“A prediction about the direction of the stock market tells you nothing about where stocks are headed, but a whole lot about the person doing the predicting.”
— Warren Buffett
2024 is here!
And with the new year, we’re seeing a very unique market.
If you’re invested in multifamily, you’ve seen struggles, particularly in the value-add deal.
I talked to investors who are dealing with multiple capital calls at the moment.
You might be wondering what 2024 is going to bring.
More importantly: What should you do with your money as an investor?
In Atlanta, we’ve seen some multifamily properties worth 42% less than they were 2 years ago. Ouch!
This is mostly because interest rates have increased, which makes it more difficult to buy.
If you’re doing value-add, you’ll have a particularly difficult time if occupancy is below 90%.
Today, we’re going to talk about opportunities inside and outside of real estate.
We’ll also go over some of my key predictions of what to watch out for and what you can do to take advantage.
Let’s jump into it!
1. Recession Fears Will Linger
My first prediction for 2024 is that recession fears will linger.
For those who don’t know, a recession is defined as two quarters of negative GDP growth.
This exact thing happened in 2022.
Q1 and Q2 were -1.6 and -0.9.
And yet, the Fed said this wasn’t a real recession!
They didn’t want to use that label because the labor market was good.
This is why we don’t trust the federal government when it comes to statistics.
In 2022, the numbers said we were in a recession, but the federal reserve said it wasn’t a recession because the labor market was strong…
We were able to come out of it, but the fear is still there.
They will linger.
A recession used to be a healthy way to cut the fat out of the economy.
Some people would lose their jobs, but it allowed for better opportunities to be created.
Currently, the U.S. has a lot of debt.
At the time of writing this, the national debt is at $34 trillion.
In the fall, just a few months ago, we were at $31 trillion.
The spending is getting out of control.
There’s a great uncertainty when predicting what will happen this year.
I think that will continue.
As a long-term investor, there’s actually a benefit to this uncertainty.
Warren Buffett once said: “Uncertainty is the friend of the buyer of long-term values.”
If you have a long-term approach, it’s better when things are cloudy.
I think it’s a great time to be open to deals.
Right now, we’re seeing real estate deals come down across the board.
Pay attention and see what you can spot out there!
2. We Will Not Have a Soft Landing
The second prediction I have is that we will not have a soft landing.
The Fed has two main tasks:
They try to keep unemployment down and control inflation.
Neither one of those goals is easy to achieve by any means.
When it comes to investments, it’s been said you take the stairs going up and use the elevator coming down.
The Fed won’t be able to achieve this smooth landing.
This situation creates more uncertainty, which in turn creates investing opportunities like we talked about before.
When things return to normal interest mode, asset prices or interest rates could come down again.
There may not be a smooth landing, but there will be plenty of new opportunities!
3. Non-Real Estate Investments
I’ve been beating this drum pretty hard the last few months:
I suggest looking into non-real estate investments.
This is for a few reasons.
Real estate is based on how much debt you can obtain to buy property.
When we buy things in cash, there’s no leverage at all.
The ATM business we do is an all-cash business.
Some businesses require debt, but you can usually negotiate or have access to other options.
In those cases, the debt is not as big of a deal.
But real estate is very dependent on debt.
If the debt comes with an 8% interest rate, that will make a huge difference in the amount you need to pay.
Being open to non-real estate investments is a huge advantage.
I’m personally not a fan of the stock market, as a recovering stock market investor.
Business Insider ran an article that said if you missed 40 specific days over the last 20 years, you’ve missed out on most of the returns.
If you were in the market over those 20 years, you would’ve made around a 9% annualized return.
That doesn’t include fees or volatility.
However, if you pulled out during those 40 days, you would’ve had a -1% return.
All of your returns would be gone!
This is why the stock market is very difficult.
There’s so much volatility.
You need to be okay with ups and downs as well as managing your own temperament.
A lot of investors miss the “best time” to actually be invested.
I recently went to a mergers and acquisition conference where they talked about buying businesses.
On a website called BizBuySell, you can find people buying companies as cheaply as 1-3x annual earnings.
However, you need to be careful that your business investment isn’t a job.
In his book, The E-Myth, Michael Gerber says when you are working inside your business, you don’t actually own a business.
You own a job.
There are, of course, exceptions where businesses require somebody in there.
But it’s good practice to avoid these types of investments if you don’t want to overburden yourself with responsibility.
If a small business earns 1-3x earnings, that means you could pay a modest amount to get started.
A lot of that would be financed.
After that investment, you can see some businesses producing around the same amount as their initial cost.
That’s pretty incredible!
Especially if you leverage the deal, you could potentially find a situation where you put almost no money down.
In that case, you’d do exceptionally well over time.
The challenge is not operating a business unless you want to.
And for those of you who already own their own business, the question becomes:
How do you scale up without dedicating more of your time?
I talk about this in my book, Fire Yourself.
The key is passively investing.
Bronson Equity invests in ATM machines, oil and gas, and car washes.
We’ve got a real estate debt fund coming out soon.
You need to get your money working for you and not work for your money.
Be open to non-real estate investments.
There will be challenges this year, without a doubt.
With those challenges will come some buying opportunities.
Don’t have your money parked on the sidelines doing nothing.
There are great opportunities out there.
Your money can be liquid or you could get your money back with a sizable return.
Learn all you can and keep an open mind.
Now I want to hear from you!
Do you have any investing goals for the new year?
Tell us about them in the comments.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.