You’ve probably heard a lot of chatter recently about recession. It exists everywhere, and people are consumed. The idea of another housing bubble akin to the one we had in 2008 is among one of the more terrifying things that people think could happen. But here is what you need to know about multi-family real estate in the midst of a recession. It will affect you, but probably not in the way that you think. Not that it will be a wholly positive position for you to be in, but if you are smart on this end, if a recession does begin, you can set yourself up for success both during a recession and for when the economy begins to pull out of the recession. So here are some practical tips for how you can invest wisely.
What You Need to Know
Let me start by saying that I am not an economist, and have no insider information about a recession, But while every media outlet is talking about the forthcoming recession, there is no need to panic. Our economy remains strong, and rental income isn’t at a huge risk of taking a nosedive. I can say this confidently because the most important thing to remember is that multi-family real estate becomes more relevant when people are in a pinch. Whether they are financially struggling or they find themselves downsizing, apartment and condo living becomes a quick, simple solution. Renting is almost always a cheaper monthly option, with less money down and therefore people come flocking to reputable, reliable properties. So while you are unloading a pile of cash to acquire a property, they see it as an easy way to minimize their financial burdens.
What to Avoid
Avoid cash flow problems. If we are truly on the brink of a recession, avoid properties that are going to be money pits. This is not the time to invest in a property that needs a complete overhaul or face lift. This may be the time to act a little more conservatively and to make decisions based on how quickly you can get units filled.
Avoid a foreclosed property. The thing to remember is that if a recession begins, there will be little upward motion. There may not be a lot of decrease in your properties value, but you can be pretty certain that it won’t see an increase. You want to see your portfolio hold steady, not drop.
Avoid the panic. This may be the hardest thing to do when doomsday seems to be approaching. But don’t panic. Keep in mind that you may not see a huge increase in your return on investment and your rental growth may not increase, you can certainly maintain it. Real estate is a sure fire investment in a recession because people always need housing. That need doesn’t go away just because the markets aren’t doing well. And investing in multi-family real estate is an even more stable than other kinds of rental properties.
If you are interested in getting involved in multi-family real estate investing, head over to our contact page and leave your information. We are always looking for syndicated investors who are interested in add value properties in the southeast region.
