"Other assets such as storage and multifamily, have historically tended to be more durable in a downturn. “Even though during three of the last five recessions, real estate values actually increased.” A recession can be the best time to invest in real estate, says Jim Egan, head of commercial real estate banking and senior vice president at Bryn Mawr Trust. The coronavirus has created an economic storm that is putting stress on several business sectors ranging from transportation to hospitality and agriculture. This “An investment in a real estate investment trust is also an option that involves less capital and may add diversification to your portfolio.” Egan says.
But real estate could prove profitable when the economy moves toward a recession if stocks and bonds falter. So it is important to understand the value of “Real estate is an interesting asset,” says Mihal Gartenberg, an agent at New York-based Warburg Realty Partnership.
"As an investor, you have to be comfortable with the long-term nature of this investment and understand the liquidity risk associated with real estate," Laux says.6 national restaurant chains in deepest trouble amid COVID-19 include Outback Steakhouse, IHOP and Denny's
“Other assets such as storage and multifamily, have historically tended to be more durable in a downturn.” At the same time, industrial, retail and office space may prove riskier in a recession because the cash flow of those properties is dependent upon how well the underlying tenants can navigate a slower economy. In that respect, this asset class can offer more flexibility than stocks and bonds in a recession, Laux says. "Consistency of the yield is what makes real estate investments more suited for riding out a recession," says Jason Laux, owner and retirement advisor at Synergy Group in White Oak, Pennsylvania.Laux looks to rental properties, saying consistent rent payments from tenants do not fluctuate in a recessionary period.
Real estate investors have another edge when it comes to using rental income to offset the effects of a recession. “As an investor, you have to be comfortable with the long-term nature of this investment and understand the liquidity risk associated with real estate,” Laux says. REITs can provide dividend income; direct ownership allows investors to pocket rental income…
“If your investment model is dependent on appreciation, then the recession is going to be a tough time, as home prices are going to drop,” says Joseph Polakovic, owner and CEO of Castle West Financial in San Diego. But an economic slowdown may be a reason to buy real estate since this investment speaks to a variety of investor needs, including diversification and income generation. "Value on paper may change, but value, as it relates to the yearly income, doesn't tend to vary as quickly," she says.The real estate market is not completely immune to volatility, Egan says. REITs can provide As an income stream, real estate investing tends to offer predictability in a recession.
Investing wisely means managing the balance between supply and demand.
Investors can position those properties as rentals or rent-to-own until the needle shifts back to low supply and high demand. The quality of the property investment can directly dictate how well real estate performs in comparison to other securities. "Historically, there are a range of potential outcomes when it comes to performance during a recession," Palomino says. "Real estate tends to be a better hedge for inflation than bonds, especially in this low-interest-rate environment," he says.In short, a recession can open up opportunities to invest in real estate. Property investments can provide a stable income during uncertain times, can be less sensitive to unpredictable rapid changes, and can outperform the returns on stocks and bonds. Real estate investment trusts, or REITs, … 3 reasons to invest in real estate during a recession. The 2008 financial crisis and the following downturn in the housing market are evidence of that.
When evaluating properties, focus on quality and return potential, as well as the time frame involved. During the Great Recession, real estate investment properties were affected differently. At that point, the property can be sold for a profit. "Because of the steady nature of revenues from real estate, it can often be a good hedge against volatility," says Diana Hill, director of real estate education at OTA Real Estate. Investing wisely means managing the balance between supply and demand. 0.
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