(NOTE: This is Part I of a multi-part series where I try to answer the single question that I have been asked most often since I first went public about my new MultiFamily Housing Business, “Why?”)
For those of you who have known me for many years, you are well aware of the very successful exit from my technology company that I sold last year. Like many of you, I dreamed of my exit one day and never having to work another day in my life. That feeling lasted for roughly about 5 months before I was already feeling that itch again. Sure, I could have dumped my gains into a long stock market plan and been happy with losing a few percentage points in the next few years in this impending recession that I keep hearing about. But I know that I would make up for it later, right? The stock market will always rebound. I would still average my 5% or 6% or maybe even 7%, assuming I spread my risk well and did not lose too much to fees and commissions. But I want more than that…way more.
When I told some of my closest friends that I wanted to get into Multifamily Housing (buying Apartments, for those not familiar with the term), they all asked the same question, “But, Tony, isn’t there a recession coming?”. And the answer to that is simple….I have no freaking idea.
You can’t open a news site or turn on the TV without hearing about the “impending recession”. How this run has been historical, but it can’t possibly last. How all good things must eventually come to an end. Just check out these three stories….
- The New York Times said, “The business cycle appears to have become shorter than it was from the mid-80s until the start of the last recession, an era that has sometimes been called “The Great Moderation”. For the foreseeable future, more frequent recessions are likely to be the norm”
- The Bond Buyer goes on to say, “US inflationary pressures were higher in September, as the US Future Inflation Gauge grew to 99.9 from 99.2 in August”.
- Even the ECRI (Economic Cycle Research Institute) says “Many have questioned why, in the face of improving economic data, ECRI has maintained its recession call. The straight answer is that the objective economic indicators we monitor, including those we make public, give us no other choice.”
Oh…one thing I failed to mention…. all three of these stories are from 2012. Yes, seven years ago.
But how long can this run last? Really?
Right here in Atlanta, back on January 4th, at the annual meeting of the American Economic Association, the past two Federal Reserve Chairs had quite the funny exchange. Janet Yellen said, “I don’t think expansions just die of old age” to which Ben Bernanke quickly quipped “I like to say they get murdered” to a rousing round of laughter from the economist in the audience. In their reporting of this meeting, Bloomberg said it “reveals how central bankers think about recessions – and says something about how likely it is that the US will tip into one over the next year”.
Oh…one more thing I failed to mention…. this meeting in Atlanta was not this past January 4th but actually January 4th of 2015. Yes, four years ago.
The bottom line to answering the question is simple. Yes, there is a recession coming…I just have no idea when…and neither do you.
In Part II we will look at my history in the MultiFamily Housing space starting with being a Limited Partner (aka “silent partner”) and how both Limited Partnership deals and General Partnership deals if managed properly, will continue to make money even into, throughout, and out of any upcoming recession.
About Tony Morgan: Mr. Morgan is a life-long entrepreneur with a history of founding or buying companies, installing world-class operational practices, growing them with long term, sustainable customers, and exiting near their peak.
About Broadwell Property Group: BPG is a MultiFamily Investment Firm based in Atlanta, Georgia. The mission of the Company is to identify and acquire under preforming MultiFamily properties in key markets around the Southeast United States. BPG provides the cash and experience necessary to renovate and/or repopulate these assets transforming them into highly profitable ventures in desirable locations. By following the BPG plan, the newly repositioned assets will yield a better home for its tenants, a better property for its communities and will command a superior Return on Investment for its owners and investors. At the time of this writing, BPG is fully funded and not accepting any investors.