Being sturdy and reliable, people have always considered properties, residential as well as commercial, to be the most viable investment option. However, during unprecedented events, such as a recession, many often wonder whether a real estate investment can weather the storm. “Should I invest in real estate during a recession?” is a question we get asked often. Just like any other industry, the property market too has understandably taken considerable hits during previous economic downturns. But that’s more the reason for owning rental property during a recession. Let us explain.
3 Reasons For Making Real Estate Investments During A Recession
Reason 1: Real Estate Continues To Appreciate In Value
Over the last 70 years, despite several recessions, real estate values have continued to go up. In fact, there have been instances where the values have increased even during the recession itself. But even if an economic turmoil causes a hot housing market to cool down, that’s still great news for investors since this could potentially open up opportunities to purchase properties at discounted rates.
Reason 2: Housing Is Basic Necessity
The best investment during a recession is residential properties. There’s surely someone or the other on the lookout for a home; since it is a basic need, housing always has a demand no matter what happens. You might be under the impression that commercial real estate is more dependable and profitable. But, since people need a shelter over their heads, homes aren’t subject to global economic conditions and thus make for good investments.
Reason 3: Real Estate Is More Stable Compared To Others Investments
Compared to other investments such as stocks, Government bonds, Certificates of Deposit, Mutual Funds etc., real estate is more stable in the long run. According to business and capital news giant Bloomberg, stocks are unstable in nature and can easily be affected by economic crises. On the other hand, recession has minimal effects on real estate. And since real estate is a physical, tangible investment, you can put it to use even if its value decreases.
What To Invest In During Recession?
Wondering which types of properties to buy during a recession? As mentioned earlier, residential real estate is the best way to go. Businesses might suffer losses and you might have to face vacancies in your commercial investments. Housing, on the other hand, will always be in demand. So, if you are wondering how to make money during recession, start investing in the following property types!
- Duplexes, triplexes and quadplexes
- Multifamily homes
- Off-campus student housing
- Senior housing
- Farmland
The more units you can rent out, the more rental income you can generate. We have written a detailed blog regarding the above-mentioned properties and how they survive during a recession. Click here to read it.
How To Make Real Estate Investments During A Recession?
Considering the ever-present demand for real estate, you have better chances of securing your future through smart investments, proper financial planning and robust property management. BFPM can help you get started on your real estate investment journey during a recession. We not only help you to buy real estate, but our property management services also include multifamily property management, commercial property management, construction management and repositioning, utility management and cost reimbursement, to name just a few. To know more, you can schedule a 15- minute consultation call with us.
Trevor Henson
Trevor Henson is an experienced entrepreneur (10+ highly-successful start-ups) and property investor with a demonstrated history of building and leading teams in investment property management environments, maximizing returns for property owners, and optimizing properties through construction management and re-positioning. He…Learn more about how we can help. Customized solutions for large portfolios!