Investing During a Recession
When you invest in something as significant as a property, you want to ensure it will be safe through a recession. Creating a recession-proof portfolio can be a no-brainer to ensure that you continue to get a safe and consistent return as you would any other time. Fortunately, real estate has proved time and time again to be stable through times of change as they are a tangible necessity in our day and age. Other investments, such as healthcare and utilities, are considered safe during an investment, while stocks invested in risky businesses might not be.
Real estate investments are seen as stable, but let’s understand why.
Properties Are Constantly Appreciating
Through over 70 years of ups and downs in the housing market and multiple recessions, real estate continues to increase in value. There are even instances where houses rise in value during the recession. Properties are hot ticket items; no matter where they are or what is happening in the economy, they will continue to appreciate through financial turmoil and earn you a high return. This is also backed up by investors and homeowners constantly renovating and upgrading their homes, causing the value to appreciate because of added amenities or luxuries. The simple addition of a pool or garage can boost the value even through a recession.
Houses Are Necessities
Unlike other investment options, housing continues to prove itself to be a necessity. People need shelter, and no matter what the economy looks like, people will seek property. If you rent out to tenants, you might find new renters out of people who lost their homes because of the recession or market changes and now need somewhere to rent. No matter the circumstance, real estate will always be in high demand.
Real Estate Is Consistently Stable Compared to Other Investments
Real estate investments have been proven more stable through rough economic changes than other options, such as stocks, CDs, government bonds, and mutual funds. Stocks are more volatile during an economic crisis and can cause the investor to lose their investment in a matter of moments, while real estate is only minimally affected by recession or turmoil in the long term. During past recessions, real estate did fluctuate, but at low rates that could be explained by single-family homes correcting themselves. Real estate is slower to move, unlike how fast stocks and cryptocurrencies move in the face of economic change.
Earn a Stable Income
You have full control over the income you take in from your rental properties. If you have tenants, you can be promised a certain amount of return each month, allowing you to earn a stable income. During a recession, you are still earning this rate, meaning that the only time your income might change is when you adjust your price during economic shifts, most likely raising your rent to follow market fluctuations.
Find a Cheaper Investment
If you have yet to invest in real estate, a recession might be a proper time to do so. Many houses will go on the market as homeowners shift to renters, and it is your chance to invest in these homes at lower prices than before. Investing during a recession can help diversify your portfolio while getting you a more stable and less volatile investment to maintain.
Market fluctuations can bring many questions regarding your investments, but real estate continues to prove itself stable. If you have further questions or wish to start your real estate investing journey, contact the team at KC Investor Funding.