Recession is Coming! What should you do to Prepare? Reduce Downside? Get Ready to Make Some MONEY?

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one ritz-led time it

is thursday afternoon it’s my favorite

day of the week

yeah it’s my favorite day of the week

it’s the three amigos how you guys doing

we’ll go to dion first

howdy zoo we’re doing great ready for

round three

and matt how are you i’m still here so i

gotta be having some level of fun there

you go there you go uh so what i wanted

to talk about here is i think uh you

know on my channel specifically the

daily financial news we’ve been talking

about how i thought q4 was going to be

artificially goosed and it was

but that we might come into q1 and have

a very low if not negative gdp print

if in economics a recession is called

when you have two consecutive quarters

with negative gdp growth

and i fear that we have one of those in

our very near future so i thought i

would talk to both of you about a

recession

what it might mean because you both are

old enough to have been through several

right we can talk about it at the

business level right you were both

employees and business owners we could

talk about it from a real estate angle

rentals whatever you want but let’s talk

about a recession because first and

foremost i can guarantee the audience

this we will have several more

recessions in your lifetime you could

argue when they happen but they will

happen so dion

what’s the recession like in the

trucking industry

i

don’t know that i’ve ever understood

what a recession was because

until i made it to the age of 40

without ever having a thousand dollars

in the bank as a single parent with

three kids i always felt like i was

struggling so i don’t care if it was a

booming market if the world was falling

apart the housing crash of 08 the

dot-com crash i’ve never had any money

to worry about

so i want to be really careful with how

i say this because i don’t want to be

insensitive to the negative impact that

a recession has to people

one of the reasons i like making content

that helps people get on the property

ladder and well it helps you get to the

point where you make work optional is

because you’re buying cash flowing

assets

and when you own assets and you have

cash flow from those assets

inflation

is your friend

a recession

while somebody who’s working and working

very hard for the money that they make

goes to the store and worries about the

price of milk

i don’t care

it the recession when you own cash

flowing assets

if you’ve structured your portfolio

right with good diversification of where

the properties are the property types i

diversify my tenant base so they’re from

three different categories i’ve done

things to protect myself i i call i

don’t call it proof but i call it

recession resistant

that i’m actually and i’m not so i want

to careful how i say this i’m looking

forward

to not suffering from a recession like

taking the last 10 years of action in a

specific pattern to be ready for one

like my my strategy is designed for a

pandemic a stock market crash and you

know a recession or a prolonged

government shutdown i’ve been planning

for those so there are things where i

could have gotten better cash flow i

could have gotten better appreciation i

could have taken more risks to perform

better but instead i took the amount of

risks appropriate to the way i was able

to diversify

to be ready for what we’re going to

experience in the next year

very well said how are you matt you and

i’ve been through a couple of technology

recessions where you know you’re hiring

people then you’re having to let them go

that’s not fun no no i remember looking

at spreadsheets all the time going well

i got to find seven names on this list

so

what do you think about recession in the

technology space recession sucks

it’s horror it’s i mean you know it’s

like

multi-year contract stuff

that starts coming due like

just get ready to hear it right like

just

grind gr well we’re asking all of our

vendors to take a nine percent cut

across the board sure why not yeah i

mean i only make seven percent profit so

why wouldn’t i give you nine

like

that’s the kind of thing that you’re

that you have to emotionally prepare

yourself for i think

the this is why it’s so important that

these crisis videos so often on on

youtube are stupid yeah because agreed

they actually weren’t doing anything in

2008 except for taking another

beer hit

you know playing beer pong right so

that’s what i find a lot of the younger

guys on youtube are talking about and

they don’t know they have no clue they

were completely insulated from it they

were in college or they were in high

school or they had just gotten out of

college so they have no idea we lived

through it we invested through it so the

lessons that i learned from last time

were

don’t be over capitalized you can’t be

over capitalized you need to have as

much money as you possibly can have

don’t be over levered

don’t be heavy in margin other than what

you know scent even even questioning

what banks will give you that created a

lot of really good investors

the guys that got sunk some of them got

even better than what they were and

they’re like yeah i’m not going to get

caught like that again other guys are

going to learn exactly the same lesson

the other thing that i think

we’ve also put a lot of time effort and

energy into is we know that when that

correction happens

we know that it’s going to directly

impact workers

and so the thing that we want to do in

being a good properly run business and

making sure that we dance with the one

who brung us and that we help them in

their time of need

we make sure that we have

slate ready projects that we can put

into play immediately i literally have a

page of projects that we will do if the

market corrects 20 percent

and there’s a bunch of workers out there

materials are have have corrected in

price

i have a whole slate of projects that i

will keep our main subs busy for months

months if not a year year plus between

us and other customers that i know that

they have so they won’t feel the pinch

nearly as much

sort of the other thing that we will do

as well is say hey listen

you raised your price a lot

in the last five years my turn

and so i will put you to work but it’s

not going to be at the same

you know red retail price that you guys

have been getting me for because you

have 17 other people banging on your

door

you don’t have 17 other people banging

at your door and so the economy we will

be there to help you and support you but

we recognize you’re going to work with

us just so you can stay busy and and

make money yeah

great stuff there the only things that i

would add on top of that because again i

suffered through the 80s recession as a

teenager it’s one of my most painful

memories watching my mother not be able

to pay bills having to get a job as a

teenager at a fast food joint i mean i i

have these scars or baggage or whatever

you want to carry them what i would tell

you as an adult

is first and foremost your kids are

watching

right my parents

didn’t really get that we were watching

uh i took it one way my sister took it

entirely different we’re thus different

today

second uh first thing i would do is i

would evaluate my job yes i know the job

market 10 million jobs open blah blah

blah if we have a recession coming the

job market will get darker quicker

what i would do is i would

if you are a sales software sales rep

you love selling new products because

you have the lowest quota green field

you can share accounts all of this stuff

except

at the beginning of a recession

because what will happen is they will

slash r d they will slash marketing and

they will slash they will

that team that was selling that new

product will disappear

so

check yourself are you working on bread

and butter products or are you that

one-off that’s going to be the next

generation thing

that in a recession will go bye-bye so

check yourself don’t don’t get caught

next

time do you really audit needs and wants

might be time to stop spending on wants

just for a little while just to see

where this is going and then finally if

you are

ready

the best deals i’ve ever made were in a

recession

you can get seller financing creative

deals

again

the market in real estate is going to

change and prices may not fall

that who cares you just need one seller

who has to sell and move to texas for a

job and he wants out of california

50k 50 000 savings because i can close

tomorrow or whatever

so again be ready

a lot of people in a recession will

retreat when you should actually be

aggressive but change your numbers we

talk about good and great all the time

on this channel if great for you is

eight percent today

in a recession i want it to be 12.

we’re not going to do eights in a

recession we’re gonna do 12s we’re not

doing sixes today we’re gonna do tens

whatever they are

be aggressive be greedy but change your

number

um you know if that if we come to a

recession again a recession unemployment

might go from three nine to eight

percent that’s horrible it’s a double

it still means 92 percent of the people

are working

i say that all the time because people

are like oh what if unemployment goes to

12

so 88 of people still have their jobs

yeah well i’ll be just fine

but to dion’s point and to your guys

point

this is one of the things that i’ve

learned from you guys is diversification

by portfolio i had zero

housing you know voucher program housing

i had none of that i had no government

assisted housing none of it because the

market there was so much there that i

never needed to take any of that and

then it was looking at what we went

through in the pandemic it was

understanding what occurred and we still

only had two tenants that didn’t pay but

i said boy it really would be nice

if

50 of my nut can be covered with 25 of

my housing and it’s guaranteed money

that’s these guys are onto something

that’s something i need to do to start

to diversify which we actually haven’t

so i think we’re i think we’re at like

18 of our portfolio now is his assistant

yeah that’s awesome so in the end folks

reset again people hear me talk about a

recession that i’ve been calling for one

for a while they think i’m doom and

gloom i

i’m a realist i i’m not a you know to

the moon or diamond nonsense i’m like

hey i’ve been studying consumer for a

long time i think they’re about to

retreat from the market if they do that

will lead to a recession

and uh i’m excited i’m i’m excited

because again the hardest thing to do in

real estate is find a motivated seller

they only show up in a recession

so i’m excited any closing thoughts uh

dion will go to you first yeah let me

wrap up with

the person i’m most concerned about is

the person who relies on their income

from their job

if you have one source of income and it

is your w-2 job

we talk about making work optional so we

have income that comes from sources

where we don’t have to sell our life one

hour at a time because in a recession

what does that person do when nobody’s

buying

their life one hour at a time

you want multiple sources of income

coming in and that’s why in the one

rental at a time model the thing that i

really like is it’s not

don’t go buy a 60 unit apartment complex

because that’s in one area and if that

local market loses its economic drivers

and you don’t have tenants coming in

that’s a huge impact but what i like

about having one rental at a time and

duplex is i like to spread mine out i

only i only have seven properties but

they’re more than 10 miles apart close

to

boeing amazon a base a port a college a

hospital it’s like five or six

massive changes would have to happen to

impact my portfolio in a way that it

actually

hurt me because i think my balances are

around the same i think almost half of

our tenants would have to stop paying

rent

for us to have to figure out a way to

pay the mortgages right pretty close to

and that’s about where my average is

yeah um yep

and so i can’t stress the importance of

it in a booming market for the last

several years it’s been like you should

be getting on the property you know

ladder this is really important but when

we see things happen where companies

shut down or when a recession happens

and the jobs go away

people should have and should be getting

on the property ladder so that they have

income that doesn’t come from that w-2

well said matt any closing thoughts

can’t say it any better than that i

think that people need to be

you know mike you and i have spent the

last year dean you’ve got to do this man

mike and i spent the last year creating

cash

with the anticipation that we know

that

when that first shoe drops

we’re not gonna be able to get that cash

anymore

and you’re even if you pick up that

phone and you call today to refinance an

existing property you are at least six

weeks away if you’re not going in if

you’re not going non-qm if you’re going

traditional routes you’re at least six

weeks away if not eight

lucky you’ll be lucky if you lock in a

rate you’ll be lucky if they finish it

by the time the rate lock is done you’ll

be lucky if the appraiser at that point

isn’t even seeing some changes in the

market where now your numbers are going

to be adjusted

so the time to do it is when you don’t

need it

and i think largely that time has passed

i think there are a number of markets

where it hasn’t necessarily passed but

that’s why you have to be a good

business person and be able to at least

on some levels anticipate because i’m

going into this recession better

capitalized better percentage cash flow

than i ever have been so this is

something where even if we get hit with

war over in russia and all the craziness

that’s happening here it’s something

that i you know i believe will be in a

strong position to not only weather the

storm but be able to acquire from others

that weren’t positioned as well

yeah

dion would you like to respond or just

leave it there

i think that was a perfect summation

there you go well folks i got nothing

better to say again recessions are the

time to make some money take care of

your house first also remember your kids

are watching so if you want to stress

about money make sure they’re out of the

room because

you don’t want to have your kid your son

walk around the corner and see mom at

the kitchen table

weeping that was not a good memory in my

memory bank so uh folks take care uh the

three amigos will be back next thursday

bye

thanks

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