The Extreme Short: How To Save Yourself & Make Money In The Crash
While newer investors may still be very bullish on growth in the US real estate market, those who lived through 2008 are certainly having some traumatic flashback moments.
There are certainly many, many similarities in the data from the run up to the Great Recession. We also know that a soft landing is almost impossible to pull off. Markets invariably overcorrect before they recover.
This can not just put a huge hole in your savings and capital, but can wreak havoc on income as well. So, if a crash or correction is possible, then how can you save yourself, and continue to make money through it?
The Consequences Can Be Extreme
Failing to act, or even just acting too slowly to changes like these can have serious, and long term consequences.
2008 sent many CEOs and multi-million dollar producing real estate players lining up among hundreds of others begging for minimum wage jobs in restaurants. Many lost their families, and spent a decade or more to build back.
It’s true that a few made it, came through COVID, and are prepped for what's next. Those are the ones most focused on shorting the real estate market right now.
Short Or Long?
There are two choices at this pivotal time in the market. You can play this phase of the cycle short or long.
You can hold for cash flow and until the market rebounds higher. Though rentals may not be as reliable as you hope.
Remember that it may take 10 to 14 years for the market to come back to where it is today. If you don’t want to be holding those assets that long, or risk losing them, then you should be shorting the market. Getting out faster, with the expectations of prices coming down.
If you haven’t already made these adjustments, don’t just go short, you may need to extreme short to get out fast enough. If you haven’t already missed your window of opportunity.
So, what are some of the things that you can do to do this?
Sell Your Home
Preserve that equity and capital by cashing out now. It is better to regret selling and have money in the bank, than regret holding and have nothing. Just like going to Vegas, you’ve got to know when to cash in your chips and step away from the table.
Exit Those Rehabs
This may not be a great time to be fixing up and flipping homes. Don’t finish or begin on any more line items if you don't have to for a certificate of occupancy. Save that cash, sell a little cheaper, and exit.
Exit Rentals
Sell off any rental properties that have peaked for this phase of the cycle. You can buy them back cheaper later, if you want to.
Make Money By Wholesaling
Real estate is still going to be the best way to make money. You just have to play the extreme short. Sell before you buy it, and use 100% leverage by wholesaling properties using transactional funding.
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