How I Plan To Take Advantage Of The Recession
I have not only been patiently waiting for this exact moment, but I am excited about this upcoming recession because of how I plan to take advantage of the opportunities that are becoming available to me.
The very first thing that suffers in a recession is LAND. Land is not income producing and this causes people to have fear as they do not know what to do with land; thus, they are stuck. People let go of their land at throw away prices because they panic. I take advantage of this situation and buy land for extremely cheap prices.
The second thing to happen during a recession is that incom
e producing properties will now start generating less income as people have less disposable income to spend. Rents start to struggle and in turn, all of these income producing properties will start to suffer.
Now historically, what has happened with industrial flex space real estate is that the demand follows an opposite trend. The demand actually goes up for these developments as these larger companies who have industrial spaces now all need to downsize. Where do they downsize to? Flex spaces. Why? Our leases are flexible, they do not need to sign on for 10 years, they can sign for 1-2 year leases. Flex spaces also give these companies an opportunity to combine their office and warehouse spaces into one solution. Logistically this is better for them and their business, it saves them a lot of money. This is why historically, flex spaces have really not suffered or struggled during a recession, people tend to move into them rather than out of them.
Now with demand exploding for these types of flex spaces, we expect this rental market to be the strongest amongst all the other asset classes. I also believe that during a recession we will be able to negotiate better pricing for our upcoming office warehouse deals for the next two years because general contractors’ work load will generally decline. So for example, instead of building at $100/sqft, we will now be able to build at 80$ a square foot. That is a 20% discount off the top and that’s simply a byproduct of a recession. This is what I am anticipating. Not only this, but I have actually tried and tested this theory. In 2016 when Houston, TX went into a downcycle due to the oil and gas crisis. I built a product with a 30% discount because everyone else panicked and chose to stay on the backburner.
In my last blog post How To Get Ahead During A Recession, I talked about how you can get ahead during a recession, this is how I do it. Now is the time where we want to push to build more, buy more land, and start developing more flex spaces. The demand for this product is high and everyone else is delaying their developments, leaving us alone to swoop in to capitalize on this opportunity. Take advantage of this once in a lifetime opportunity to invest with me and take advantage of this recession.