Ep 46: Best Practices for Managing Market Cycles with Lee Kearney
With enough know-how about how to work deals in relation to changing market cycles, you could keep your head above water during crashes and even come out the other side smiling. Our guest for today’s show is Lee Kearney and he joins us to talk about his experiences as an investor through a complete market cycle. Lee got into real estate by flipping houses around 2003, capitalizing on the moment and slowly working his way up to rentals. When things went south in 2008 though, he had to make some big adjustments to his game plan. However, before we get into the topic of tactics concerning market cycles, Lee fills us in on his recent experiences being COVID-19 positive.
After having spent time in the hospital fighting for his life, Lee has many interesting perspectives to share about fake news, political agendas, and the hysteria we are seeing around drugs and social control right now. Of course, real estate has been affected by all of this too and we move on to talk about some best practices that Lee is employing which he learned from the last crash. He shares a few pointers about indicators that a market will turn soon, and we consider all the recent signs that a bear market was coming, only the last of which is COVID-19. Listeners will also hear far-ranging advice from Lee about what causes markets to fluctuate, and what to do with your investments accordingly. He weighs in on when to wholesale and day trade, how to underwrite by actually taking risk into consideration, and many ways to make sure that a rental property deal is worth it. Tune in for a whole bunch of sound advice on practical steps to take to get through the coming slog.
Key Points from This Episode:
Lee’s recent experience being COVID positive and thoughts on the crisis.
Amazing deals Lee has come across during this crisis due to scared sellers.
Focusing on innovation during this time and how the economy can be exploited.
Extremes of human characteristics brought about since the restrictions.
Lee’s on-the-ground take on the rifeness of fake information due to political agendas.
An accidental road into flipping houses and what Lee’s mentor taught him early on.
The value of asking questions about what you don’t know.
Why Lee went broke in 2008 and how he could have dodged that by wholesaling.
Comparing wholesaling to rental models in terms of risk aversion.
Understanding when to buy or sell to best exploit cyclical markets.
Indicators that the market is going down: eroding affordability, fed funds being pumped up.
The idea that COVID is only the last event to crash an already crashing market.
No free lunch: how great deals right now will always come with some negative aspects.
How Lee is reducing risk: beating up deals, selling rentals, shorter rehabs, wholesaling.
Confidence and spending habits concerning market cycles.
Lessons to be learned by those who take on too much debt on rental properties.
Debt as it plays out for a stock owner vs a real estate owner.
Factors that determine whether a rental will make money or not.
“Almost every day now we’re innovating. What’s the new market? What’s the new demand?” — Lee Kearney [0:06:22]
“I started flipping houses in 2003 by accident. I bought a house, got broken into, put it right back on the market, sold it three months later, got a taste of real estate. I made 30 grand.” — Lee Kearney [0:12:20]
“You know you’re at the end of a cycle when you see affordability go down.” — Lee Kearney [0:18:15]
“There are fundamentals in real estate that are out of whack right now, and they have been for a couple of years, and so that alone would dictate that something needed to change.” — Lee Kearney [0:24:32]
Links Mentioned in Today’s Episode:
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