Real Estate Investments That Can Survive Economic Recession
The real estate market is not immune to the ups and downs of the economy. When a recession hits, property values can plummet, and rental vacancies can skyrocket. However, certain real estate investments can survive an economic downturn better than others. Knowing which assets are better can help you make informed buying and selling decisions.
- Multifamily Properties: One of the most recession-resistant types of real estate investments is multifamily properties. In a recession, many people may not be able to afford homeownership, so the demand for rental properties can actually increase. Additionally, people may downsize to smaller, more affordable living spaces, increasing demand for apartments and other multifamily units.
- Commercial Properties: Commercial real estate can also be a good investment during a recession, depending on the property type. Specific commercial properties, such as medical buildings, are necessary regardless of the economic climate. Other types of commercial properties, like shopping centers and office buildings, may be more vulnerable during a recession as businesses struggle to stay afloat. However, commercial real estate can be a valuable asset with careful management and diversification.
- Rental Properties in High-Demand Locations: When the economy takes a downturn, people may still need to move for work or other reasons. Rental properties in highly desirable locations, such as urban centers or near universities, may continue to see demand even during a recession. These properties may also command higher rents, which can help offset any economic turbulence.
- Government-Backed Housing: Investing in government-backed housing, such as Section 8 housing or other affordable housing initiatives, can also be a recession-resistant option. These properties are often rented by low-income individuals who may be less affected by economic downturns.
- Short-Term Rentals: While short-term rentals may not be recession-proof, they can be more resilient than long-term rentals during an economic downturn. This is because short-term rentals are often used by travelers, who may still need to visit a city for business or leisure, even during a recession.
- Self-Storage Facilities: Self-storage facilities can be a recession-resistant real estate investment. During an economic downturn, people may need to downsize or move but may not want to part with their possessions. Self-storage facilities provide a solution for these individuals, and demand for storage space may even increase during a recession.
In addition to investing in recession-resistant types of real estate, there are other steps investors can take to weather economic turbulence. One crucial step is to maintain a diversified portfolio. This can help mitigate risk and protect against losses in any asset class.
Investors should also be prepared to weather short-term market fluctuations. Real estate is a long-term investment, and while economic downturns can be difficult, they are often followed by periods of growth and opportunity.
For more info about recession-resistant commercial income, contact a local professional.