23/04/2020
*WHAT IS ADVISABLE TO INVEST IN DURING RECESSION? REAL ESTATE*
by Mays KuhailMar 25, 2020
Should you begin thinking about what to invest in DURING recession?
But wait, why are we talking about recession in the first place? COVID-19 is disrupting industries and economies worldwide, and it wouldn’t be a surprise if the US housing market went into its first recession since 2008. And if we learned anything from the last recession, it’s that real estate investors played it smart. While the housing crisis took a hit on homeowners, real estate investors were able to benefit. So if you’re wondering where to put money during a recession, consider real estate – the best investment during a recession.
*REASONS FOR INVESTING IN LANDED PROPERTY DURING RECESSION*
There will always be demand for residential property: Even as pandemic hits, people will still need a place to live. Therefore, there will always be demand for rental property, and a recession will not change that. This is why, while other types of investments can take a hit during recessions, residential real estate is less likely to.
Long-term rental properties produce stable income (if they’re occupied): Residential real estate (or buy-and-holds) provides a steady monthly income, given the rental property is occupied. At dire times such as recession, having that source of income is crucial. Other types of real estate investments, such as commercial properties, may not provide income as stable as that of residential properties.
Real estate, in general, is less volatile during economic downturns: Usually, investments such as stocks and bonds are more affected and are a less reliable investment. Our current stock market is proof of that. Stock prices across different industries are making unpredictable swings. This is one of the general benefits of investing in real estate. While all types of investments bear a certain degree of risk, residential real estate bears the least.
Recession leads to a drop in housing prices: During the 2008 recession, homeowners lost significantly. Real estate investors, on the other hand, turned the difficult market conditions into opportunity. Recessions are not ideal times for homeowners or sellers. But if you’re looking to buy a property to invest in during a recession, now is the time. Once real estate prices begin to increase, you can either continue to rent out your property, or you can sell the investment property for a profit.
