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Recession Survival
How To Profit From
An Economic Recession!
Real Estate
Page 2
As an investor during an
economic recession it’s vitally
important that you understand the basic
framework of a recession. THE RECESSION
IS NOT GOING TO LAST FOREVER! Sooner or
later the economy is going to start
getting back to normal, and when it does
the value on your investment is going to
rise back up. That $200,000 home is
suddenly going to sell for $350,000
again-more if it happens to be in an
area that sees a tremendous boom as a
result of the ending depression.
That means that if you can afford to do
it, the best thing you can do at this
point is play a waiting game. You know
the value of your property is only going
to rise, and if you rehab it while
you’re waiting you can watch the value
rise even more. Let’s take that $350,000
house and use it for an example again.
Let’s assume for a moment that the house
is sitting on a lightly wooded lot with
a big backyard an easy commute away from
a major, booming industrial area.
Let’s also assume that the industrial
area saw a major boom as a result of the
ending recession, and that because of
that boom property values in the area
were jerked back up. That house that was
worth $350,000 and sold for $200,000 is
suddenly worth $400,000; however, while
they were waiting for the end of the
recession the homeowner also took the
opportunity to rehab the property, doing
some landscaping, adding a pool and a
spa room and installing all new plumbing
and appliances.
Suddenly that property that the investor
bought for $200,000 and invested $40,000
to fix up is worth over $500,000. Even
with the additional $40,000 investment
for the rehabilitation the real estate
purchaser is going to walk away with a
tidy $100,000 in their pocket-more than
many executives make in two years, and
all because they were clever enough to
take advantage of an opportunity when
one presented itself on the back of an
economic recession.
If you’re looking for a way to take
advantage of the recession and you have
the time and the money to do it, I
strongly recommend real estate. The good
thing about real estate is that if you
know the ins and outs of the business
you can enjoy a return from this career
whether you choose to think in the short
term or the long term-although, for the
sake of this book, I’m going to
encourage you to put at least a little
bit of thought into the long term.
Remember, long term when you’re talking
about an economic recession isn’t the
same as when you’re talking about the
long term anywhere else. A recession
usually lasts less than a year. A year’s
worth of stockpiling for a lifetime’s
worth of profit. Hmmm…
What to Look for When You’re Buying
Real Estate
When you’re going shopping for real
estate in the middle of an economic
recession you can pretty much guarantee
that whatever you purchase, you’re going
to be able to make a profit. There are
certain parts of the country that take a
little longer to be affected when a
recession strikes, but sooner or later
every place is going to start to feel
the pinch-which means you can basically
stick a pin in the map when you’re
trying to decide where you want to make
your investment.
Of course, just because you can make a
profit just about anywhere doesn’t mean
that you shouldn’t take measures to
maximize that profit. If you were
sitting in the middle of a giant room of
sweets that were yours for the taking
absolutely free, would you go for the
Godiva chocolate or the M&Ms? When you
have the choice between a property that
you’re going to make a minimal
investment on and a property that you
will make an incredible profit on when
the economy starts rising up again, go
for the property that’s going to bring
you the best return!
Where are you going to find the best
deals? Urban properties and homes in the
suburbs of these urban areas are always
more highly in demand than those that
require a lengthy commute to get to
life’s essentials. Homes in the suburbs
of Washington, D.C. are going to sell
for a greater profit (and much more
quickly) than a home in a small town
like Rexville, NY. (Don’t worry if
you’ve never heard of it-most of the
rest of the world hasn’t either!)
When you first begin investing it’s
usually recommended that you pick a
property close to home, where you know
the neighborhood, the general ambiance
and, most importantly, what sells! If
you choose to do your own rehab this is
particularly important, as there are
many areas in the country that are
particularly prized for their historical
value and which will bring a much lower
return on your investment if they’ve
been stripped and decked out in the
latest style than if they’d been
carefully restored. An experienced
rehabber will know this. A beginning
investor will not.
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