Talk of the recession is flooding the airwaves and internet. People are predicting everything from next week to the next 5 years. And while some may be more accurate than others, we know for a fact that the economy is fluid. It always will be. And while we all want to throw ourselves into a “recession proof” market, the truth is, it doesn’t exist. But what does exist is a solid understanding of what will hold up better than others. Richard Green, director of the USC Lusk Center for Real Estate in Los Angeles said “No class of real estate is immune to recessions. Recession-proof implies that if we’re in a recession and someone needs to dispose of a property, they can get all their money back.” Which we know that even in the smartest investments, isn’t possible. But here are some things to think about when looking at a “recession proof” real estate investment.
Supply, Demand & Location
In a recession, the demand for rentals at multi-family properties almost always increases exponentially. In a bad year, you may have to cut rent a bit, but that doesn’t mean it isn’t an excellent investment. Not recession-proof, but probably very good. Especially in areas where the housing market is already looking weak. In an area where houses are selling quickly, regardless of price, there will be a great need for multi-family housing in the wake of a recession. These areas are normally places where industry is rising and new hires are scrambling to find appropriate housing. Often a hospital has opened, or a new factory, a branch of the tech industry, these kinds of endeavors hire a massive number of employees all at the same time and when they come rushing into town for a new job, they are desperate for a place to land. As a recession begins to creep up, they still need housing, but instead of looking for a luxury house with 3 bathrooms and an in-ground pool, they will be much more likely to land in a well appointed apartment or condo that can offer them the amenities that they require with ease.
After choosing a city that is booming and can’t keep up with the demand for housing, your next step will be to zoom in one more click. And figure out where people actually want to live within that city. Downtown is often an excellent location, it normally contains properties in specific, central, walkable neighborhoods and they are perpetually in demand. Buildings that feel “soulful”—that is, thoughtfully designed, with close attention paid to details—will stand out even in a cooling market.
If you’re looking to start investing in multifamily property in the Charlotte area, reach out to us through our contact form and let us know how we can help. We are constantly looking at value add properties to invest in and we are always looking for accredited investors to partner with! We provide a turn key solution where we find and source the property, move it through the acquisition and management process and bring in qualified investors through a SEC legal process. We provide a hands off, wealth investment strategy for our accredited investors and we are always looking to add to our team!
[…] still need a place to stay and work. They will likely rent it instead. Rental properties will be in higher demand and have a good track record of returns in investments with or without a recession […]