September 6, 2022

Recession or Not? 2 Key Things to Know About Real Estate Investment

As we head towards the end of 2022, there has been much speculation about whether or not the US is headed towards a recession. Recessions happen as the business cycle naturally expands and contracts. A long period of expansion coupled with the lasting effects from Covid related shutdowns caused many to predict that a recession is coming. However, other experts disagree, pointing to low unemployment rates, strong hiring, and ample job openings.

For the real estate investor, although recession fears may be cause for concern, it can also be a time for opportunity. Regardless of the macro economic trends, there are always ways to make money in real estate.

Here are two key things to know about real estate investing during a recession (or not):

#1 - Real Estate is More Stable Than the Stock Market

Even though the real estate market does indeed fluctuate, historically it has been significantly more stable than the stock market. The rules for investing during the recession are not much different:

  • If you are investing in single family rental homes, look for properties in areas with high rent growth that you can get for below market value.
  • If you are investing in commercial real estate, you should still be looking for properties in areas with a thriving business community. These areas do not necessarily change much during a recession.

The stock market may drop 30% or even more, but the real estate market typically does not act like that, even in a severe recession.

This relative stability is one of the reasons why Nada exists and why we are passionate about creating real estate investments for everyone. With Cityfunds, you can choose the level of investment that feels comfortable for you, starting at as little as $250, which is great for any investor with concerns about job security or personal finances.

#2 - Housing is Always Needed

Housing is one of the most basic needs that people have and there will always be a demand. Modest and lower income housing will often see a boom in some markets during a recession. People will cut back on luxuries like vacations, expensive cars, or clothing during a recession, but they will always need a place to live.

In addition, rents often actually rise during a recession as fewer people are able to afford to buy homes of their own, fueling increased demand in the rental market. Rental property owners may actually be more likely to find highly qualified tenants (and get higher rents) during a recession.

Nada recognizes the great importance and potential of someone’s most valuable asset - their home. In addition to being able to invest in a city’s residential real estate market through Cityfunds, Nada also provides opportunities for homeowners to unlock their equity through Homeshares. Providing investment opportunities on both sides of the equation is part of our belief that everyone should be able to invest in real estate.

Shift Your Focus to What Works Now

Investing in real estate during a recession can still be lucrative, but requires a shift in focus. This may not be the right time to go all in on luxury homes, gourmet kitchens, granite countertops, and high end fixtures. But if you can pick up a distressed property at a steep discount and make it rentable on a budget, you can start building equity and enjoying a modest cash flow.

Real estate investing at its core is about finding a need and filling it, and the opportunity to do that never ends. If you are interested in investing in residential real estate, but don’t yet have the assets required to purchase a property of your own, consider Cityfunds as an alternative. Cityfunds pools money from multiple investors to purchase residential properties in popular cities, making investing easier than ever. Recession or not, Nada helps people invest in their future.  

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