Economic Cycle – Is the Sky Falling?

Inflation. Increasing interest rates. Recession. Is the sky falling? While these terms might be scary, it is part of the “economic cycle”, and may in fact offer opportunities for the brave, and/or the thrifty.

It was inevitable that the housing price increases during the height of the pandemic could not be sustained long-term; we just did not know when the end was coming. Those of us who lived through the 1980’s real estate downturn have always been well aware that you might need patience to see a return on your real estate investment.

Understand Your Investment

When investing in anything, you need to understand the investment. As far as we know, there is no such thing as a low-risk, high-return investment. Generally speaking, the risk-return ratio generally means that with high returns, you generally see a higher degree of risk. While that can be great when the return pays off, you need to ensure that you will not be devastated (financially or emotionally) if the return does not pay off. This holds true even in real estate investing. Just because it has paid off for others, does not mean that it is a magic potion that guarantees you financial security.

Owning Real Estate

While owning real estate is, for many, a means of securing your future financial well -being, it is not necessarily the only way to do so. People who have been patient and prudent might find other opportunities, just as people did during the pandemic when it seemed like the world was ending.

People who have some equity and access to funds (and good credit) might be able to pick-up some good deals, both in the areas of real estate and corporate acquisitions. And, when looking at protecting your wealth, the importance of good estate planning cannot be underestimated.

Take a breath (while perhaps tightening your belt a bit) and hold on. Make sure you have the right team in place to help you navigate this new world. And remember, the only thing constant is change. We made it through the pandemic, and we will make it through this.