“What should I do during an economic downturn?”
I think a lot of people who are going into a downturn feel a lot of fear. But for those people who are stable and set up and ready to take advantage of a downturn, they’re excited. It’s an opportunity to buy. And I think right now we are kind of in this lull before the storm. I think the storm is going to get worse. The best thing you can do as a person–in my opinion–is to be flat-footed right now, to “cash up.” There’s never been a cheaper time in human history to borrow money, and you have a government who has printed a ton of money, which is going to create inflation. And if you can lock in a 30-year fixed rate–and that’s one opinion I would say is, I would not do a five-year or 10-year. I would do a longer-term rate because even if the rates drop another half percent, 3% is so cheap.
If you can lock that in, have a little cash out, I think that’s a really smart thing to do. And the key for me in being a lender, it’s not about leveraging yourself too much, even though I’m a lender, I lend money. I encourage people to borrow responsibly, no matter how much you borrow, it has to be something you can service. So you say, I want to pull money out and let’s say, my house is free and clear. Should I borrow half a million dollars against it to have some cash? It depends. But the key is is that if you borrow half a million dollars, it’s going to cost you $3000- $4000 a month, whatever the interest rate is, and you have to be able to service that now. And the key is if you borrow so that you have cash, do you have the ability to service it if things change in the market. Servicing, that is a really important thing to consider.