How Will The RECESSION Affect Property Investor
Yesterday, it was officially announced that we are in a recession for the first time in 11 years.
How do I feel about that and how should you feel about it?
Well, the first thing I want to say is that it’s not a big deal.
I put out information through this blog since every media outlet such as the newspapers and TV try to get views through scaring people because bad news and fear-mongering leads people to be excited.
People are addicted to bad news and want to be afraid whereas I want to actually just tell you the truth which is that there's usually a recession every 10 years.
Typically, every 10 to 15 years there'll be a recession and after a recession, there'll be an expansion and after an expansion, there'll be a recession and that's always been the case as far back as we can go and therefore, this is not a big deal as it’s nothing to be worried about.
However, you do need to be aware of it and know what a recession means as you need to pivot your business as an entrepreneur and as someone who's responsible for your finances in order to succeed.
Whats a Recession?
Firstly, you need to know what a recession actually is because many people that are scared of a recession don't know what it is.
If you don't even know what it is, how can you be afraid of it?
A recession is when there's a general decline in economic activity. In layman's terms, that means, when people aren't spending money because they haven't got any money, there's vast unemployment and there's no money going around or the banks aren't giving out money, that can cause a recession.
In this instance, the reason for the recession is that people aren't spending money because they can't as everything has been closed for the last two quarters and there's been a down turn in the economy.
But how can people spend money when they're not going out to restaurants, when they can't go to football stadiums, they can't go to concerts, they can't trade, they can't meet people as they’re locked down?
It's kind of obvious that people aren't spending money and if people aren't spending money, then the economy goes down.
Not every Business is Negatively affected by a Recession?
It's also really important to note that just because there is a recession right now and generally the economy is doing badly, it isn't necessarily a bad time to start a business and not every business is struggling and doing bad financially as some businesses are flourishing right now.
In a recession and in a boom, there's usually an opportunity for people to make money and others to lose money.
Right now if you spoke to Richard Branson, he'd tell you that he's struggling but on a personal level, i'm sure he's still doing extremely well but his business is all around things like travel holidays, planes and trains.
He's losing millions and millions of pounds as he's just sold millions and millions of pounds’ worth of shares from one of his businesses and so right now Richard Branson is going to be thinking all right I need to do something a little bit different and on the other hand, some people like Jeff Bezos are absolutely rolling in it as he's made more money during this lockdown.
Jeff actually had a divorce which cost him 38 billion pounds however, since the pandemic he's now made all that money back as Amazon is doing better than it's ever done before because people are ordering things online.
What does that mean for you?
Well, what that means for you is that you need to think how to do a business, a service or have a product that can flourish.
We're coming out of the lockdown and so things are beginning to get back to normal for a lot of businesses and therefore, it's not to say oh my goodness let's just only do online businesses and let's close down.
I run an events business and I have a training company.
Over the last few months, my training company has been hit really bad now and my salary comes from my property business.
I’ve got staff that need to be employed and some of those staff go to events and do the lighting and the sound.
Right now, we're not running events and so my training business has been hit hard while in other areas to my business, some of my property businesses are doing exceedingly well as I’ve actually had to refinance some of my properties to pay wages for some of my staff and it's been a really crazy challenging time.
The thing is, it's really important to note that as an entrepreneur, you need to adapt and be fluid because a recession is time for you to make your business boom.
I really believe that we create our own economy and so you might be thinking but Samuel what about property? This is a property blog?
Although we're in a recession, house prices are not going down right now despite what the media will tell you as the media lie with headlines they've been putting out in the newspapers that property price is down four months in a row and that’s not true which in most cases is 0.1%.
Don't worry about what property prices are going to do in the next couple of years because when I started in property in 2008, everyone was saying it’s a terrible time to buy but I bought and guess what, house prices went down, I held on to the properties and then they went up.
It's not a bad time to buy right now and ultimately, capital appreciation will happen but it's also really important to remember that capital appreciation does not pay the bills which means when you buy a house, don't just buy it and think about what's going to happen in the next year or so.
I want you to buy for cash flow and I want you to buy for return on investment.
Don't just sit there and rely on the government and your employer because right now more than 730,000 people over this lockdown period have lost their jobs and I believe that there'll be over a million people just from a result of this pandemic that are going to lose their jobs.
It's important to not rely on the government or on an employer but to rely on yourself and be an entrepreneur by making sure that whether the market's going up or down you know how to make money.
Richard Branson right now is probably a little bit stressed as he's struggling with his businesses but he is going to be okay.
You need to worry about making sure that you are going to become successful and going to become wealthy through this pandemic and through this recession if you want to see the future.