Your Survival Guide to an Impending Recession as an Investor

Your Survival Guide to an Impending Recession as an Investor | Kitti Sisters

038: YOUR SURVIVALYour Survival Guide to an Impending Recession as an Investor

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As we are prepping for an epic day today at The Kitti Sisters HQ, what kind of financial BFFs would we be if we first didn’t check in on all of you?

We’ve come off of a very turbulent two years. Pandemics, wars, and supply shortages…it’s all felt like one giant Will-Smith-style slap in the face.

And just when you think the masks have been lowered and life is scheduled to resume to some sort of normalcy, enter 2022. 2022 is really THAT girl, you know, the one with all the audacity. 😵😵

As we’re recording this, inflation is at a 40-year high, crazy right? Russia has gone to war with Ukraine resulting in a massive humanitarian crisis, and the stock market has been volatile. 🤯🤯

If 2022 is Regina George, then we’re dubbing the stock market as Gretchen Weiners because that place has too many secrets. 

That’s why inflation is so big, it’s full of secrets! 

And don’t take our word for it, the Time, Inc recently reported that 40% of the 3000 Nasdaq stocks have lost 50% or more in value in the past few months. 

And for those of you keeping close tabs on Cryptocurrency then you already know nearly half of the crypto market has been wiped out.

If you’re thinking “well my week has been quite rough, and this really isn’t helping,” let’s be clear, our intent isn’t to be negative, we’re simply stating the reality.

But, it really isn’t all that simple, is it? 🧐🧐

There is not a person on this planet who has been left unscathed by the monstrosity of the year that was 2020. And from where we’re sitting, things really aren’t looking up too much.

But again, this is check-in on you. And while we wish we could sit down with every single one of you guys to see how you’re really doing, the least we can do is offer some perspective, and hopefully offer solutions as we look down the barrel of 2022.

Whether you’re an investor or not, you may be wondering what the economy is going to look like over the next year. 

You know our favorite R word is retire. And early, if we can help it. 😏😏

But our least favorite R-word, and we have a feeling we’re not alone in this, is recession. And like it or not, recessions are an inevitable part of our current modern capitalist economy.

And if Regina George and Gretchen Weiners–we mean 2022 and the modern economy— are giving the signals like they’ve been doing, we wouldn’t be surprised if we entered a recession at some point this year.

But before you start putting your money under your mattress in fear, let’s take a breather. While we don’t have the forces to stop the recession from happening, we do have an education. And you know what they say about education, it’s power‼️ 

That’s why today’s episode is dedicated to the signs that point to recession, so you can keep an eye out for the signals. 

We’re also discussing how a recession can affect different asset types, and how you can protect yours. 

And lastly, we’re going over how you can prepare.

You’ve heard of disaster preparation, right?

👉 It’s the stockpiling of non-perishable goods, medicines, and other survival goods just in case that tornado blows through your town, or the big ‘quake comes.

Well, in turn, the same preparation and care for your finances and assets deserve just as much– if not more- prep and awareness. 

Before we continue any further into this episode, a friendly reminder here don’t forget to always seek advise from your professionals or legal team.  We’re here on the basis that we’re sharing our knowledge based on historic evidence that has worked for us, in conjunction with older, wiser, and smarter investors who have taught us a thing or two and have saved our butts in the process. 

We’re here to spread the knowledge and help you become a more informed investor. 

So let’s start with the basics, what is inflation?

What Does Rising Inflation Mean?

In our show notes on our website, thekittisisters.com/podcast, we’re linking the Investopedia definition of how recession happens. In short, inflation is linked to economic business cycles. 

We tend to laugh when people tell us “we can never have enough money!” because honestly, you can– just ask the economic system. 🤪🤪 That’s how inflation occurs, there’s too much money in the economic system.

Let’s break this down on a more practical level. How suspiciously low are these interest rates that have been put on mortgages? Have you applied for a business loan recently? Because those things are easier to get today than they have ever been. And the last, probably most in your face example, is how much stimulus money has been sent out by the government over the past couple of years. 

There is no shade if you’ve purchased a home 🏠, applied for a loan, or got a nice check in the past couple of years. But what all of these have in common, is that inflation is not politically favorable. 

Can you blame them? Consumers have every right to be upset that the same gallon of milk 🥛 from 2018 is a heck of a lot more expensive in 2022. 😔😔 Rising inflation tends to signal that the economy doesn’t need to be “propped up” any longer. 

America has always had this appeal of a booming economy to other parts of the world, but the people who are living and experiencing life here today know that’s the furthest thing from the truth. Yet, we’re experiencing high inflation which typically indicates that we are in this illustrious booming economy.

Unfortunately, the U.S. government cares more about tapering down inflation than how the economy is actually doing. This means they are going to be working to reduce that inflation with the tools they have available.

Curb (Your) Inflation 

So how do you curb inflation? Well, you might have heard of quantum physics— and don’t worry, no one is doing any of that nonsense here– but quantitative tightening is the key to curbing inflation. If you’re thinking ‘there’s something about the word “quantum” that sounds incredibly intimidating.” 🤓🤓

You’re not alone!  

So let’s break it down. If there’s too much money in the economy causing inflation, how do we taper that down?

Quantitative easing is an act aimed at reducing the overall supply of money being pumped into the economy.

Quantitative tightening happens when the Fed Reserve does not buy back Treasury bonds, increases federal interest rates in the short term, and provides less government-backed lending.

Okay, so going back to the whole low interest on taking out loans for a house or business, with quantitative tightening, there will be higher interest rates and fewer lending options, which will hopefully discourage people from taking out such massive loans. 

Exactly, tightening them, and us, into an economy we all benefit from, even if it can be painful at the moment.

What This Means for You, Fellow Investor 

As we bring this conversation back to investing, you might be wondering what this means and how it affects you.

In order to relate to the investor, let’s first look at the stock market. As we know, the stock market is made up of businesses. So when the Fed increases interest rates, those tend to negatively impact businesses because it means businesses have to limit their activity. 

When Daddy Warbucks starts getting stingy with his dollars 💵, and pairs them with a high-interest rate, this leaves Annie with no choice but to limit her day-to-day spending habit and overall operations. 

And that’s just one side of the coin, when the stingy stock market is then met with a global supply chain issue, induced by the pandemic plus even more recently with the wars happening in Eastern Europe, that is what is driving a lot of the volatility we are seeing in the stock market recently. 

If you were to ask us if there’s any change on the horizon, we’re most likely to say “probably not.” We don’t believe this is likely to change in the near future given the signals, but if we were to give sound advice to those stock investors out there, we’d definitely encourage them to take stock (pun intended) of their investments as it relates to our current economy.  

Those of us who invest in 🏢 multifamily apartments (we’re talking 65 units or above) are already aware of how different the market is compared to the residential market.

Ever been around a toddler? 👶

Their mood is completely based on their surroundings. Do they have enough 🥨🧁🍧 snacks? Is the crayon 🖍️ the right color? Do they want to change their shoes 🩰 every 5 seconds? Think of single-family home assets similar to the child-like wonder of a kid ages 2-4. Single-family home prices are similar to stocks because they are based on speculation about how the surrounding market will perform. 

In addition, when interest rates go up, mortgages get more expensive so fewer people will buy homes because they can’t afford the mortgage at the higher interest rate or they don’t want to pay the interest on the loan.

Which drives most people to… rent.

On the other hand, multifamily apartments are built differently. Literally. If people can’t afford homeownership, they will turn to rentals. This is why even during recessions, you still see cash flow coming in from those who invest in apartment syndication.

They know people will choose the more cost-effective option when getting priced out by the single-family homeowners market. Even during one of the worst times in history– the pandemic– people were ordered to “stay at home.”

Home can, and does, look different for everyone. 

This doesn’t mean investors walk away clean from any impacts of inflation. While rate increases will impact commercial real estate loans as well, investors like us can adjust for these increases in our business plans. How? By underwriting deals more conservatively and doing stress tests to ensure we can still meet our debt obligations even if interest rates go up.  

It’s all about thinking and planning ahead. The key here is if you have proper cash reserves and enough cash flow coming in then you will be able to withstand changes in rates. 

Easier said than done, right? So let’s get into the details ▶️ of how to prepare, plan, and execute an investment strategy for an impending recession.

Okay So, Now What?

Remember this is our survival guide and how these steps have historically proven to work for us. Consult with your team, lawyers, and accountants to address how these tips can also work in your favor! 

  1. Review your asset protection vehicles and ensure you eliminate any unnecessary risk in your investment strategies. Some of our Evil Knievel risks takes may roll their eyes at this one, but playing it cool and safe in your investments during these times will benefit you in the long run. Save you backflip, cannon shooting investments when the economy has stabilized just a bit more
  2. If you are going to invest because you see a recession as an opportunity to make money, make sure you have liquidity. You can do this by increasing your credit lines and access to credit when needed. 
  3. When looking to invest, focus on cash flowing rather than appreciation.  It’s important to make sure that you, or whoever you invest with, have ample cash reserves and monthly cash flow coming in to handle turbulent times. Remember, cash flow is king, and cash can quickly decrease in value over time. 
  4. Utilize your team! Ask your sponsorship team if they’ve done any stress tests on the investment opportunity they are presenting to you, they are smart people who are just as invested in protecting their assets as you. They might be assuming there will be a lower rent growth, but we don’t foresee this happening. By the way, if you want to hear more about why cash flow is king, check out our EP036 A Couple of Queens and the Cashflow King, we’ll link up to it in the show notes.
  5. Understand what type of loan will be used in the investment opportunity.  Ask the sponsorship team if they are buying the cap rate insurance, if so what’s the strike rate? In baseball, batting a 300 average is considered a success. That means for every 10 pitches, you only need to hit the ball three times to sign millions of dollars worth of deals and sponsorships. Can the same be said for the history of your investments? 

Remember while we can’t stop inflation, we do have the power, as investors, to make wise and sound decisions with our team by taking a 30,000-foot view of our assets and investments. ✨ 

With every wave 🌊 in the economy comes lessons and learnings that you have to observe and be privy to in order to become a successful leader in this sector. We’re happy to help and support you during this time in our history, and together, navigate every dirty trench and mountain top moment.


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Fortified with years of experience, fierce passive investors (we ALWAYS in our own deals), and selected high qualities investment opportunities to help build your long term wealth no matter what stage in life you're on. We will show you the ropes, help you build out a powerful, personalizes strategy, and give you masterful, financial freedom focused on living your lifestyle dreams.

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A sister duo team obsessed with all things financial freedom, passive income, and apartment investing + apartment syndication, who turned a $2,000 bank account into a nine-figure empire.  Now, we're sharing with you the behind-the-scenes secrets of our wealth building strategy.

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