Conseils pour investir dans TOUT état des marchés | Investissement immobilier

Bienvenue au BigcastPockets Money Podcast Show numéro 70 où nous interviewons J Scott.

À un moment donné, nous allions entrer dans cette phase hivernale, cette phase de récession où tout le pays commençait à peine à se tasser, mais aucun d’entre nous ne peut vraiment prédire quand cela se produira. Ils ne peuvent pas prédire où cela va frapper en premier, quel marché cela affectera en premier, mais cela se produira à un moment donné au cours de la semaine, du mois ou de l’année à venir.

C’est le moment de créer un nouveau rêve américain, qui ne consiste pas à travailler dans une cabine pendant 40 ans à peine. Que vous cherchiez à mettre de l'ordre dans vos finances, à investir l'argent que vous avez déjà ou à découvrir de nouvelles voies pour créer de la richesse, vous êtes au bon endroit. Ce spectacle est pour quiconque a de l'argent ou en veut plus. C'est le podcast BiggerPockets Money.

Scott: Comment ça va tout le monde? Je suis Scott Trench. Je suis ici avec ma cohost Miss Mindy Jensen. Comment allez-vous aujourd'hui Mindy?

Mindy: Scott, je vais très bien. Il fait enfin chaud dehors dans le Colorado et le soleil brille comme toujours et c’est une belle journée. J'ai passé un excellent week-end. Et vous? Comment allez vous?

Scott: Je vais bien. J'ai utilisé mes récompenses de voyage pour mes premières vacances. C’est un petit voyage rapide à Portland, Oregon. Nous aurions pensé que nous n’y arriverions jamais pour un voyage de ce type, par exemple. Nous avons passé un merveilleux week-end et avons raté toute la pluie.

Mindy: Bien bien. C'est toujours bien quand on peut aller à Portland et ne pas frapper la pluie.

Scott: C'est vrai. Aujourd'hui, nous avons J Scott, qui est comme le maître de tout. Pensez finance d'entreprise et relation immobilière.

Mindy: Il est un peu intelligent à propos de tout.

Scott: Oui, il a de l’expérience dans les entreprises publiques. Je veux dire que nous avons entendu son histoire il y a quelques épisodes ici sur le podcast BiggerPockets Money en ce qui concerne l'argent, mais aujourd'hui, nous le discutons vraiment de votre connaissance des cycles de marché et de la façon de préparer un véritable portefeuille immobilier, mais avec le certains se sont certainement chevauchés dans d'autres types de portefeuilles pour une récession imminente. Nous allons parler de savoir comment définir les cycles du marché. Il n'y a pas de surprise.

Je pense que nous pouvons donner ceci dans l’introduction, car nous pensons que nous entrons dans un cycle de phase de marché intense et qu’une récession se profile à un moment ou à un autre. C’est ainsi que se passent les cycles économiques et comment en faire une bonne chose. Comment en faire une victoire pour vous et votre portefeuille et vous y préparer intelligemment.

Mindy: C’est juste parce que vous entrez dans la phase de pointe ou que nous sommes dans la phase de pointe. De toute évidence, vous ne pouvez pas chronométrer le marché. Vous savez que vous pouvez seulement regarder en arrière et voir où vous étiez, mais vous savez que nous ne savons pas où nous en sommes dans le cycle du marché. J nous donne plusieurs astuces sur la manière de visualiser un marché et d’obtenir des indices sur ce qui se passe autour de vous et sur la partie du cycle dans laquelle vous vous trouvez, mais il ne suffit pas d’investir dans les creux. Ce n’est pas seulement investir dans les hauts. Vous pouvez toujours prendre des décisions intelligentes et prendre des décisions dès maintenant en investissant, et vous savez que vers la fin de la série, il dit investir encore plus aujourd'hui que l'an dernier.

Scott: C'est vrai. Ce n'est certainement pas un, vous devez voir la sélectivité et vous savez, je pense qu'il utilise l'expression bunker down, mais c'est certainement comme, hé, voici un peu de bon sens, j'espère que lorsque nous vous les présenterons dans une émission, l'auditeur Je me rends compte qu'il existe de nombreux concepts et idées de bon sens que vous pouvez simplement commencer à appliquer et qui n'auront pas d'incidence négative sur votre structure de placement globale, mais qui pourraient vous préparer en cas de récession dans les deux prochaines années. Je crois que J est bien convaincu qu’il devrait rester dans les six à 15 prochains mois.

Mindy: Oui, et même si vous faites tout ce que J suggère, il n’ya aucun inconvénient à le faire. Il ne dit pas qu’il faut arrêter d’investir dans l’immobilier. Il dit, commencez à faire des estimations plus conservatrices. Estimez les coûts un peu plus élevés. Estimez un peu moins d'occupation. Estimez un peu moins de loyer et si vous vous trompez, si vous estimez 900 $ pour le loyer, mais vous obtenez à mille, quel est l’inconvénient? Oui, vous allez mieux.

Scott: Oui.

Mindy: Vous savez que la prudence dans vos chiffres est toujours un choix judicieux, même au milieu de la phase de croissance d'un cycle immobilier.

Scott: Si vous êtes un auditeur qui envisage de commencer à investir, à acheter sa première maison, son premier investissement immobilier ou autrement, faire cette première incursion dans le monde des investissements après avoir peut-être économisé, augmenté votre taux d'épargne et commencé à accumuler de l'argent. l'argent couvrira également quelques conseils et stratégies pour vous.

Mindy: C’est vrai, ce n’est pas réservé aux personnes qui sont actuellement sur le marché. Cet épisode est vraiment pour quiconque envisage d’acheter un bien locatif, d’acheter un investissement immobilier quel qu’il soit, dans les 18 prochains mois, dans deux ans.

Scott: Oui, je le pense

Mindy: 15 ans. Oui. Je veux dire que c’est juste. J investit dans l’immobilier depuis toujours et son regard sur le marché est si magistral. Voici comment vous pouvez vous préparer à tirer le meilleur parti possible, à vous placer au meilleur endroit possible pour ne pas perdre d’argent. Il ne garantit pas que vous ne perdrez pas d’argent, mais vous trouverez ici de très bons conseils pour faire des choix d’investissement judicieux.

Scott: Oui, j'adore. Bien devrions-nous le faire venir?

Mindy: Avant de le faire venir, écoutons une note du sponsor de l’émission d’aujourd’hui.

Ok Scott. Tout le monde vous connaît et j'aime l'immobilier. Comme si je regardais les maisons laides pour s'amuser, c'est bien. J'en ai vu un récemment avec des tapis au sol, des tapis aux murs, au plafond. Je pensais que cela aurait fait un très bon stand de podcast, mais regardez, je comprends. Tout le monde ne veut pas passer son temps à faire ça.

Voici la chose. Avec Roof Stock, vous pouvez investir dans l’immobilier sans vous salir les mains, sans traiter avec des locataires ni avec des entrepreneurs dirigeants. Roof Stock est le marché numéro un pour l'achat et la vente de maisons locatives unifamiliales. Je parle de logements locatifs aux États-Unis. Si vous souhaitez investir dans l’immobilier mais que votre marché local n’est pas à votre prix, consultez Roof Stock.

Ils vous connectent avec des gestionnaires immobiliers agréés et que toutes les propriétés bénéficient de la garantie Roof Stock, la plus performante du marché, vous permettant d'investir à distance en toute confiance. Pourquoi attendre plus longtemps pour commencer à créer un nouveau flux de revenus passifs. Cela pourrait être votre prochaine grande étape sur la voie de l'indépendance financière. Pour vous inscrire à un compte gratuit et commencer à parcourir les propriétés de location à flux monétaire, visitez RoofStock.com/BPMoney. C’est ROOFSTOCK / BPMoney.

Ok, merci au sponsor du show d’aujourd’hui. Faisons entrer J, allons-nous Scott?

Scott: Faisons le.

Mindy: J Scott. Bienvenue sur le podcast BiggerPockets Money ou je suis désolé. Bienvenue dans le podcast BiggerPockets Money. Comment vas-tu aujourd'hui?

J: Génial d'être ici. Merci Mindy. Comment ça va Scott?

Scott: La vie est belle. Bien heureux de vous revoir.

J: Excellent.

Mindy: J est notre premier client régulier, notre premier client régulier, alors merci beaucoup de votre visite. Pour rafraîchir la mémoire de nos auditeurs, J a été invité à plusieurs reprises sur le podcast BiggerPockets Real Estate. Il a écrit quatre livres pour nous, J?

J: Quatre livres.

Mindy: Est-ce correct? Pour BiggerPockets Publishing, il a été présenté à l'épisode 43 de ce très podcast Money Money, disponible à l'adresse BiggerPockets.com/MoneyShow43. Aujourd’hui, nous allons parler d’investissements immobiliers parce que c’est une sorte de spécialité de J. Nous avons déjà entendu son récit d’argent, ce qui était génial. C’était très intéressant d’entendre cela parce que j’avais déjà entendu votre histoire d’investisseurs immobiliers, mais je n’avais pas entendu votre histoire d’argent et c’était très amusant à entendre.

Aujourd’hui, nous allons parler d’investissements immobiliers et vous devriez commencer dès maintenant. Le marché est vraiment chaud et cela fait très longtemps que nous commençons à voir des marchés un peu en train de se ramollir un peu, ce qui laisse supposer qu'il pourrait y avoir un crash et vous savez que vous pouvez le faire il? Savez-vous s'il y a un crash qui arrive J?

J: Personne ne sait s'il y a un crash et si je suis assez intelligent, je ne suis certainement pas assez intelligent pour prédire si un crash se produira et quand, mais il y a des choses que nous savons, donc la bonne chose à propos de notre économie est dans ceci Notre pays possède quelques centaines d’années de données et d’expérience, ce qui nous permet de savoir ce qui s’est passé ces 200 dernières années. Nous avons gardé de bons dossiers et il y a beaucoup de ce que nous appelons des cycles. Je veux dire que tout le monde connaît les cycles. Il y a beaucoup de cycles en ce qui concerne l'économie.

Si vous regardez quelques centaines d'années en arrière, vous pouvez voir qu'il y a certaines choses qui se sont produites à maintes reprises. Cela ne devrait pas surprendre les gens que notre économie fonctionne de manière cyclique. Il monte, descend, et en réalité, au cours des cent soixante dernières années, nous avons assisté à 33 cycles économiques. Là où le marché a grimpé, il a culminé, puis baissé, puis remonté.

Nous avons environ 33, essentiellement 33 études de cas sur la nature de ces cycles. Si nous remontons au cours des 33 derniers cycles, nous commençons à voir certaines tendances et certaines choses émergent et sur la base de ces tendances, en fonction de ce qui s’est passé dans le passé, nous pouvons quelque peu prédire ce qui va se passer dans le futur. Personne n'a une boule de cristal. Le prochain pourrait être beaucoup plus gros que ce que nous avons vu dans le passé. Il pourrait être moins important que la récession ou le ralentissement habituel, mais nous savons que, étant donné la nature cyclique de l’économie, compte tenu des tendances observées au cours des cent soixante dernières années, nous savons qu’à un moment donné probablement l'avenir, nous allons voir une récession dans le cycle.

Mindy: J'aime que vous disiez que vous ne pouviez pas le prédire, car je vois toutes ces personnes en particulier dans les forums BiggerPockets. Ooh il y a un crash qui arrive? Oui, ça va arriver le 14 mars. Comme vous ne le pouvez pas, vous ne pouvez pas le prédire et même quand cela se produit, ce n’est pas comme si tout se passait bien et que cela heurterait un mur de briques.

Scott: Oui.

Mindy: Il commence par ralentir d’abord, puis de plus en plus lentement, puis de plus en plus lentement. Cette citation n’attend pas pour acheter de l’immobilier, mais aussi pour l’immobilier en attente.

Scott: Absolument. Oui.

Mindy: J'aime cette citation. C’est l’un de mes préférés.

Scott: J'aime dire aux gens que si quelqu'un dit qu'ils savent ce qui va se passer et que, lorsqu'il est question d'économie, l'une des deux choses est vraie. Soit ils ne savent pas assez ou ils essaient de vous vendre quelque chose. Attends le pitch. Voyez ce qu’ils essaient de vous vendre.

Les meilleurs économistes du monde entier vous diront que, s’il ya beaucoup de données intéressantes, il est très difficile d’essayer de retarder l’économie sur une semaine, un mois ou même quelques mois. Je veux dire, revenons aux années 2001 et 2008. C’était les deux récessions. Ce sont les deux dernières récessions, mais elles se sont produites très différemment.

En 2001, nous avons en quelque sorte atteint le sommet du marché vers 2001 et nous sommes remontés au sommet pendant six ou huit mois, puis nous avons eu tendance à baisser légèrement et nous avons connu une année 2008 où nous nous sommes précipités au sommet et où nous en sommes. le sommet du marché pendant un mois ou deux ou trois, puis tout est tombé en panne du jour au lendemain. C'était vraiment, c'était une sensation très différente entre ces deux récessions. Si vous revenez sur les 33 derniers cycles, chaque récession se sent différente. Chaque récession est déclenchée par quelque chose de différent.

Il y a beaucoup de points communs, mais il y a aussi beaucoup de choses très différentes. Je veux dire que 2008 a été un crash immobilier. 2001 était une bulle technologique. Je veux dire que nous nous souvenons tous de l'essor du .com si nous étions au moins adolescents à l'époque. Si vous remontez plus loin à la fin des années 80, nous avons eu la crise de l’épargne et des prêts et vous remontez aux années 70. C’était une feuille qui bouillonnait et chaque récession a ses propres facteurs qui la précipitent, mais en même temps, il ya Beaucoup de points communs et beaucoup de choses que nous voyons sont les mêmes d’une récession à l’autre.

Scott: Quels sont certains de ces points communs pour ceux qui n’ont pas encore eu la chance de revenir sur le sujet?

J: Bien sûr, mais laissez-moi commencer par quelque chose qui, je pense, inquiète beaucoup de gens. J'aime utiliser l'analogie avec l'économie au fil des saisons. Nous pouvons penser que votre économie est en train de monter. Nous avons atteint un sommet et nous avons en quelque sorte baissé.

Nous avons atteint un creux puis nous avons remonté. J'aime penser à cela qui monte la phase. Les économistes appellent souvent cela la phase d'expansion de l'économie. C’est un peu comme l’été.

À votre réveil, un matin, c’est l’été et vous n’allez pas vérifier le temps pour savoir si vous devriez porter un short ou un pull. Nous savons que c’est l’été. Chaque jour sera très agréable. Nous allons à où court la plupart des jours.

Nous allons porter des chemises à manches courtes presque tous les jours. Peu importe où vous vous trouvez dans le pays et que vous soyez à Seattle ou à Tampa. Ce sera une belle journée. Maintenant, il va certainement pleuvoir un jour. Il pourrait y avoir du vent un autre jour.

C’est la même chose dans l’expansion de l’économie. Chaque jour est un peu pareil. Les choses vont mieux. Le chômage diminue.

Le PIB que nous appelons le produit intérieur brut avec la production totale de notre économie est en hausse. Le marché du logement est fort et peu importe où vous vous trouvez dans le pays. Peu importe le jour. Au cours d'une expansion, chaque journée est une bonne journée. Ensuite, vous arrivez au sommet, puis vous descendez de l'autre côté et vous arrivez à cette phase de récession.

En période de récession, un peu comme l’hiver, il n’est pas nécessaire de consulter la météo lorsque vous vous réveillez le matin. Vous savez qu'il va faire froid dehors. Vous savez que vous allez probablement porter un pantalon long et une veste et, encore une fois, peu importe où vous vous trouvez dans le pays. En général, les températures seront beaucoup plus froides qu'en été.

L'expansion est un peu comme l'été. La récession est un peu comme l’hiver, puis nous avons le haut et le bas et c’est le sommet du marché ou le creux du marché et c’est là que se passent les choses intéressantes. C’est un peu comme l’automne et le printemps. Maintenant, nous savons tous que nous nous réveillerons à l’automne si nous nous levons en octobre, septembre, octobre, nous devons vérifier le temps, car nous ne savons pas si il va neiger ou si il fera 75 et ensoleillé. Si vous êtes à Buffalo, vous pourriez avoir un pied de neige.

Si vous êtes à San Diego, vous pourrez passer une belle journée à la plage et c’est ainsi que les hauts et les bas du marché sont des endroits où chaque jour sera un peu différent. Vous aurez peut-être des chiffres sur le chômage le mois prochain et ils sont vraiment bons. Ils sont toujours vraiment bons, mais ensuite le mois après le chômage augmente, mais ensuite le mois suivant, il baisse à nouveau et nous commençons à voir des choses étranges se produire et nous ne pouvons pas vraiment prédire ce qui va se passer au jour le jour. ou d'un mois à l'autre et nous ne pouvons pas non plus prédire ce qui va se passer sur tous les marchés. Certains marchés vont rester solides au sommet de l’économie.

Certains marchés vont commencer à s’affaiblir et à devenir vraiment plus faibles au sommet de l’économie. Si je parle à quelqu'un, je vis actuellement en dehors de Washington. Si je parle à quelqu'un à Seattle, il va me dire qu’il assiste à un assouplissement du marché du logement. Pour ma part, notre marché continue de prospérer.

Nous voyons des jours inférieurs sur le marché. Les choses se vendent à des prix plus élevés, c’est pourquoi ce décalage existe au sommet du marché, à la fois entre ce qui se passe au jour le jour et ce qui se passe sur différents marchés. À l’heure actuelle, nous sommes au sommet du marché. Beaucoup d'économistes, je ne peux pas le garantir, mais je pense que la plupart des économistes sont d'accord avec le fait que la plupart des Américains accordaient une grande attention à l'idée que lorsque vous êtes au sommet du marché, cela signifie que chaque jour sera un peu Un peu différent.

Nous aurons peut-être de bonnes nouvelles économiques demain, de mauvaises nouvelles la semaine prochaine, encore une bonne nouvelle le mois prochain et nous allons rebondir là-dessus là où les choses vont de bien en mal et de mal en bien peut-être pour la semaine prochaine, peut-être pour le mois prochain. Peut-être pour l’année prochaine, mais à un moment donné, nous allons entrer dans cette phase hivernale, cette phase de récession où tout le pays commence à se tasser, mais aucun d’entre nous ne peut vraiment prédire quand cela se produira. Ils ne peuvent pas prédire où cela va frapper en premier, quel marché cela affectera en premier, mais cela se produira à un moment donné au cours de la semaine, du mois ou de l’année à venir.

Scott: Quels sont certains de ces indicateurs qui permettent de dire que beaucoup d’experts disent que nous sommes au sommet de la phase en ce moment.

J: Oui, il y a généralement trois aspects que j'aime examiner. Tout d’abord, il ya le facteur timing et j’ai parlé du fait que nous avons eu 33 de ces cycles au cours des cent soixante dernières années. Si vous examinez ces cycles, vous constaterez qu’il s’agit en moyenne d’une période allant du sommet du marché au sommet suivant du marché jusqu’au prochain sommet du marché. En règle générale, c’est quelque part dans le taux de cinq ans et demi à huit ans.

Si vous remontez cent soixante ans en arrière, nous avons en moyenne six, six ans et demi, pour chaque cycle, donc en général, lorsque nous entrons dans ce cycle de six ans, de sept ans, les économistes commencent à penser ok commençons à penser à regarder les données et à voir si les choses changent. À l’heure actuelle, nous avons 11 ans de cycle. C'est le cycle le plus long de l'histoire et nous pouvons en parler si vous voulez que la cause du cycle soit un peu différente des cycles précédents, mais le fait est que nous sommes sur 11 ans dans un cycle qui dure généralement six ou six ans. ans et demi. Du point de vue du calendrier, nous devrions faire face à un ralentissement dans un proche avenir.

Le deuxième morceau est l'observation. Vous allez regarder autour de vous et les choses commencent à se sentir un peu différentes. Je veux dire, tout le monde se souvient de 2014-2015 – 16 surtout si vous êtes un investisseur immobilier où le marché était très actif. Chaque jour du marché était en hausse. Vous mettez quelque chose sur le marché et il se vend en une journée.

Vous achetez quelque chose en septembre à un prix, vous le proposez pour le revendre en décembre et c’est 20 $, 30 $ ou 50 000 $ plus cher. De nos jours et encore pas tous les marchés, mais ces jours-ci dans beaucoup de marchés nous ne voyons plus cela. Nous voyons des maisons qui restent un peu plus longtemps, des prix qui stagnent dans certaines régions comme Seattle et San Francisco. Nous constatons des baisses de prix de 20% à 25%, ce qui est assez significatif.

Nous commençons à voir et à ressentir des choses différentes. La confiance des consommateurs est donc un indicateur de la confiance des consommateurs dans l’économie. Au cours des deux derniers mois, les consommateurs sont un peu moins confiants qu’ils ne l’ont été ces dernières années. Au jour le jour, par exemple, combien les gens sont-ils prêts à dépenser pour des choses telles que des voitures neuves, une hypothèque ou des vêtements, et ce que nous constatons, c’est que les gens dépensent moins. D'un point de vue observationnel, les choses se sentent un peu différentes maintenant qu'il y a trois, quatre ou cinq ans, alors que tout le monde était vraiment excité par la situation économique difficile et que les gens n'avaient pas de problème à dépenser de l'argent. Le deuxième morceau est l'observation.

Le troisième élément concerne les données économiques elles-mêmes. Les données réelles, les mesures quantitatives et c’est la partie la plus intéressante, car pour beaucoup d’entre nous qui étudions l’économie, ce sont les données qui nous intéressent vraiment. Il y a beaucoup d'indicateurs économiques qui tendent à être de bons prédicteurs de notre situation dans le cycle du marché. Nous parlons de ce qu’on appelle la courbe des noeuds et quiconque a prêté l’attention au cours des dernières semaines ou des derniers mois a probablement entendu parler de cette courbe. Je n’entrerai pas dans les détails, mais le gouvernement vend des obligations pour collecter de l’argent.

Ils paient des intérêts aux personnes qui achètent ces obligations. Vous pouvez acheter des obligations qui expirent dans une courte période ou dans une longue période, en fonction de la durée pendant laquelle vous souhaitez les conserver et généralement si vous achetez une obligation qui expire dans une courte période, elle ne rapporte que peu d'intérêts. . Vous achetez une obligation qui expire après une longue période de temps et qui rapporte plus d'intérêts. Si vous regardez un graphique de l'intérêt que ces obligations paient, nous voyons un graphique qui ressemble à ça.

Il commence bas en bas à gauche, les périodes d'expiration courtes et il monte haut à droite aux périodes d'expiration longues. C’est une bonne chose que nous appelons une courbe de rendement. Maintenant, lorsque les investisseurs commencent à être nerveux, ils commencent à vendre certains types d’obligations et achètent d’autres types d’obligations. Ce que nous constatons, c’est la courbe qui va de bas en haut à droite, comme nous le voyons dans une économie saine. cette courbe aplatit. Cet aplanissement de la courbe est simplement une indication que les investisseurs deviennent nerveux, les gros investisseurs, les fonds de couverture, voire même d'autres pays. La Chine achète donc une grande partie de nos bons du Trésor et le Japon en achète beaucoup. La Russie achète une grande partie de ses bons du Trésor et quand elle commence à être nerveuse à propos de ce qui se passe dans notre économie ou dans l’économie mondiale, elle fait des choses qui créent cette courbe, la courbe des taux d’intérêt s’aplatissant pour les obligations.

Au cours des derniers mois, nous avons commencé à constater un aplatissement de la courbe des taux d’intérêt. C’est un facteur prédictif de la tension sur le marché qui fait que certains investisseurs commencent à devenir nerveux. Ensuite, finalement, ce que nous avons tendance à voir est ce que nous appelons une inversion dans cette courbe où les obligations à très court terme et les obligations à très long terme paient des taux d’intérêt plus élevés ici et où les obligations à échéance moyenne paient des taux d’intérêt de bas ici. Nous voyons la forme de tasse peu profonde et nous appelons cela une inversion.

Historiquement, lorsque cette courbe de rendement, lorsque cette courbe des taux d’intérêt est inversée, c’est le meilleur prédicteur d’une récession imminente. En règle générale, vous verrez une récession dans les six à 15 mois suivant l’inversion de cette courbe. . Nous avons constaté une très légère inversion de cette courbe à la fin décembre, puis une inversion majeure la semaine dernière. Quand je dis la semaine dernière, nous enregistrons ceci début avril, alors il y a quelques semaines probablement pour ceux qui écoutent, nous avons assisté à une grande inversion de cette courbe. Si vous regardez cela, c’est un indicateur, pour beaucoup d’économistes et de nombreuses personnes qui suivent l’économie, que nous pourrions être dans les six à 15 mois d’une récession.

C’est une chose et je suis désolé d’avoir si longtemps insisté là-dessus, mais c’est un problème important et beaucoup de gens en parlent. C’est un très bon prédicteur. Ensuite, nous pouvons envisager des problèmes tels que le chômage, de sorte que le chômage a tendance à diminuer grâce à une économie forte au cours de l’expansion, puis nous arrivons finalement au point où nous appelons le plein emploi. En gros, la plupart des personnes à la recherche d’un emploi ont un emploi et nous l’avons frappé il ya environ un an. C’est là que je suis à 4% de chômage, nous sommes tombés à environ 3,6% de chômage.

Ce que nous constatons généralement, c’est que lorsque nous avons atteint ce chiffre du plein emploi, environ 4% dans environ un an, nous commençons à voir l’emploi augmenter, ce qui entraîne une récession. Il ya plusieurs raisons à cela dans lesquelles je ne vais pas me lancer, mais le chômage, ce chiffre d’environ 4% de plein emploi, est un bon indicateur d’une récession imminente. PIB, produit intérieur brut, qui correspond à la production totale de toutes les entreprises de ce pays. Ce que nous avons tendance à voir, c'est que le PIB va augmenter.

L’économie devient forte et nous verrons ensuite la production des entreprises de ce pays chuter. Depuis l'été dernier, le PIB a culminé à 4%, ce qui signifie que l'économie croît de 4% par trimestre. Au troisième trimestre, nous avons enregistré une croissance de 3,2%. Au quatrième trimestre, nous avons enregistré une croissance de 2,2%. Nous commençons à assister à un ralentissement de la croissance économique.

Maintenant, que cela devienne négatif ou non, quand on le fait pour deux trimestres consécutifs, on appelle cela une récession. Nous ne l'avons pas encore vu devenir négatif, nous ne sommes donc pas prêts à dire: nous sommes en récession, mais nous observons cette tendance, ce qui signifie que nous pourrions voir un ou deux trimestres ou quatre trimestres une récession. Vous ajoutez cela à de nombreux autres indicateurs. Des choses comme les autres ventes sont en baisse et les gens vont commencer à devenir moins confiants sur l'économie.

Ils ne font pas d’achats importants comme des maisons et des voitures. Le marché de l’habitation a ralenti d’un bout à l’autre du pays, de sorte que nous constatons bon nombre de ces indicateurs économiques qui nous disent en gros que nous ralentissons. Nous sommes probablement au sommet du marché et à nouveau dans le futur, que ce soit une semaine, un mois, une année. Dans un proche avenir, nous allons commencer à constater cette tendance.

Mindy: Ok, eh bien je ne peux pas vraiment discuter avec le timing et je ne veux pas discuter avec vous.

Scott: Oh non s'il vous plaît, disputez.

Mindy: Cette courbe de rendement. Vous vous trompez. Non, la courbe de rendement a été l’une des meilleures explications que j’ai entendu parler de la courbe. Je vous en remercie, car j’ai bien compris ce terme et vous savez que je le comprends un peu et que je le comprends maintenant beaucoup plus. Je ne fais pas beaucoup d’investissements obligataires ni d’investissements obligataires, mais c’est vrai que ce n’est ni ici ni là-bas.

Je ne les recommande pas. Je ne les recommande pas du tout. Prenez vos propres décisions, mais au moment opportun, nous en sommes à 11 ans et c’est énorme, car je veux dire trois ans de plus que le sommet le plus élevé de la fourchette habituelle des cinq à huit ans. Que vous ne pouvez pas discuter avec ça. L'observation, la chose se sent différente.

La maison ne se vend pas instantanément. Je voudrais vous demander votre opinion là-dessus car sur mon marché, il y a environ trois femmes qui répertorient 97% des maisons et je viens de voir une liste qui est apparue l'autre jour. Il est venu sur le marché sous contrat, ce qui est intéressant. Cela signifie qu'ils avaient une liste de poche puis ils la mettaient automatiquement sur le marché de toute façon ou cela faisait peut-être partie de leur plan de marketing, peu importe, mais ils avaient déjà un acheteur lors de sa mise sur le marché. Elle a énuméré ceci. Je pensais que c’était une maison de 450, 500 si vous voulez vraiment pousser et elle l’a énumérée à 672.

J: Sensationnel.

Mindy: Pensez-vous que certaines de ces baisses de prix sont simplement dues à des agents immobiliers trop exubérants essayant de pousser le marché ou à être très agressifs en matière de prix ou pensez-vous que c'est davantage une condition du marché?

J: Oui, alors rappelez-vous que lorsque nous pensons être au sommet du marché, nous allons voir des choses très différentes selon les marchés. Encore une fois, celui que vous venez de décrire sur votre marché, je suppose autour de Denver n'est pas inhabituel voyez ici où je suis sur le marché DC. Je veux dire que les choses sont toujours très fortes ici. Je suis allé en Floride pendant les vacances d'hiver avec ma femme et nous avons examiné certaines maisons là-bas. Cela ressemblait beaucoup à 2008 dans certaines parties du marché de la Floride. Il y avait des rues avec une douzaine de maisons à vendre et elles ne bougeaient pas.

Les jours sur le marché ont duré plusieurs semaines ou mois, de sorte que certains segments du marché étaient encore forts. Comme les maisons à prix moyen, mais vous entrez dans les maisons haut de gamme et c’est une chose que nous voyons généralement vers le haut du marché, c’est que les maisons haut de gamme, les maisons qui dépassent largement les prix moyens sont celles qui ont tendance à ralentissez d'abord. Il n’est pas rare de voir des ralentissements dans des endroits où les marchés sont très chers, comme New York, San Francisco, Seattle, voire même Denver, qui se situe dans la catégorie supérieure du marché. Nous commençons à voir beaucoup de choses maintenant où nous ne voyons tout simplement pas autant d’acheteurs. Il pourrait certainement y avoir d'autres éléments en jeu: les taux d'intérêt sont en légère hausse, les stocks sont insuffisants, etc., mais vous ne pouvez pas nier qu'il y a moins d'acheteurs dans le haut de gamme en ce moment et fonction des gens sont plus conservateurs.

Oui, il y a d'autres choses en jeu et il y a certainement des choses comme l'observation, vous ne savez jamais si ce que vous observez est vrai. Vous savez à quel moment votre rue, votre bloc ou votre ville s’applique dans l’ensemble du pays. On ne sait jamais, mais lorsque vous comparez les données d’observation que beaucoup de gens obtiennent actuellement avec les données quantitatives réelles, les données économiques, nous constatons que ce n’est pas seulement l’observation d’une, deux ou trois personnes. Il existe vraiment des données économiques qui corroborent ces observations que nous constatons sur de nombreux marchés.

Encore une fois, rappelez-vous que lorsque vous êtes au sommet du marché, vous êtes comme à l’automne. Quelqu'un pourrait marcher dehors et vous le montrer à la plage tandis que quelqu'un d'autre dans un pays différent pourrait marcher dehors et ils marchent dans un pied de neige. On dirait que vous êtes sur la plage à Denver. Je suis sur la plage ici à Washington, mais j’ai des amis en Floride, à San Francisco et à Seattle qui ont l’impression de marcher dans la neige tous les jours en ce qui concerne le marché du logement.

Mindy: J’étais en Floride et ils ne se sentent pas comme en été en ce moment.

J: C'est vrai.

Mindy: C’est 150 là-bas.

J: C'est vrai.

Mindy: Bon alors, comment quelqu'un qui envisage de se lancer sur le marché immobilier peut-il investir avec confiance? Parce que clairement le ciel va tomber et tout va s'effondrer.

J: Bon alors.

Mindy: Je suis juste que je suis en train d'attaquer.

J: Oui bien sûr. Non, alors peut-être que le ciel va tomber. Je ne sais pas. Encore une fois, je ne vais pas essayer de le prédire, mais si vous regardez simplement les données historiques. Si vous regardez les 33 derniers cycles, je pense que beaucoup de gens sont en quelque sorte bloqués dans ce que nous avons vu en 2008 et c’est ce qu’ils pensent de la récession parce que c’est ce que les gens ont tendance à se rappeler de ce qui s’est passé récemment.

En 2008, c'était une anomalie. Nous n’avons rien vu de comparable à 2008 depuis les années 1930, la Grande Dépression. C’était littéralement la pire récession que nous ayons connue depuis 90 ans, donc 2008 n’est pas la norme à laquelle nous devrions penser. Je ne dis pas que 2008 ne se reproduira plus. Peut-être que ça va. Peut-être que les années 1930 vont se reproduire.

Maybe worse the 1930s will happen again. C'est possible. Again I’m not going to try and predict, but if you look at the data, which is most likely to happen is not 2008. What’s most likely to happen is what we saw in 2001 or what we saw in the late 80s where we do get to a top and we do see a trend down and unemployment jumps to 5% or 6% across the country and days will market for houses, jumps from three months to eight months and we do see some suffering and people losing jobs and wages going down.

That’s likely to happen, but it’s unlikely that we’re going to see what happened in 2008 again just statistically speaking. It’s unlikely that unemployment is going to drop to 12% or 15%. It’s unlikely that days will market for houses are going to drop to a year and a half and we’re going to see as many foreclosures as we did and people are going to be losing jobs and people are going to be going bankrupt left and right. That hopefully was an anomaly.

When we talk about a recession, don’t think 2008. If you remember back think 2001. If you don’t remember 2001 think about a really toned down version of 2008 and when you think in those terms and when you look historically it’s really easy to support the fact that there’s really never a bad time to be buying real estate. Now if you knew for a fact that 2008 was coming again in the 1930s we’re coming again I’d say don’t buy.

Again, that’s unlikely. If you look back at 2001 and the early 90s, the late 80s, the mid-70s that was still a good time to buy real estate assuming you were following certain rules and were just investing intelligently and were being conservative. It’s always a good time to buy real estate. That’s the nice thing about real estate. As long as you’re being smart about it and as long as you’re setting rules for yourself that kind of limit your risk, limit your worst case scenario. It generally is not a bad time to be buying.

Scott: In your book, the recession proof real estate investing you know there’s a lot of really good tips in there for how a real estate investor should react and think about things at various times in the market cycle so for example there’s a bunch of tips on here’s exactly how to maybe start thinking about things if you do think that we’re in the peak phase of preparing your business. I was wondering if we could go through an exercise where we put ourselves in the shoes of someone who is new to real estate investing.

J: Certainly.

Scott: Suppose that we’re all new investors. We’re all making a $50-$60,000 a year household income. We’re saving up our first pile of money and we’re thinking about maybe like a house hack you know as our first major investment. We don’t really have that much in there. How does that thought process get affected by the potential of being in the peak phase of the market?

J: Oui. The first thing I’ll say is whether you plan to buy real estate this year or next year or the year after or whether you plan to wait a few months or a year or two. It’s always a good time regardless of what your plans are to start learning and so I tell people now. I have people come up to me and say well I’m just not comfortable investing in this market. I’m going to wait until the downturn hits I’m going to do what everybody did after 2008 and buy up all the foreclosures really cheap. What I say to them is great. If that’s what you want to do that’s perfectly fine strategy. You may not find that what happened after 2008 happens after this month, but if that’s what you want to do fine, but don’t wait until the equivalent of 2009 or ‘10 to start studying and being prepared. Now is a great time.

If you know you’re going to start buying in a year or two now is a great time to basically spend the next year or two learning the business. Learn the different types of investing. Learn how to estimate rehab costs. Learn how to estimate the value of a house or to comp a house. Learn the different types of sales and the different marketing strategies. Learn how direct mail works.

Learn how the MLS works and learn how bandit signs work. Jump on BiggerPockets. This is what I tell people. Jump on BiggerPockets.

If you know you’re not going to be investing for a year, that’s awesome. You have a year to read through hundreds of thousands of threads on BiggerPockets. Watch 300 real estate podcasts and 80 Money Podcasts and basically learn about real estate investing so that when the day comes that you’re ready to actually jump in, you’re prepared. Let’s pretend even if you don’t want to invest right now it doesn’t mean you shouldn’t start preparing right now.

Now is the time. It’s always the time, but now is a great time to start preparing. Next, I tell people let’s say you don’t know if you want to invest. Well now is a great opportunity to start preparing and start making offers. It’s possible that you won’t find a good deal for a month or six months or a year.

C'est bon. Start making offers. Start getting out there and trying real estate and if you don’t get an offer accepted for six months or a year, great. In a year when you start getting offers accepted, you have a year of experience of making offers and again comping houses and estimating rehab costs so there’s no harm, there’s no risk in making offers, and seeing what happens.

Now maybe you’ll get lucky and you’ll get a great deal. You can buy that first deal now at the top of the market. Maybe you’ll find five great deals and you can buy five great deals now on top of the market. Again, there’s no risk in making offers. There’s no risk in getting experience and getting practice doing all of the things that you’re eventually going to want to be doing a whole lot more of.

Scott: Okay so the two, the big piece there is basically just get comfortable with investing and then do what you would do basically any cycle, which is make an offer at the price that would make sense for you at that point. If it doesn’t happen, it doesn’t happen. If it does it does. You can just kind of apply the strategy across all investment cycles. Is that right?

J: Absolutely, you shouldn’t be changing. What’s going to change is the number of your offers that get accepted potentially. Maybe you’re going to be more conservative in the offers that you make, but essentially as we as real estate investors are doing the same thing that we’ve always done we’re just going to get different results at this point of the cycle. That said, in the book I characterize four phases of the cycle. I talk about four different phases of the cycle. In each phase of the cycle I think of three things.

I think of what are the strategies and tactics that are working in that phase of the cycle to first is how to identify that you’re in that phase of the cycle. That’s the most important thing. If you’re doing the strategies and tactics for one phase of the cycle, but you’re actually in a different phase that’s going to be a problem so the first thing is identifying which phase of the cycle you’re in right now. Two is identifying which strategies and tactics are most likely to do two things.

One grow your profits or ensure that you continue to make profits and two, decrease your risk because ultimately that’s the two things we want to do as real estate investors. We want to make money and we want to do it as little risk as possible. Again, the first thing is figure out what phase of the cycle you’re in. Second thing is figure out the strategies and tactics to kind of optimize your business for that part of the cycle and then the third thing and this is the thing that I think a lot of people don’t think about enough is how do you prepare for the next phase of the cycle?

Whether it’s a month out or a year out or two years out. What should you be doing now to prepare for the next phase of the cycle? If you’re jumping into real estate investing now there are certainly strategies and tactics that you can use to kind of optimize your real estate business, minimize your risks, but what I would tell people who are jumping in right now the most important thing to do is one get educated like I talked about before, but two do to things that you need to do to prepare for the next phase. The next phase being the recession phase and there are number of things that anybody can do whether you’re investing are not investing there are a number of things you can do right now to prepare for the next phase of the cycle.

Scott: Merci.

J: I guess you’re going to end up.

Scott: Yes, we know what questions.

J: You guess the next question.

Scott: Oui.

Mindy: Wait, wait, wait, wait, this isn’t your show. This is our show.

Scott: Oh pardon. I’m sorry.

Mindy: J.

J: Oui.

Mindy: What is the next phase of the cycle?

J: The next phase of the cycle is the recession phase.

Mindy: J what should people to be doing in this phase to prepare for the next phase?

J: That is a great question.

Scott: You really walked in to that one.

Mindy: Je vous remercie. I am a professional here.

J: Yes you are. Yes so here’s what I’m recommending to everybody that wants to be selling real estate or investing in real estate in the next phase of the cycle. The next phase being the recession phase. Again, I don’t know if the recession is coming. You know a week, a month, a year, but here are the things you can be doing now to prepare for when it does come.

The first thing I’d like to tell people is start hoarding cash so everybody has heard the phrase cash is king. That is especially true during the recession phase of the cycle whether you’re investing in real estate or anything else. The big reason for that is that when it comes to investing a lot of times we are reliant on financing. We’re reliant on other people lending us money. Most of us don’t have enough cash to just by all of the deals we want to buy out right.

We borrow money. During a recession lending gets really tight and I tell people who weren’t investing back in 2008- ‘09- ‘10 about this and they don’t really get it. If you weren’t investing back in 2008- ‘09 or ‘10 you don’t get how tight lending becomes. How difficult it can become to get a loan. Regular banks don’t want to make loans. Portfolio banks or small banks that lend to investors they don’t want to make loans.

A lot of people rely on private money so loans from family and friends and other professionals. People don’t want to lend money to real estate investors during a recession. They’re terrified of losing money so they’re putting their money in CDs. They’re putting their money in savings accounts and so the people that are the private investors that are lending money now when the market turns they’re not going to be lending any money. Hard money lenders start to go away and those that are left are charging 15% -16% -18% interest rates so hard money becomes much more expensive so the best way to combat the tightening of lending will be in the next phase is to have as much cash available as possible.

Scott: Oui.

Mindy: Okay so I want to jump in here. I get this question a lot. Oh I’m saving up for my home purchase. Where should I put my money? Oh you should put it in the stock market isn’t really necessarily the best choice because as the housing market goes down and the economy goes down so does the stock market and so the $10,000 that you put in there it is now $8,000 or $2,000 or whatever it is. Where are you hoarding this cash?

Scott: Yes so first of all I’m not telling people what to do with their money. I don’t always. Again I don’t have a crystal ball. I may have told people back in a year ago to take their money out of the stock market and put it some place safer and the stock market’s gone from $22,000 to $26,000 and now they’ve lost money because they took my advice. I’m not saying don’t put your money in the stock market, but that said during the peak phase, going into the recession phase the stock market’s going to be more volatile.

That’s actually one of the economic indicators we use to predict that we’re heading into the recession phase there’s this—a stock thing called the VIX and it’s basically a volatility index. That’s what VIX stands for, volatility index and it measures the volatility because volatility of the stock market and as we get into the peak phase and then head down towards the recession phase we start to see a lot more volatility with the stock market. There’s a lot more risk of having your money in the stock market. Sure you might the market might go up to $30,000 from here. You might make more money.

It might drop to $20,000. You might lose money. I don’t know, but what I will say is that we’re going to see some more volatility in the market as we get closer to the recession. What I typically recommend for anybody that doesn’t like that volatility for anybody that’s saving money and they don’t want to risk losing that money put it in something that’s federally insured.

Put it in a CD. Put it in I wouldn’t recommend a money market. I like CDs because CDs will pay a little bit more than a savings account, but pay a little bit more than the money market. It’s federally insured. Sometimes you have to keep your money in for three or six or 12 months to get the full interest payments on it.

That’s going to be the most secured place to put it. Now if you are an experienced real estate investor and you really know real estate what I’m telling a lot of experienced real estate investors who have cash is use that money to lend to buy and hold investors. Use that money to lend people that are doing the BRRRR strategy because buy-and-hold is a relatively low risk strategy at this point in the market cycle. Even going into the recession buy and hold is a relatively low risk strategy when you’re conservative when you’re buying things at good prices.

You’re not over leveraging because worst-case if the market drops, lending gets tight and the investor that’s doing the BRRRR strategy can’t do the refinance piece. At least they’re still generating cash flow every month on that investment. If you’ve lent them money, if you lent money to a flipper and the market drops out from under them they may have to go into foreclosure. They’re not getting money from anywhere to pay you. The buy and hold investor is renting out their property so even if your loan comes due and they can’t pay it off.

They can’t refinance, they may still be able to repay you every month for the next two or three or five years until they’re in a better position. A relatively low risk strategy for your cash right now and again you do run the risk of it being tied up for a while, but a relatively low risk strategy for generating good returns on cash right now is to lend to buy and hold investors. That’s actually what I do with a lot of my cash rate and charging eight-nine-10-11% interest so I’m making a good return on that money. It’s relatively low risk. If they can’t refinance I just extend the loan five years and they keep paying me that eight-nine-10-11% interest so for those who don’t have that investing experience, but are saving up I’d probably recommend CDs for those that do have the investing experience I’d probably recommend lending to buy and hold investors. For those people who have a lot of money like more than the federal limits for insuring the savings account or whatever bonds are a great choice as well, but if you have that much money you’re probably familiar with those options. I don’t have that much money.

Mindy: That’s a question that I get a lot is you know I’m starting to save I don’t want and it comes from people who really don’t want to put it in the stock market because they see the volatility. I like the CDs. I like even just a plain old “high” in air quotes, high-yielding savings account like an American Express account. I think we’re making 2.3%.

J: Oui.

Mindy: Or 2%, which is such a ridiculous rate. I’d really like a lot more, but when I’m getting ready to use it and that’s really liquid. That’s just hey transfer this to my bank account and then I have it. As opposed to a CD you might have to wait three months.

J: Oui.

Mindy: The buy and hold investors like you said could you know there’s more risk.

J: Oui.

Mindy: That your money isn’t as liquid, but it’s you know you’re still generating. I like 8%. I like 11%.

Scott: The point is though that it’s not it’s generating more than that. Right so yes you’re getting 2% yield, but J is basically saying hey this is going to reduce your risk and then I think you know by implication expose you to opportunity. If we’re saying hey there’s a 60% probability that there’s a recession coming in the next 12 you know five to—what did we say 4 to 15 months or something like that—16-15 months.

J: Oui.

Scott: Is that what we’re saying.

J: Droite.

Scott: You know if there’s a 60% probability that it happens and you have cash there then yes you’re only earning a 2% return. You could be earning more in the short term, but that could expose you to much higher returns somewhere in that 16-15 month period right.

J: Exactement.

Scott: That’s kind of how I think about that cash piece is hey it’s not really earning those low returns in the meantime. It’s reducing your risk and exposing you to potential greater opportunities down the line.

J: Absolutely and I’m not saying again I’m not saying to put your money there and wait, but if you’re waiting for a particular event for example you’re waiting to save up enough money to buy your personal residence with house hack or you’re saving up money to buy a rental property then there’s nothing wrong with leaving it in the savings account for three months-6 months-12 months. Even a little bit longer, keep in mind we talk about these 2.2% interest rates of returns. In reality we have inflation. Inflation is around two or 2.2%, which means every year the money that we are holding on to that we’re storing under a mattress or putting in a savings account is purchasing about 2% less than what it was the year before so if you’re getting 2% return in a savings account or a CD or a bond what you’re really doing is you’re breaking even. You’re getting a little bit more money, but next year your money is going to buy less than it did this year. Don’t fool yourself into thinking you’re really getting a 2% return, but it’s that way with any investment. If I’m getting 8% by lending it out it’s really 6% a year because we have inflation so. Always something to keep in mind.

Scott: Oui.

Mindy: Okay so you said here are some tips. Start hoarding cash.

Scott: Oui. Next one is focus on building your credit so it kind of goes along with cash. I mentioned how tight lending gets. It doesn’t stop. It gets tight. It’s a lot harder to get loans, but it becomes harder to get loans because the lenders are requiring better credit.

They’re requiring more income. They’re requiring more assets and you can’t necessarily impact your income or your assets, but what you can impact is your credit. What we see is just in the conventional lending world if you’re buying a house, if you’re a regular buyer buying a house these days you can get a loan from a conventional lender or Fannie Mae, Freddie Mac. If your credit score is around 660-680 you might pay a little bit higher than if you had a higher credit score, but if you have a 660 or 680 credit score you can theoretically get a loan for to buy a house right now.

During a recession if you look back to 2009-2010- ‘11 even 2012 what we saw was lenders were requiring a 740 credit score. It was big news in 2011 I think when the first lenders said hey we’re going to start lending to people have a 720 credit score. The first thing that’s going to happen is lenders tighten up their requirements is they’re going to require better credit scores. Now is a great time to really focus on building your credit, to focus on getting your higher interest rate debt down if you have high interest rate credit cards or if you have a high interest rate car loan. Start paying that down.

Talk to a good financial consultant, somebody that really understands credit and figure out should you be closing accounts? Should you be opening account because these things will impact your credit score, but focus really on building up that credit score because once the market starts to turn you’re going to need a better credit score to get loans.

Mindy: That’s a really good tip.

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One of the best ways to build your credit is to pay your bills on time.

J: Absolument.

Mindy: This sounds like a no-brainer, but 35% of your credit score is based on your ability to make on-time payments. I can be sometimes flighty and not necessarily remember that my credit card is due on the 30th. There’s a lot of ways to make these on-time payments that don’t require you remembering to make the payments. First of all you could just set up a Google calendar or whatever calendar you use. Alert hey tomorrow pay your bill. Set them up on automatic payments. That I think almost everybody has automatic payments except my water bill for some reason so then I just have to remember that or I just give them the credit card.

J: Oui.

Mindy: Yes, you know automate as much as you can so you don’t have to think about it so you don’t miss it because that is a real number killer. A real credit score killer is just missing a payment by one. I remember the first place I ever bought I’m sitting there going through the with the lender and she’s like oh here’s your credit report. It looks like you made a payment late like six years ago.

I’m like really? I don’t remember that. Like I never remember making a late payment. She’s like well you know this is coming up. She’s like did you maybe just not get the bill? I’m like sure let’s say that. Like it was a very different time when I bought my first place, but you know they keep that information forever. If you are not making payments on time. Start. Number one start.

Scott: Yes and the other thing I would say is go out and understand what your credit looks like right now and why it looks that way right. I mean you can get these free credit reports or you can go to a site like Mint.com or Credit Karma, all these different online places will show you pretty clearly what’s impacting your credit score and why right and if you have any missed payments take care of that. Then start playing with the finer points there because it sounds like you know you’re targeting a 750 or above really to kind of be in a strong position going into any type of recession. Does that?

J: Oui.

Scott: Better commentary J?

J: Absolument oui. If you can get your credit score to about 740, you’re probably going to be positioned to not only get loans, but also get the best rate loans. Just to not to pile on to what you guys were saying, but keep in mind, there’s a site called AnnualCreditReport.com, which is a government basically requires that the credit, the three big credit companies provide you a free credit report once a year. You can go basically once a quarter is it four credit companies.

Scott: It’s three.

J: Three to four.

Mindy: Three.

J: I think it’s three times a year or each one once a year. You can basically go every four months and request a copy of your credit report from one of the credit agencies and that’s a great way. It’s a freeway to every four months to verify that you don’t have anything on your credit report that you didn’t expect to have on your credit report. Just a tip there.

Mindy: Yes and the people who are putting the information into the credit report they make mistakes. They transpose numbers. They forget or you know it doesn’t get entered properly. Whatever so if you you know if you’re just starting out you want to start building your credit. Go and get a copy of your annual credit report for free like J said at AnnualCreditReport.com. We’ll put links to all of this in the show notes, but go there and just choose one. It’s Trans Union. I shouldn’t even start this because I can’t remember them all. There’s three.

J: Equifax and Experian.

Mindy: Oui il y a. Voilà. Equifax, Experian, and TransUnion. Pick one. Choose one. Ask them for a copy of your credit report and then spend some time reading through it. Make sure everything on that report is actually what has happened in your life because maybe somebody else’s name is J Scott and their information got put into yours or maybe you never lived at this address so you need to take this information and you know correct it if it’s wrong because that could be affecting your credit score too.

J: Absolument.

Scott: Okay so after hoarding cash and building your credit what else?

J: Next thing I would recommend. Open up and again you want to make sure that your credit score is strong before you do this, but considering. Consider opening up lines of credit. I talked about hoarding cash.

A lot of us don’t have access to a ton of cash, but we may have access to cash through lines of credit. A line of credit is basically just credit given to us by a lender, by a bank that’s secured by something. It might be secured by real estate so you can get a line of credit against your personal residence if you have equity in your personal residence. You can get a line of credit against your business if you have assets in your business. You may be able to get a line of credit against yourself personally just by having I really good credit score, a personal line of credit so I recommend that people talk to banks, talk to lenders, and find out if you can get a line of credit or multiple lines of credit.

What a line of credit is is it’s basically cash that’s available to you when you need it. You don’t take it now unless you need it now. You only pay interest on it when you use it so if I take out a thousand dollars tomorrow I’ll pay interest on that thousand dollars until I pay it back and then once I paid it back I’m not paying interest until the next time I take money. Lines of credit are like cash in the sense that you have that money available guaranteed when you need it and it’s also like a loan in the sense that you’re paying interest on it. It’s kind of the best of both worlds.

You’re only paying interest when you have it, but you have access to it. Get access to lines of credit if you have the ability to. Again, opening up lines of credit might impact your credit score so if your credit score is borderline, make sure you’re talking to a financial professional, who understands credit before you just go willy-nilly open up a whole bunch of lines of credit, but if that’s an option for you I highly recommend it.

Scott: When you’re talking about opening up lines of credit you know I got a house so I can get a home equity line of credit right, a HELOC on that and get access to that. You know I can call up my credit card company and ask for my limits to be raised right, my credit card. What are some other actions that I can take if I’m looking to take your advice?

J: Those are the two big ones so for most people. Get your credit card limits raised and get a line of credit against your personal residence. Now if you own a business it’s generally especially these days not very difficult to get a line of credit from the bank that you bank with. If you bank with a big bank like Bank of America or Wells Fargo a lot of times they’ll send you promotional things for line of credit against your business especially if you’ve had your banking with them for a couple of years.

If you have a bunch of inventory or equipment or you own real estate in your business a lot of times you can get a line of credit against those things. There are a lot of people who buy rental properties for all cash and then will go find a small local bank that will give them a home equity line of credit against the rental properties, which is even better in my opinion than a mortgage or a refinance because again you’re only paying interest when you’re actually using that money. Then again if you have a relationship with a bank that you’ve had for a long time and you have a good credit score, go ask about a personal line of credit. Banks, some trust, not my favorite bank out there, but they’re well known for giving what are called unsecure lines, personal lines of credit, which means if you have a good credit score and you’ve been working with them for a long time a lot of times they will give you a line of credit just against you personally based on your financial situation.

Scott: What kind of amount are we looking at for a personal line of credit to that effect?

J: It’s a good question. I don’t know the answer to that. I’ve never actually gotten an unsecured personal line of credit. I’m guessing that it’s going to be very dependent on your income.

It’s going to be dependent on your credit score. It’s going to be dependent on what assets you own so I don’t want to throw out any numbers because I’d be making them up. Typically speaking, against a business you can often get 50% of the value of any equipment or inventory so let’s say you own a business that sells stuff. Hopefully if you own a business it sells stuff.

Let’s say it sells a physical product as opposed to a service. Let’s say you have a half million dollars of that physical product in inventory at any given time and you own that inventory out right. A lot of times banks will give you the line of credit against that half million dollars in inventory because that’s their collateral. If you don’t pay the loan they know they can take that inventory and presumably sell it at some discount and get their money back.

50% is not uncommon for a business line of credit against equipment or inventory. For a house or a rental property a lot of times it’s 75% or 80% so if you own a $300,000 house that you own outright it wouldn’t be uncommon for you to be able to get $200 or $225,000 in home equity line of credit against that real estate.

Scott: Just to clarify you know the alternative here to achieve a similar result would be to just refinance and take out the cash. If they have $300,000 property I can either get it a line of credit where I don’t have I don’t take any money out until I need it and I start paying interest once I’ve taken out the cash or used, starting to use a line of credit or I can refinance the property and pull out a ton of cash that way.

J: Droite.

Scott: The advantage there is that you’re going to have a fixed interest rate.

J: Exactement.

Scott: You have the easy option for a fixed interest rate if you refinance versus a variable interest rate on your line of credit right so what’s your?

J: Absolument.

Scott: Why do you recommend the HELOC versus the refinance there?

J: No, that’s a really good point. There’s actually so that’s the first big thing. If you’re going to refinance versus a HELOC you’ll typically get a lower interest rate. Typically interest rates on HELOCs.

One it’s going to be variable. The interest rates are going to change so interest rates are going to fluctuate on the HELOC with interest rates so if you take out money today on your HELOC you might pay five and a half percent interest on that money. If rates go up two point next year and you take out money next year or even the money you took out this year that you’re still repaying next year, the rates that you’re paying on that money even though you took it out this year when rates were low if you’re still paying interest on that money next year when rates are higher you’re going to be paying a higher interest rate. That’s one of the big differences between a refinance where you fix an interest rate, a lower interest rate for a long period of time versus a variable interest rate. The other thing to know is that it is possible with a line of credit that a bank generally writes into the terms, into the contract that they have the right to rescind that line of credit or reduce that line of credit so let’s say again you have a $300,000 house.

You get a line of credit for 80% or $240,000. If the bank thinks that your house has dropped to $200,000 in value they can come back and say well we’re going to drop your line of credit to 80% of the new value, which is $160,000 so you could overnight find that your line of credit has decreased or even gone away and in some cases the bank might say you have 30 or 60 days to pay off whatever you owe. There’s certainly a risk there. Now that said it did happen after 2008 to a lot of people that had lines of credit, but unless there’s a huge downturn, unless there’s a major recession it’s not really common for banks to call lines of credit or two new lines of credit. It’s not a common thing, but it is a risk so to your question of when should people be doing the fixed refinance versus a HELOC it’s really a personal decision.

For me, it boils down to how often I’m going to need that money. If I think I’m going to be using that money full-time between now and 10 years from now I’d probably just rather do a refinance because I’m going to be paying an interest every month for the next 10 years. For me though, I typically use a HELOC for more bursting type things. I might use it to buy a rental property that I’m going to refinance in six months so I need that money for six months and then I’m not going to touch the line of credit for a year. I only pay I only want to pay interest when I actually am using that money because it’s a very small percentage of the total time so you can run the number. You can say, “Hey if I’m paying 4% over 30 years every month this is how much interest I’ll pay in over 30 years versus I have a HELOC for the same amount and I’m paying 6%, but I’m only paying it a quarter of the time over the next 30 years.”

You can run those numbers and see where it falls and what’s better for you. The other thing is some people just sleep better right knowing that they can choose to be debt free tomorrow. I can pay off my HELOC and be debt free, but still have access to the money. Other people would rather just get fixed low rate interest so a lot of it is psychological as well.

Mindy: I want to tag on to this really quick so point number three is open up lines of credit. I want to suggest .3A is to start building a relationship with a local bank or credit union.

J: Oui oui oui.

Mindy: I have been with Chase bank since they were Bank One and First Chicago and I think somebody maybe somebody before that. I’ve been with Chase Bank since before Scott was born and it is actually true, Scott so, but they don’t know me. I’ve been with them for 30 years and they don’t know who I am at all and they don’t care about me because they’re so big. I started connecting with a local credit union in my city because they want to you know better the city.

They do a lot of advertising in the newspaper talking about how they want to help the city and you know we support local businesses yadi yadi yada and as I start gaining this relationship with them they are more inclined to give me a personal line of credit or to give me a business line of credit because my business is in their city too. I have a HELOC on my house with them even though I have some random mortgage that gets sold every six months or whatever. Connect with a local bank. Look around and see you know Chase in your city is not a local bank.

Somebody who has one or two branches, somebody who’s headquartered there. Somebody who does portfolio loans. Somebody who is invested in the community in a way that a large branch or a large nationwide bank is not going to be is a really great way to get these lines of credit especially when times are tough. They’re like oh Mindy is really awesome because she has all the stuff. You know she has all these ties to the community. She’s not just going to up and leave and leave us high and dry because she’s invested in this too. I just wanted to throw that out there, start talking to local banks now.

J: Yes, and can I throw out one more point about that?

Mindy: No, this is my show, not yours.

J: D'accord.

Mindy: Yes, absolutely of course you can.

J: The other thing to keep in mind and I know there are people that would be like well I walk into Wells Fargo and they know exactly who I am and they call me by name and they call me on the phone and offer me all these things so that’s all well and good, but here’s the thing to know about these big banks, they don’t make their own rules. If they want to lend let’s say on the purchase of investment property or they want to lend on the purchase of your personal residence basically their lending money and then they’re turning around and they’re selling that loan to a big organization like Fannie Mae or Freddie Mac and so Fannie Mae and Freddie Mac basically will tell the Wells Fargos and the Bank of America if you want to be able to sell the loan to us here are all the rules you need to follow. You need to verify that the borrower’s credit is this and their income is this and their assets are this and you need to check literally hundreds of boxes if you want to make a loan to them and then turn around and sell it to us. Bank of America or Wells Fargo or Chase they don’t have the ability to say yes, your credit score is a little bit low, but we’re going to make an exception for you because we’ve been working with you for 20 years and we know you.

They can’t do that even if they want to. Now, the local banks what you refer to as portfolio lenders, what a portfolio lender does is they don’t turn around, they might, but they don’t necessarily turn around and sell the loans to a Fannie Mae or a Freddie Mac. They use the money from their depositors. They use the money from other people that bank with them to make that loan.

What they can do is they can make their own rules. They can say hey Mindy yes, I know your credit score is a little on the low end, but we’ve been working with you a long time. We trust you. We know you.

You have cash with us. You have accounts with us so we’re going to do the loan anyway because we have the ability to do that or they can say to you, “Hey Mindy I know that Wells Fargo can’t loan on your 11th investment property because that’s the rule they’re only allowed to loan on 10 or in some cases four, but we don’t have to follow those rules.” We’re going to make 50 loans to you. I know people that literally have 50+ loans with small portfolio banks. They do the BRRRR strategy and literally every single loan 25-50-75 times they turn around to a small local bank and they get a loan. These small banks have the ability to make their own rules and if you have that relationship they’re not handcuffed to say we’re not allowed to do this even though we want to. They can do it.

Mindy: Yes, that’s the beauty of a local bank and you may not get the best rates with the local bank, but the local bank.

J: It would be a little higher.

Mindy: Is yes, but the local bank is giving you money when other people aren’t so you know do you want zero dollars or do you want more than zero dollars at a higher percent interest rate so okay. Do you have any more points to make about opening up lines of credit?

J: Yes, none about lines of credit, but I’m going to make one more recommendations prepare for the next phase.

Mindy: Oh yes, well that was going to be my next you keep are you reading my mind?

J: I’m on your show.

Mindy: You’re on my show. You’re a first welcome back guest. Okay so next tip. Last tip.

J: Yes, last tip so for anybody that has short-term debt again and this goes back once again to how lending gets tight during a recession. If you are going to need to refinance any loans in the next three to five years let’s say during the time that could be the next recession. Do it now so restructure any debt that might be coming due in a couple of years. Restructure that now so that you’re not in a situation in three years where a loan gets called due let’s say on a rental property and you’re having difficulty refinancing because the lending has gotten tight. Instead refinance that loan now for five or eight or 10 years out so that we’re probably going to be during in the next expansion during a strong part of the cycle by the time that loan comes due. If you have any loans that are going to come due or if you have any loans that you can restructure to low interest rate so we don’t know interest rates are going to go in the next couple years, but they’re still historically low as we’ve been saying for several years now is a great time to restructure that debt and I’ll throw a loan with that.

If you own any properties that you are interested, that you’re not interested in holding for at least 3 to 5 years you’re thinking yes I might sell this thing in a year or two. Sell it now because most likely as we get into that recessionary period values are going to drop. I’m not telling people to sell your properties. I’m not saying don’t hold them for five or 10 years, but what I’m saying is if you were going to sell them in a year or two anyway it’s probably better now than in a year or two.

Mindy: Yes, that’s really excellent advice. Sell the dogs now. Who is it Steve, Steve from Washington says you know I’ve been cherry picking and I like these properties. I don’t like these properties anymore. I’m selling the dogs at what I believe is the top of the market and you know you might, we might be wrong. This might be the beginning of the top of the market and there’s still a little bit left in there and maybe you would make you know an extra thousand dollars next year, but maybe you don’t and Jay I thought you had a crystal ball, which is why invited you back. You don’t, you’ve claimed that you do not so I don’t have a crystal ball either. Yes, I like that. If you’re going to if you’re thinking about selling them, if you’ve got one that’s pumping out a lot of money, keep it, but if you’ve got one that isn’t I am now really really regretting the triplex that I didn’t buy over the weekend.

Scott: Well I’ll just throw it here I mean this is a get back to basics. Right get your foundation really strong right have some cash. Make sure your portfolio is really strong and can weather any downturns. Sell off the stuff that you don’t think is a great fit for you’re clearly in your long-term vision and then you know it sounds like this you know this tip might not be a miss like focus on your expenses and just kind of make a quick you know make sure that that your savings rate is continuing to be strong right of the day one stuff. Right all that stuff that you may not have had to think about as much in the last year or two or three because you know you probably got a raise that work or a couple of promotions and you know your property or home value increase. Your rental property is doing well all that kind of stuff. You know now is the time to really fortify that position and strengthen it and not go and take the $10,000 vacation or whatever it is right.

J: Oui.

Scott: Spend wisely and focus on all the basics that we talk about every single week on the show.

J: Yes and I actually in the book I include that tip. I include a whole bunch more tips then what we talked about, but like you said a lot of this is common sense. I can’t tell you the number of people that have read this book and basically said to me I learned so much and yet it was so obvious because a lot of this once you understand how the cycle works and you see how it’s things have gone down the last hundred and 50 years with previous cycles. A lot of it starts to make sense and you can start to put the pieces together to say, “Yes, of course this is what I should be doing now and of course this is what I shouldn’t be doing now.” It’s all it’s really it’s common sense, but it’s stuff that we don’t think about very much so it’s not necessarily common sense to us yet.

Scott: Love it.

Mindy: I love it too.

Scott: All right J so we’ve talked about what we should be doing to prepare for a recession or the next phase in the cycle that we think might be coming. What if we’re investing and building our portfolio today what are we kind of—what do we kind of do to maximize our returns in the current cycle, in the short term?

J: Yes, absolutely so if you’re flipping houses today and a lot of us are flipping houses and I know there are people that ask me every day should I stop flipping houses? My answer is no. You don’t need to stop flipping houses, but I would certainly be more conservative and take certain precautions. One, make sure you keep your project short because again it may be a month or two or three or five or six before we hit the next recession, but if you have a project that’s going to take 18 months there’s a much better chance that we’re going to be in the next recession by the time we finish that project and you could see that the values have dropped out from under you so keep projects quick. Two, make sure you’re getting good returns on your projects so I like to tell people do some research on your local market and see how much of a price drop we saw in real estate in the last couple of recessions.

For example in the DC market we tended to see about 12% to 15% worst case in 2008 and a little bit less than that in 2001. If we expect the worst case in my area that the market is going to drop let’s say 12% then I want to know that my profit margins or any flips that I do are at least 12% so that way if the market drops 12% I’m going to break even on those deals. If I do a deal that’s 8% profit margin and the market drops 12% I’m not losing money on that deal. Make sure that your profit margin support whatever you think is the likely or the worst case scenario during a recession in your market.

If you’re doing buy and hold, buy and hold is good any time during any part of the cycle. Never a bad time to do buy and hold investing, but they’re are again just like with flipping there are some things you want to keep in mind. One, make sure you’re being super conservative with your numbers. When I’m evaluating deals at this point in the market cycle I like to assume that my rents are going to drop 10% and my vacancy is going to increase 10% so if I have 8% vacancy typically now I assume 10% higher than that or closer to 9% vacancy.

If my rents right now are a thousand dollars a month I’m going to assume closer to $900 a month so that way going into a recession if rents drop and in many markets they will if vacancy increases and again in many markets it will, you’re prepared and you’ve underwritten your deals. You’ve analyzed your deals in a sense that you’ve accounted for those things. If you can still make money with 10% lower rents and 10% increase vacancy then it’s probably a good deal. What you’ll find is once we get through the recession your numbers are even better because you assumed the worst.

There is a there are some tips there. If you’re lending again I would say don’t lend to flippers because if the market drops out you basically have one one recourse, you can foreclose and you’re going to foreclose on a property that’s probably worth less than you lent on it, but if you lend to buy and hold investors you have that extra piece of recourse, which is hey I’m going to extend your loan for as long as it takes you just keep paying me monthly cash flow. Keep paying me interest every month from your market rents that you’re receiving and we’ll just extend this loan and at least you know you’re going to get paid for the next two or three or five years until the market improves and you can pay that off.

Scott: Or you foreclose on a rental property.

J: You could foreclose on a rental property, but why? If you’re getting paid every month just happy, happy with that cash flow because it’s probably more money then you’re making anyway.

Scott: It just sounds better than foreclosing on a half completed flip.

J: That’s a really good point. If you have to foreclose, you’d rather foreclose on a property that’s still generating cash flow.

Scott: Oui.

J: Than a property that is under one.

Scott: I would certainly not say to foreclose unnecessarily. I’m just saying that.

J: Oui.

Scott: Oui.

J: We talk about a whole bunch more tips in the book, but those are a few tips for if you’re flipping or buy and hold or lending.

Scott: J recently came out with a book called the book Recession Proof Real Estate Investing. It’s an e-book only so it’s a short quick read, but it’s full of fantastic information. It’s kind of got his style just so we talked about all day today on the show how to kind of think through what a market cycle looks like. What are the leading indicators of market cycles? How can you know again we go through these things, timing, observation, and then the economic data.

He really makes a strong case for how you can kind of sort through in your mind when a recession or the next stage in any type of economic cycle is coming and it’s not just about really you know the recession proof real estate investing is the title of the book, but really I thought it was more of just kind of a how to handle all the market cycles and adapt a strategy at any time in a market across a variety of different things. Really got a lot out of it. I just kind of read, I read through it again this last weekend actually and thought it was fantastic, but personally going to begin following some of the advice that J gives out in terms of hoarding some cash, taking out some lines of credit, you know making sure that I’ve got my ducks in a row and my financial house in order because you know the risk is low from doing these activities and the upside is pretty big and being prepared if there is a recession coming along. Definitely couldn’t recommend the book more highly.

J: Je vous remercie.

Mindy: Yes, and it’s a really great time for this book to be coming out because like you said we’re probably nearing the top of the the current real estate cycle and I just I see this question pop up so much in the BiggerPockets forums. Should I wait for the market crash? And inevitably, the first response to everyone of those questions is well when is it going to crash and you know you don’t know, but being prepared is what is it? The best defense as a good offense?

J: The other way around.

Mindy: The best offense is a good defense. Yes okay.

Scott: Oui.

Mindy: Clearly not a football person.

Scott: And this too. Yes, and again that doesn’t mean you know I’m not timing the market or anything like that, but I can adapt and say hey there are some signs that are coming along and I can slightly modify my approach just to kind of reduce my risk and potentially have a shot at greater returns if some of those things end up being true. Not going to stop investing entirely or growing my business to a halt, but I can certainly start preparing in some ways to take advantage of what economic data and our observation are kind of giving us.

Scott: Yes, the biggest mistake I see people make is they are so focused on today and now that they’re not spending that 10% or 20% of their time that they should be looking forward and paying attention to what’s coming in preparing for what’s coming. I’m not saying that everybody should hunker down and move into their bunkers and hoard guns and amo because the next crash is coming, but what I’m saying is start paying attention to the market. Figure out what is likely to happen. Take a look and pay attention to the economic indicators and start preparing. Because preparation is always good.

Mindy: Right and you know what’s the downside of starting to hoard your cash while still running the numbers on properties and analyzing them and seeing you know who this is a really great property. I’m going to offer on it. Great and then you hoard your cash some more after that. What’s the downside of building up your credit? What’s the downside of opening up a line of credit now or you know reorganizing your short-term debt. Loans are what is it? The interest rates have dropped in the last couple of weeks. Have you seen that? I was like wait. What is the rate? I have to tell to everybody it’s like 5% and it’s closer to 4%, which is really really awesome. Okay so I’m sorry I cut you off go ahead.

J: No, that’s okay. I was just going to say I’m doing more deals this year than I was doing last year so a lot of people like look at me and they say oh so I guess now that you’re so familiar with all of the all the economic stuff and you think a recession is coming, you’re probably slowing down and to be honest no I’m not slowing down. Again, the more now that I was doing last year or even the year before.

Mindy: C'est génial. C'est génial. Okay so J thank you so much for coming back on the show. Our first repeat guest. You’re actually really kind of good at this podcasting thing.

Scott: Yes, you should start your own or something like that.

J: Well, funny that you mentioned it so I guess this is our big announcement, but I am going to be hosting my own podcast and I’m going to be doing it with my amazing wife and business partner Carol. We’re actually going to be hosting a podcast created by BiggerPockets and we’re going to be calling it the BiggerPockets Business Podcast where we’re going to be interviewing business owners both investors and non-investors alike and really digging down into how to build, scale, and optimize businesses from people that have done it in the trenches. Starting this week, we’re going to be releasing our first episode of the BiggerPockets Business Podcast.

Scott: Love it. I’ve been looking forward to this for so long. I cannot even begin to describe how excited I am for this show and for you and Carol as the host. I mean you guys have just been through so many, you just have studied and really developed a strong philosophy, tempered that with experience in the real world and then interacted with so many people across all these different types of business, real estate, personal finance and investing concepts. I just can’t think of anyone who could be better situated to kind of describe and help people build businesses and build wealth than you and Carol so thank you so much for agreeing to do that and we’re looking forward to it.

J: I really appreciate it and our first guest is going to be somebody that I have a feeling many many many of your listeners are going to be interested in in hearing from. I’m not going to say who it is. We’re going to leave that as a surprise, but make sure you listen to this week’s BiggerPockets Real Estate Podcast where we’re going to be talking more about the business podcast and then tune in to the business podcast later this week.

Mindy: Yes, if you are not already subscribed to the real estate show it is the BiggerPockets Real Estate Investing Podcast and the episode that J is talking about is our episode number 328 so you can find that wherever podcasts are. BiggerPockets.com/Show328 is where you can find the show notes for that episode and I am really looking forward to that. That is going to be a great podcast. You’re an excellent guest. I can only imagine that you’re going to be a fantastic host.

J: Thank you and I want everybody that’s listening if you have any thought or input into the business podcast, into the economy, into anything I’ve talked about, don’t hesitate to reach out to me. I love interacting with everybody. Can I tell people where they can reach me?

Mindy: I was just going to ask. Where can people find out more about you, J?

J: Excellent. You can reach me, email, the letter J at the numbers 1, 2, 3 flip.com. is my best email. My website is 123Flip.com. If you didn’t guess and if you want to find me on Facebook, JScottInvestor and I post a lot on Facebook and I communicate with a lot of people on Facebook so if you’re on Facebook, friend me on Facebook.

Scott: Impressionnant.

Mindy: And of course here on this little website called BiggerPockets.com.

J: I am J Scott on BiggerPockets.com and hopefully most of you know that because hopefully most of you are on biggerpockets.com. If you’re not go register for biggerpockets.com right now.

Scott: Then follow J Scott.

Mindy: Then follow J Scott everywhere. J do you have a favorite joke to tell at parties?

J: My wife likes this this one. Okay hold on. If I can tell this correctly.

Mindy: Because we got to have a joke in every show.

J: Okay, here we go. Knock knock.

Scott: Who’s there?

J: Control freak. Okay now you say control freak who.

Scott: Control freak who? I got it. First I let you go and do your thing you’re so forceful about it.

J: If you were a control freak you’d get that one.

Mindy: That’s my favorite joke ever. I had my microphone on mute and I started laughing so hard. I’m like oh they’re not going to hear me laughing. Okay I want to give a little shout out to my friend Liam who is seven I think him he asked me, he told me this joke yesterday okay what’s your name?

J: J.

Mindy: What color is the sky?

J: Blue.

Mindy: What’s the opposite of down?

J: Up.

Mindy: J blew up. Hahahaha. Thanks Liam. He’s seven or eight.

Scott: Oui.

J: I think that that’s a seven year old joke because both my kids were telling that joke when they were seven.

Mindy: Okay do we haven’t anything else we want to add? We want to add go listen to the BiggerPockets business podcasts because it’s an awesome show.

Scott: C'est vrai.

J: Impressionnant.

Scott: No, I think we’re pretty good here. J thank you so much for sharing your wisdom yet again here on the BiggerPockets Money Podcast. We appreciate it. Love the book. Definitely want to encourage everyone to go out and get that and thanks so much for your time.

J: Impressionnant. Thank you and I look forward to being the first three time guest on the Money Podcast.

Mindy: Ooh.

Scott: I’m sure that will happen.

Mindy: Okay great. Thanks so much J. Have a good day.

J: You guys too. Merci.

Scott: All right, that was Jay Scott. He’s delivering his wisdom for the 15th time and really the beginning. It’s just the beginning of the fountain of the knowledge of knowledge that we’re about to receive from J through his new podcast.

Mindy: I just think that the business podcast is the next natural step in the BiggerPockets podcast empire and J is a really perfect person to host that show. He’s knowledgeable in starting your own business. He’s knowledgeable in running your own business. He’s knowledgeable in real estate. He’s knowledgeable about money. He’s just kind of the total package.

Scott: Yes, him and Carol have built just an amazing business portfolio and have tons of experience and have made consistently smart, calculated choices with a strong philosophy behind them the entire time. Right and this is BiggerPockets right so our audience, you the listener, we presume are looking to use real estate as at least one part of a portfolio that may achieve financial freedom. It’s totally fine if you don’t, but typically that’s how most folks do it. There’s a lot of overlap obviously around on real estate and personal finance.

You have to have a strong personal financial position you know in our opinion to have a sustained chance at succeeding in the real estate business. Right, but a lot of people that are interested in real estate are also going to do small businesses. Right they’re also going to build their own private empires whether that’s in real estate or something else and then deploy the earnings from that into investments like real estate and there’s just so much overlap and ability to learn and grow an application from business to real estate and real estate to business in investing to business and money management to business and money management to real estate that we think that there’s just this great overlap between the three shows that we’re going to have here, the BiggerPockets Money podcast, BiggerPockets Real Estate Podcast and now the BiggerPockets Business Podcast.

Mindy: Yes and you know even if you’re not focused on starting your own small business, the BiggerPockets business podcast is going to be a great going to give you a lot of tips for running your real estate business, something I see in the forums over and over and over again is you will have a much greater chance of succeeding as a real estate investor if you treat it like the business that it is.

Scott: Yes and you know moving over into just a career in general. Even if you’re not going to start a business no thinking like an owner, like the owner of a business, someone who’s growing the business will help you in your career. Right because as an employee we’re rewarded when we generate returns for share holders. Droite.

Mindy: Droite.

Scott: That’s the job. That’s one of the jobs of an employee working at a business and I think that that will that just learning from that from my perspective like J’s will help regardless of whether you’re the owner or an employee or a salesperson or whatever it is and helping move your career or long.

Mindy: Okay so the book is Recession Proof Real Estate Investing. You can find it at biggerpockets.com/recession. It is an e-book only. The show is BiggerPockets Business. You will want to tune in to the BiggerPockets Real Estate Podcast on Thursday, May 2nd to hear J’s special announcement. Okay Scott, shall get out over here?

Scott: Let’s get out of here.

Mindy: D'accord. From the BiggerPockets Money Podcast episode 70, I am Mindy Jensen and he is Scott Trench and I have no clever ending for today.

Scott: We are leaving.

Mindy: We are leaving goodbye. Thank you for listening so much we appreciate you so very much. Send all your bad jokes to Over and out see you later alligator.

Scott: Bye-bye.