{"id":4549,"date":"2022-12-14T03:31:01","date_gmt":"2022-12-14T03:31:01","guid":{"rendered":"https:\/\/imsfund.com\/?p=4549"},"modified":"2022-12-14T03:31:01","modified_gmt":"2022-12-14T03:31:01","slug":"you-can-predict-economic-cycles-on-skyscrapers-heres-why-that-matters-right-now","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2022\/12\/14\/you-can-predict-economic-cycles-on-skyscrapers-heres-why-that-matters-right-now\/","title":{"rendered":"You Can Predict Economic Cycles On Skyscrapers\u2014Here&#8217;s Why That Matters Right Now"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\"><button class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<h2 class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/h2>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">Here are some weird but important facts.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">My friend and marketing expert, Perry Marshall, pointed this out:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Plans for construction of the Empire State Building started in a boom time, 1929. It was completed in a bust, the Great Depression, in 1931.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The Willis Tower started construction during a boom in 1970. It was completed in a bust, the energy crisis of 1973.\u00a0<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The Petronas Towers started in the boom time of the 1990s. They were completed just before the dot-com bust of the early 2000s.\u00a0<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The Burj Khalifa broke ground in 2004. It was completed in the worst financial crisis since The Great Depression, in 2009.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">What do these buildings share in common? They\u2019ve all been the world\u2019s tallest buildings at some point. Coincidence? I don\u2019t think so. In fact, there was an <a href=\"https:\/\/mises.org\/library\/skyscrapers-and-business-cycles\" target=\"_blank\" rel=\"noreferrer noopener\">entire study<\/a> done on this in 2008 and an <a href=\"https:\/\/www.investopedia.com\/terms\/s\/skyscraper-effect.asp\" target=\"_blank\" rel=\"noreferrer noopener\">Investopedia definition<\/a> to boot.<\/span><\/p>\n<p>Right now, most of the world\u2019s large skyscrapers are set to be built in China. It just so happens that China\u2019s economy has had the fastest GDP growth of all major nations over the past few years. It\u2019s also potentially heading for a <a href=\"https:\/\/www.biggerpockets.com\/blog\/inside-chinas-real-estate-crisis\" target=\"_blank\" rel=\"noreferrer noopener\">serious downfall<\/a> in the coming years. Coincidence again? Nope.<\/p>\n<p><span data-preserver-spaces=\"true\">People make big expansion plans when things are going well. They contract their plans, cancel, and downsize when things are going poorly. But as real estate investors, you should do the exact opposite.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">A lot of investors are going to make disastrous moves in the next 2-3 years. In chaotic economic times, that\u2019s what happens because most investors don\u2019t really get how economic cycles work and how to take advantage of them. Most importantly, many don\u2019t know how to avoid making foolish decisions that can tank their portfolios.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If investors don\u2019t understand these cycles, we can\u2019t possibly make the best strategic decisions about how, when, and where to invest.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Hedge fund manager Howard Marks wrote an outstanding book,\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.amazon.com\/Mastering-Market-Cycle-Getting-Odds\/dp\/1328479250\" target=\"_blank\" rel=\"noopener\"><em><span data-preserver-spaces=\"true\">Mastering the Market Cycle \u2013 Getting the Odds on Your Side<\/span><\/em><\/a><span data-preserver-spaces=\"true\">. I recommend you pick it up.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">But until then, I recommend you internalize one of his most important concepts: The worst of deals are made during the best of times. And the best of deals are made during the worst of times.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Are we entering the worst of times? I can\u2019t say. I won\u2019t predict the future. However, I can see signs of a massive contraction in the real estate investing realm all around me. You can see them, too.\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/ticking-time-bomb-in-real-estate-is-this\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Credit markets are tightening<\/span><\/a><span data-preserver-spaces=\"true\">, price growth is falling drastically in several of the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/new-redfin-report-shows-which-housing-markets-are-gaining-and-losing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">boom markets<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0of the pandemic, interest rates in the multifamily space are\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/lines-just-crossed-investors-need-to-be-careful\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">surpassing cap rates<\/span><\/a><span data-preserver-spaces=\"true\">, large firms are constantly\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/another-firm-changes-its-forecast\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">changing their price forecasts<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0for the worse, and\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.conference-board.org\/topics\/consumer-confidence\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">consumer confidence<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0is way down.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Things sound rough. But I encourage you to keep your head on straight and prepare for opportunities. Investments you may not find when everything is rosy and all signs are pointing up.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Investing With A Downturn In Mind<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">I\u2019ve been to several recent conferences, and I\u2019ve been on dozens of investor calls. It\u2019s funny. I\u2019m getting the same question everywhere: \u201cHow are you investing differently in light of the current economy?\u201d\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">I don\u2019t mean to sound snooty in reply, but I say something like: \u201cNo different at all. Smart real estate investors always invest with a downturn in mind.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">What steps can investors take in good times and bad to invest with a downturn in mind?<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Invest in a diversified portfolio of recession-resistant asset types.\u00a0<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Perform rigorous due diligence and\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/learn-how-to-say-no-to-opportunities\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">say no<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0to almost every opportunity you review.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Set up a system to acquire off-market deals from (typically) mom-and-pop operators.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Conservatively underwrite your assets and look for what can go wrong more than what will go right.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Structure your deals with conservative, fixed, long-term debt.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Look for hidden intrinsic value and execute proven strategies to raise both income and asset value, creating a wider margin of safety between debt and income.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Plan to hold for the long haul. Then wait for the ideal time to market your portfolio to the right buyer. These are sometimes institutional investors who pay a premium for their stabilized assets or portfolio.\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">In all fairness, I\u2019m a commercial real estate fund manager. I have a particular bias toward what we do best. You should modify these answers to best fit your situation.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Conclusion<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">So how does this apply to your situation? As I said, my niche is diversified commercial real estate. While I love what we do and believe in it with all my heart, you are likely in a different situation. But I believe these boom and bust principles should apply to whatever you\u2019re doing.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">So how are you investing with a downturn in mind? Are you investing differently now, given the looming economic contraction? Are you prepared to make \u201cthe best of deals\u201d in any upcoming \u201cworst of times?\u201d I know I am.<\/span><\/p>\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block    has-background has-slate-200-background-color has-text-color has-slate-900-color\">\n<div class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 lg:w-2\/3 \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Run Your Numbers Like a Pro!<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Deal analysis is one of the first and most critical steps of real estate investing. Maximize your confidence in each deal with this first-ever ultimate guide to deal analysis. <em>Real Estate by the Numbers<\/em> makes real estate math easy, and makes real estate success inevitable. <\/p>\n<p><\/main><\/div>\n<div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/REBN_cover_mockup_01-e1666813743854.png\" alt=\"real estate by the numbers\" title=\"You Can Predict Economic Cycles On Skyscrapers\u2014Here's Why That Matters Right Now 2\"\/><\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/you-can-predict-economic-cycles-on-skyscrapers\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article Here are some weird but important facts.\u00a0 My friend and marketing expert, Perry Marshall, pointed this out: Plans for construction of the Empire State Building started in a boom time, 1929. It was completed in a bust, the Great Depression, in 1931. The Willis Tower started construction during a boom in 1970. [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":4550,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/12\/burj-khalifa-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-4549","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=4549"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4549\/revisions"}],"predecessor-version":[{"id":4551,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4549\/revisions\/4551"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/4550"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=4549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=4549"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=4549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}