Over the last 60 days, the United States economy has been on the path to recession since the onset of coronavirus.
The big question that every investor in this country has right now is when is the bottom going to finally come?
In this article, I’ll break down the next recession and provide you with insight into the possible shape of the recession, when the bottom will come, and most importantly the steps that you should be taking to prepare and capitalize on any passive real estate investing opportunities that come from it.
Understanding the Next Recession
Even though it may seem like our country is currently in a recession right now, the reality is that we still are about three and a half months away from the current economic conditions being classified as a recession.
Two months ago, the President and every member of his administration felt that the economy would bounce back in the fall as we prepared to have an awesome 2021. Sadly, with continued lockdowns in cities like Los Angeles, followed by no clear coronavirus vaccine, it’s likely that the next recession is going to take a lot longer than many people originally anticipated.
Yes, the federal government has helped keep the economy going by offering liquidity bridges like the economic stimulus, PPP loans, and grants, but unless businesses are allowed to reopen, and lock-downs are eliminated across the United States, the moves that policymakers have been making to keep our economy on life support will not last for much longer.
Thanks to a recent interview with Dr. Anthony Fauci, we know that the development of a coronavirus vaccine could be at least 1-2 years away. When you combine this news with the continued reoccurrence of coronavirus flare-ups across the United States, along with the threat of future lockdowns, it’s easy to see that the next recession could last up to 2 years and possibly morph into an L-shaped recovery, as many economist’s fear.
An L-shaped recovery means that the United States could have a protracted period of bad economic news which could last for years but, there is also that the economy could have a W shaped recovery.
A W-shaped recovery refers to an economic cycle of recession and recovery that resembles the letter W in charting. A W-shaped recovery represents the shape of the chart of certain economic measures such as employment, gross domestic product (GDP), industrial output, and others – Investopedia
Most Businesses Are Adapting to Coronavirus Challenges
Even though the thought of an L shape recovery is on the minds of economists these days, the good news to report is that most businesses in the United States have been adapting to the challenges created by a coronavirus and they found success in having their employees work from home.
This is good news because of the obvious fact that if lockdowns persist in major cities across the United States, companies like Twitter can remain in business since their employees are productively working from home rather than having to shut down.
Although there are plenty of companies that have been adapting to Coronavirus, there still are plenty of businesses in this country that have been shut down for the last two months and if they are not allowed to reopen within the coming months, this could another factor that extends the next recession even longer.
As of May 2020, anyone can look at what’s happening in the news and know without a doubt that it’s not going to be as easy for the United States to beat coronavirus as many, people including the president, originally thought.
The widespread reopening of the economy is going to take some time and we could not see the bottom of the recession for up to another year or longer.
What Should You Be Doing Now?
As an investor who follows the market, including news of the coming recession, one thing that you’re most likely wondering is what should you be doing right now to prepare for it?
The answer to this question is simple, as I stated in previous blog posts, the most important thing that you should be doing right now is building your cash reserves so that you can capitalize on any multifamily properties that come to market in the coming months that you can purchase for under market value.
Besides doing everything that you can to build your cash reserves so that you could capitalize on wedge deals, you should also be focusing on cutting your expenses right now.
This means that you should be specifically analyzing how to create passive income in real estate including your costs for water, sewer, trash and property management at all of your investment properties just to see if you’re paying a competitive market rate for each service or if you could save money every month by eliminating higher-priced services for more affordable ones.
Contact Trier Capital
2021 is going to be a huge year for you to add new properties to your portfolio of investment properties but, you shouldn’t do all the work yourself because the goal with investing in multifamily is to earn passive income.
How do you earn passive income while still building your portfolio of multifamily properties and having a great time doing it? The answer is to work with a company that specializes in multi-family Investments.
At Trier Capital, we are a private equity firm that makes it easy for you to passively invest in lucrative commercial real estate syndications.
If you’re tired of investing in multifamily properties yourself and are ready for a change, contact me today to learn more about how easy it is to get started with building a portfolio of income properties that are earning passive income.
Contact us today by calling (630) 229-2383 or click here to connect with us online.