#138 The 4 Step Process To Dominate During A Recession

Hey everyone. Today we're going to be talking about the four step process to dominate in a recession. Stay tuned. Welcome to the Passive Income MD podcast where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. All right, everyone knows that we're sitting in the middle of a potential recession right now. Depending on your definition, whatever it might be, maybe it's 2/4 of negative GDP growth. You've seen that happen. Maybe things have improved by the time you're watching this, maybe the world is worse. But in any case, there are proven strategies in a downturn to take advantage of whatever's going on in the economy today. If you've heard the statistics, the greatest transfer of wealth is happens in downturns or recessions. And these happen on a cyclical basis, sometimes seven years, 10 years, whatever it might be. But there's been a long time since we've actually seen a true recession. Sure, during the pandemic there was a blip and of course that was a short lived one. But since 2007, 2008, the Great Recession, you know, we've been waiting for this moment right now. And the reason so many of us are actually really excited by this time is that the zone or the time of maximal financial opportunity and happens in downturns and I believe depending on what age you're at. But if you're my age or around it that you only get so many of these opportunities in your lifetime, I was probably too young to take advantage of the last one. I did take advantage of some of that upswing, but I'm ready for the next one and I hope you are too. So while everybody is scared, it's when everybody's paralyzed. They don't know what to do. Their decisions are clouded by what's going on in the economy. So this four step process will help you do extremely well, especially during this downturn. Honestly, this stuff can work whatever economy you're in, but especially during a recession, this is when you can take advantage of what's happening. Step one, this is the best time to educate yourself. Everything starts with education, meaning that you read books, you listen to podcasts, you watch YouTube videos, you talk to other members of communities, you take courses, you go to conferences. These are all ways to educate yourself. Now, today, finding resources is not the issue. There are so many resources out there for you at our fingertips, we all have phones and that has more information than has been ever known to mankind in its history. So find people that can bring that information to you in a relatable way that makes sense and honestly fits your personality and is somebody that you enjoy learning from. Now, I started with websites. I started with blogs and forums. You may not find so many of those today, but now I get most of my education from, from podcasts, from YouTube channels, from going to conferences, taking courses, to having that curated information brought to me. Those are all out there for you. When things are looking pretty bleak out there, maybe deals are a little sparse, things seem pretty quiet, everyone's scared, everyone doesn't know what to do, that is the best time to sit there and hunker down and start learning. I know you're extremely busy, we're all busy. But my recommendation is try to learn one new thing every day. Now, if you just follow that simple rule, think about it. In a year, you've learned so many new things that can help you achieve your outcome or whatever your goals might be. Okay, step two Understand where your capital sources are. What I mean by that is figure out how much money you have to invest. There might be money sitting in your savings account. Maybe it's in a solo 4:1 or self directed IRA or 401k. Maybe it's an investment that has gone full cycle or is exiting and that money's going to be coming your way pretty soon. Maybe it's in the form of a credit line where you have access to capital if you need it. Or maybe it's sitting in cash somewhere in your house. Either way, you have to figure out how much you have to invest and where to find different sources of cash if you absolutely need to get into an investment. If you're a high income earner, you know that money is going to be coming in on a monthly, quarterly basis. Know exactly how much is going to be coming in, how much you need to live off of, and how much you have available to invest. During times when things look bleak, when you're in the thick of a recession, when you're in the thick of a downturn, cash is king. You've probably heard about that. People have access to capital, liquid capital is what they might call it. Where you have easy access to it, that is going to be your biggest asset. Meaning that you have the most opportunity to get into deals and be an investor. For me, what do I do? I literally go and look at all my bank accounts. You probably have bank accounts in different banks, maybe from different lenders that you've had or different loan situations. I mean, I have several bank accounts. Maybe you have a high yield savings account. So I go through and I do an inventory every single month. And if it's around time where I'm going to invest, I actually do that inventory more often. I'll just have it on a spreadsheet and I'll figure out exactly how much cash and capital I have to invest. If you actually take a look, you might be surprised what's available to you in the form of HELOCs, home equity loans. Now I'm not telling that you should always use debt, even more debt, like put a second mortgage on your home to have the ability to invest. But it's good to know what's out there and available for you if you need it, if amazing investment comes up and there's a great opportunity to go all in. So at the time of filming, I know exactly how much capital I have. Now I'm holding onto it, looking for great opportunities. And I believe that in the upcoming months there will be many great opportunities to utilize that capital to get into some really great investments. Step three. Now this is the time to start making great relationships. Figure out your network, figure out who knows who or who knows whom depending on how you say it. Make relationships with sponsors, with operators, with people who are running deals, fund managers, because these are the people that are going to be sending you deals and opportunities when the time comes. If you have relationships with people who have been through multiple sessions, even better. Those people know how to position themselves and find those opportunities when everything everybody else is running for the door, when people are fearful, they that's when the great deals come about. They can buy things at a bargain and can set you up for greater returns down the road. But those relationships don't happen. It actually takes some work getting to know other people. Now if you're part of an investor club like we have called the Platinum Investor Club, for example at pimd, that's one place where you can just get together with other people who are looking at deals, create an immediate network. Now there might be another network out there for you, especially in some of our other communities. There are other doctors, there are other high net worth individuals that people who come to our conference, things like that, where you can network with other people to find out what other opportunities are out there. You should also be asking around to those people that you know are highly successful when it comes to investing. What are they investing in? Who are they investing their money with? Who are they trusting with their hard earned income. This is the time to create that list, to get on mailing lists where people will send you opportunities to have phone calls with the sponsors. This is actually the time to even do some of the due diligence that's involved. And before you decide on an investment, find out their track record, find out what they've done in the past. These are people that you want to stay close to. So when new buying opportunities come and they send out that opportunity to their investors, you want to be one of the first ones alerted when that happens. And the only way to do that is to create those relationships. Some of these investments actually depending on the sponsor and the type of deal, they can't actually advertise the deals like the ones you might see on Facebook or are or widely marketed. Some of these deals can only be sent to people they have a relationship with. And a lot of times that means longer than 30 days, 60 days, whatever it might be. Creating these relationships now will set you up to be able to see all of these opportunities in the next three to six months and even a year. I found that this has been my greatest return on investment. When thinking about different deals and opportunities, it's all in the relationships. You find the good people to work with, you find the good people to partner with, you find the good people to share deals with, share collective knowledge and share your experience. That's where all the amazing things happen, when you actually connect to great people. So if you're going to spend the time thinking about how to take advantage of this opportunity that's coming and is upcoming, this is where you want to spend a lot of your time and energy creating the relationships that will help get you where you want to be. And lastly, step number four, you've got to learn to take decisive action. Now, I will tell you, investing when it's a downturn, investing when there's maximum fear and pessimism, that's probably the hardest thing to do. You're going against all of human psychology, all against human emotion. There's a reason why people who are able to invest in downturns, to have that greatest transfer of wealth, those people benefit the most later on. Now, you've probably heard the statistic that so many companies, successful ones on the Fortune 1000 list, so many of them were actually started during economic winter or downturns. And the reason why is during that time, that's when the most opportunity is there. That's the time when they, if they can figure out how to make things happen, they'll be set up for many, many years and cycles down the road. So for you as an investor, if you can learn how to educate yourself, figure out where all your money is, create relationships, and then ultimately learn to take action based on all of these things put together, you're going to benefit better than anybody else during this downturn. Now, I don't know how many of you looked at the last like, bull market, the upswing, whatever it might be, and wish that you were there at the beginning of it. Well, you're going to get another opportunity. If it's not now, it's going to be in the next six months to a year, maybe even up to two years. You have that opportunity, but unless you're ready for it, you're not going to be able to take advantage of it. And part of that is learning how to take decisive action. Now, if you haven't actually invested in anything before, maybe this is a time you want to do a small nibble on something that is relatively low risk to you, especially a small amount that you wouldn't mind risking. But again, see it as a learning opportunity, a chance for you to educate yourself, figure out what your risk tolerance is, figure out how to take action, meaning actually make an investment. I can tell you there are going to be many people who sit on the sidelines. They're going to sell all their assets or they're going to just hoard their cash and do absolutely nothing with it for the next several years. Those are the people that are going to sit there and wait for things to be perfect before they invest. Unfortunately, by the time they jump in, it's going to be a little late to take advantage of a huge upswing. I hope you're one of the people that's been preparing themselves because we've been waiting for this a while and I can't tell you how excited I am for this upcoming opportunity. There are many of you have been on this journey with me and ultimately I think we can all win together. This is a team sport. We're all trying to help each other out and support each other. I'm excited for what's to come and I hope you are too. Let us know how we can continue to support you. Thanks. Enjoy the show. Let me know by dropping a review and the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you a part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. You can join us on our Facebook group Passive Income Docs, and you can always learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.