This episode of the Heartland Multifamily Show is part 3 of a 3-part series on DEFCON 3, 2, and 1. DEFCON is a term that originated in the Cold War to describe the readiness of the military to respond to the threat of a nuclear strike. It means “Defense Condition,” and goes from 5, which is peace, to 1, which is World War 3. This language has been adopted to other situations, and in this case, we are talking about DEFCON 1 as it relates to a multifamily investing company defaulting on its loans and possibly declaring bankruptcy.

A company that is in DEFCON 1 didn’t get that way overnight. They didn’t wake up one morning and realize that they had no money. They had several months of watching their profits dwindle to the point where they became losses and then had to make several uncomfortable calls to investors and banks asking for second chances and assistance before they realized there was no way to keep the ship from sinking and they had to abandon ship.

But one person’s loss can be another person’s gain, if you know where to look, what to look for, and do your due diligence to see if you have a good chance of getting a good deal on a valuable property. Watch this episode of the Heartland Multifamily Show to learn what to look for.

On this episode of the Heartland Multifamily Show, we’re continuing our discussion of the Defcon cycles. This is episode 2 of a 3-part series. In part 1, we went over what Defcon means and its military origin, and what it means when a company is in Defcon 3. At Defcon 3, you have a plan to get your company solvent again. But if it didn’t work, now you’re in Defcon 2. At Defcon 2, you have to make some pretty uncomfortable phone calls and meetings and explain to your lenders and your investors the situation. At this point, many people will be looking for an exit, but most will work with you as long as it’s in their own interest. Watch this episode to find out how you can navigate being at Defcon 2.

Today on the Heartland Multifamily Show, Trot and I are talking about Defcon 3. What is it? Why do investors get to Defcon 3? How can you get out of Defcon 3, and what opportunities are there if you want to buy a property that’s at Defcon 3? Defcon 3, meaning Defense Condition 3, is a phrase that dates back to the Cold War. The Defense Condition went from Defcon 5, meaning peaceful but aware of threats, to Defcon 1, which is a full-scale nuclear attack. This analogy also applies to multifamily real estate investing. When you are at Defcon 3, you are inching closer to disaster, but you have the opportunity to right the ship before things get so bad that you can’t fix them. And on the other side of it, if you are an investor who sees another property at Defcon 3 and you have done your due diligence, you can get a good deal to buy and fix up a property that the previous owner has mismanaged. Watch this episode to learn the basics of Defcon 3.