out, I need to get all my assets and I need to take it back, this is often
what you see happening in the stock market, right?
You hear the whisperings and the rumors that are going around, everyone's saying "Hey,
guys.
Be careful because the market is going to crash."
Well, because of all those rumors, because of all that information, you get scared, you
play off of your fear so you pull your money out of the market, that literal, that action
of pulling your money out of the market along with thousands or hundreds of thousands of
other people doing the same thing at the same time causes that market to crash.
- You cannot move with the masses, moving with the masses will hurt you every single
time.
- No fear like, do not do your actions based on fear, right?
So if you got your property and the market is crashing, I will tell you, first of all
most people don't know.
Is it a market crash when the market is crashing, your rental property, if you bought it the
right way, if you bought it the way that we've been talking about teaching over the last
many years now, you're actually in a really good space because you've got a property that's
going to continue to produce for you and where if your investment had been in any of the
other investment, it would have gone down with the crash although, the equity in your
home on paper may have gone down, you're still getting a monthly cash flow.
- Yeah.
In fact, even the opposite happens when the market is super strong, your rental market
is soft but the opposite happens and the crash, the rental market becomes very very firm so
rents can increase, it's easier to put people in homes, people are looking for rentals.
So it works if you have properties purchased below the median which is more of our tagline.
You're going to have to watch many videos before you can hear it over and over and over
and over again that the price point to buy properties is really what matters the most
and so, Steven and I, we're always encouraging people, whether you're using our system or
your own system, buying backyard real estate, purchase property below the median.
Why?
Because that means that's where you have the largest number of people that will actually
move and sell and make property work which means when the market crashes, you're going
to find everything over the median, tank, you're going to find the median lower, you're
going to find homes under the median, they're going to get a blip on the radar, they're
going to get a bump.
$100,000 doesn't go in to $10,000 but a million dollar home can turn into half a million dollars.
So anything over the median is going to crash real hard.
Now, Steven, let's talk about where we're at at the market because 2007, that was over
a decade ago and I remember what October of that looked like, we're over 10 years pass
that, we know things move in cycles and I got to tell you right now, spring becomes
summer, summer becomes fall, fall becomes winter, winter is when things crash.
Where are we at at the market right now?
- Yeah, it's an interesting conversation and I don't ever think that I have a crystal ball
necessarily, you know, these cycles, although they do happen, it's hard to really predict
exactly where we might be but - No one can, no one knows the future.
- No one can but if you look at trends and what happens, we've experienced the winter,
right?
We've experienced that 2007 and 2008, we've seen some growth back, we've gone through
some spring, we've gone through - Oh my gosh.
Yeah, construction happening everywhere, low housing availability.
- No doubt, no doubt.
And I think right now we're probably in fall and I don't know if we're in the beginning
or end of fall right now but we're kind of in the fall-ish area.
- And with fall, we're almost in that suspended animation, right?
We're printing money, interest rates are artificially being held extraordinarily low and all that's
happening to avoid the inevitable.
And the inevitable is that there's going to be another crash and it's not the end of the
world but you got to be prepared for it because there's a way to take advantage of that, we
can take advantage of any market and one of the mantras that I have in life is that winter
is coming and I'm ready for it, I crush it in winter.
If your business can survive winter when most things die, then you can crush it in any other
market time.
So winter makes champions and it makes warriors and it finds out who are the strong that are
really going to survive in the evolution of business and in the real estate game, if we're
in fall, now is excellent.
Every season is a great time to buy real estate but how do you get prepared?
You get prepared that the property that you are buying you might hold on too longer than
you think, you buy below the median so you keep it rented out ad when the market crashes,
it's just simply not time to sell, it's like Steven said, it's time to cash flow.
- So let's say that the market is in its crashing phase and you want to still get into real
estate well, usually that crash isn't going to last years and years and years, right?
SO the crash will typically happen over a shorter period of time and then things will
kind of stabilize down in a certain point and when that happens, one of the things that
I can tell you right now is to be prepared and this is kind of what you and I have had
conversations about.
Man, if we could turn back the clock to 2007 and 2008, although we did get in those markets
and help a lot of people make a lot of money, one of the biggest regrets is that we wish
we have done more.
- We absolutely could have done more and I'm talking about now even in just my own financial
world, my personal asset allocation, you never put all your eggs in one basket.
Right, there's a system of diversity.
Nate, remind me, we got to do a video and talk about how people like, what financial
bucket people should be putting money in because one of the buckets really is this financial
ability and this is what you need to know.
There's a certain amount that you're going to put into that growth bucket with real estate
and I'm telling you that in 2007, 2008, 2009, I did not allocate enough funds there.
If I had to go back, I would have put way more there because the homes that I did buy,
I crushed it.
My ROI's, I was making 30% plus a year on my money over a number of years and I only
wish that I had bought more.
You never put all your eggs in one basket and you don't just buy as much as you can
so how you get ready to crush it when the market is taking is, around the country, you're
going to see that all markets perform different, there's no such thing as this national crash.
I mean, we can all experience that roughly together but you're going to see that some
economies localized are going to experience way more crash.
For us, in our area around the nation, Vegas, Florida, and Phoenix, those are the three
markets that took the worst beating in 2007 but these were on new homes during a massive
build up that had to rebuilt.
How do we know that they had to rebound?
Because people still making babies and people are going to be needing houses and when population
is on the rise, people may go 5 years without buying but we're building really a back log
of, we got to get it back in and you can't buy house for less and it can be built so
by the way, if you can buy a house for a hundred grand that cost $200,000 to build, it's just
a matter of time before the market reevaluates and it doubles so Steven, when you have this
next crash coming, you and I, we're going to be looking at, what are the markets that
are most devastated?
Especially the ones that have natural strong economies, good business growth, good economy
but also had new build's and we want to buy as much new build's than crash as possible
because they are a guaranteed first comeback when the market re-stabilizes.
- Yeah, I think it's important to understand like you just said.
The market, when the markets crash, there are many markets around the US that are not
crashing or not experiencing that same type of crash, Phoenix, Vegas, Orlando like you
just said.
They all experience that massive crash.
Here in Utah, we experience that tiny little hiccup.
In other words, there are still markets around the US even if your market is crashing, you
can get into and make a lot of money even as though other markets are crashing.
- Well and now, here we are a decade later and we're still buying homes in Florida at
this ridiculously low prices.
That market hasn't still fully come back.
It's been moving, it's been shaking but we have such strong rents out there, that's one
of our hot markets.
North Carolina is a hot market.
Cash flow markets, Memphis, Tennessee, Indianapolis.
By the way, if you're looking for a team that has experience making money when the market
is tanking, click up here in the corner and actually get in touch with us and learn about
our systems because we'll show you how to buy properties right now, still in the market
so there's always markets reevaluating which means the crash was 10 years ago, it might
as well been yesterday because there's always a way to buy the best real estate right now
and we're still doing it for our clients and nothing that happens in the market is going
to change that because this is 3,000 year cycle called the K-wave or the Kondratiev
cycle, it was submitted as an economic theory from a Croatian man, Kondratiev.
And if you study the K-wave cycle, it's astonishing and comforting to realize, wait a second,
it's not the end of the world, it's just the end of the season and then we're going to
shift into the next season and there's no reason why your temporary losses in the market
can't actually turn into your greatest games after everything's been taken into account.
So friends, that's how you make money in crashing market.
Markets come and go, they go up and they go down.
They cycle through the seasons of life and now you really know first of all how to make
money in the crash but how to make money during any season because remember, if you can rock
it out and win in winter, then you know how to win all the rest of the time.
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