How To Prepare To Invest in the Recession

By Dustin Heiner, Author of How to Quit Your Job with Rental Properties: Expanded and Updated – A Step-by-Step Guide to Retire Early with Real Estate Investing and Passive Income 

Recession fears Shutterstock_2181774859The recession is coming and if you are prepared, you will make a lot of money while others are losing it. 

In the crash of 2008, I made LOTS of money by investing in real estate for passive income and monthly cash flow. I do this by making sure I make $250 minimum per month in passive income from every rental property I purchased. 

Now, those properties that I bought over a decade ago are making me $400, $500, and even $1000 a month in passive income. 

This is because over time rents go up but my expenses stay the same. 

Now, with a recession looming over us and an economic crash being possible, will you be ready to capitalize on the very thing that will crush most people? 

The recent podcasts I’ve been on all have the same concern. “What’s happening to the real estate market”? 

Honestly, things are going to be bad for a lot of people. But, if you are prepared, you will be able to profit from the recession. 

Actually, I believe coming soon is going to be the best time ever to invest in real estate. All the things that people are worried about, I and other real estate investors are excited for them. 

When other people are worried about these things, we are excited for them: 

  • Coming recession 
  • Crazy high inflation 
  • Home values crashing 
  • Rising interest rates 
  • Rent increasing 10%-20% 
  • Job layoffs 
  • and more 

Investors are excited because we will make so much money in the recession because we are prepared. 

If you are prepared, you can make a lot of money when everyone else is losing it. 

In 2006 when I started investing, prices were going up just like 2020. Then, in 2008 when the market crashed, I made even more money in passive income because my rents went up. 

And, because I invest for passive income and generational wealth, I have buy-and-hold real estate that makes me money when I sleep. And, if the market goes up, down, or sideways, I still make money from the rents my properties bring in. 

What Happens in a Recession 

During a recession, consumer spending decreases as people have less disposable income, which in turn leads to a decrease in business revenue. This can lead to businesses laying off workers, resulting in a rise in unemployment. The decrease in economic activity can also lead to a decrease in the value of stocks, bonds, and other financial assets, causing a drop in the stock market. 

The quote “when there is blood in the streets, you need to be buying” is a phrase often attributed to the famous financier Baron Rothschild. It suggests that during times of economic turmoil and panic, such as a recession or market crash, investors should look for opportunities to buy assets at a discounted price. The phrase “blood in the streets” is a metaphor for economic chaos and suggests that during these chaotic times, investors who are willing to buy assets despite the turmoil will be able to acquire them at a lower cost and potentially profit when the market recovers. 

Buy properties at 50% off the previous value. Our competition as investors are home buyers. Because of rising interest rates, these homeowners are priced out of the market. Homeowners are the ones who drove up the price of properties paying 10% or more. 

A mortgage payment of $1800 a month would buy a $450,000 property with a 3% mortgage. But, that same $1800 payment can only buy a $250,000 property with a 7% mortgage. Because the homeowners cannot.

Make Passive Income From Rental Properties 

Rents – Expenses = Passive Income 

It is that simple.  

When you buy 1 rental property, you need to try to make $250 or more in passive income from each property. 

  • 1 property at $250 a month is $3,000 a year in passive income 
  • 10 property is $2,500 a month is $30,000 a year in passive income 
  • 20 property at $5,000 a month is $60,000 a year in passive income 
  • 40 property at $10,000 a month is $120,000 a year in passive income 

But, there is a key component you MUST know before you start investing. 

Build the Business First

This is a statement you need to drill into your mind as you start investing in real estate. 

When you build the business first, you have a running business with experts doing the work for you. They are:  

  • Helping you find good properties to buy for rent 
  • Manage the property for you 
  • Help you get financing for your next property 
  • Fix up your property when you are playing with your kids 
  • Make sure you are not losing money in your business 

What this looks like is: 

  • Find the right city with good inventory (properties) that you can buy that make you $250 or more in passive income 
  • Interview MANY property managers and select the top one to manage your properties 
  • Get many mortgage brokers working for you to find you money to buy the properties 
  • Hire inspectors to do the inspection before you buy the property 
  • Have the property managers walk through the property BEFORE you buy it 
  • Get many quotes on the repairs needed to make it rent ready 
  • Have the property manager find the best tenant for your property 
  • Collect rents and if necessary, evict tenants 

These are just the start of all the things that others will do for you when you build the business first. 

How To Prepare To Invest In The Recession 

  • Stop over spending and going into debt 
  • Start saving 10% of your income for future investing 
  • Start learning how to invest in real estate (Get my free real estate investing course here) 
  • Try to create ways to make more money to invest: Raise from your job, start a side hustle, sell things on eBay, etc. 
  • Save all your passive income from the properties to buy your next property. Like a snowball, the farther down the hill it goes, the larger it gets. The more properties you buy, the larger your passive income is and the more money you make. 
  • Build your business first before the crash so you are already investing when it does 
  • Always be prepared for a market crash. And when it does crash, buy more properties to make you more money in passive income. 

If you are prepared, you will make a lot of money if you invest in real estate the right way. 

Remember this: You don’t wait to buy real estate… You buy real estate and wait. 

I hope you have lots of success in your real estate investing! 

About the Author

 Dustin Heiner is the founder of Master Passive Income, Real Estate Wealth Builders Conference (REWBCON) and Successfully Unemployed. 

He is a real estate investor who was able to make enough passive income from his business to quit his job when he was 37 years old. 

With his podcast, Youtube channel, books, courses, and coaching, he now helps other people quit their job by investing in real estate rental properties to live the dream life.