Should We Build Something Now?

Should we build something now? by Bill Roberts

For the most part economic activity slows down during a recession. That is actually the definition of a recession: two successive quarters of decreased economic activity. There are various technical descriptions but this is good enough for our purposes. The economists are trying to tell us that the recession is over. Yeah, right!

Recessions always lead to recoveries, usually about 18 months later. But how long do depressions last?

The last time we had a depression it lasted over ten years. And if it hadn't been for WWII it might have gone on a little longer.

So what do you do during the recession/depression? Save your money? Get ready to "pounce" once the recovery is announced? Sleep? Or do you take positive action?

Whatever you might want to do once the recovery starts, you would be better off doing it while the recession lurks. During a recession everything is cheaper. Everything!

If you are thinking about starting a business, then you will be able to get a better deal on the premises your business will need. Financing terms will be lower (assuming you can find financing). Supplies and inventories can be had at major discounts. Advertising should cost less. Any construction you need to accomplish can be done for significantly less money than will be the case after the recovery.

If you thinking about investing in real estate, prices, selection, and financing costs are all better during the recession than after the recovery.

And what if you want to build? With nothing selling, building during a recession is just plain crazy, or is it?

If you decided today you wanted to build something and you got started right away to accomplish that then you should finish your project just about the time the recovery begins. You will have reaped all the benefits of the recession. You will have been able to complete your project on time and for lower costs. Most of the construction bottlenecks just aren't present. Supplies are available when you need them. Sub-contractors are anxious to work. Inspectors aren't over burdened with work. Even the local building department is able to get right to your application.

Financing might be a major issue, but a little creativity can go a long way. Most commercial lenders prefer "loaning" to a single use LLC. That same LLC can be used to raise capital. The seller of the land and the broker might also be persuaded to contribute to the LLC. If the LLC owns the land "free and clear" the lender should be amenable to make the loan.

So what are you waiting for? The sooner you start, the sooner you'll finish.

Now your project is complete and here comes the recovery. How sweet it is!