Should you Invest during recession ?
Due to what is happening in the world right now we are headed towards a recession. What does this mean for someone like you who is interested in or is already in the real estate investment and development field. According to thebalance.com in recent history recessions have lasted a period of 11 months. The site also states that commonalities between recessions tend to be falling stock prices, high interest rates, high unemployment and a general low level of consumer confidence and generally a good time to buy real estate (if you have the means). Obviously, what is currently happening internationally is unprecedented and may not be exactly like previous recessions when it comes to timelines but so far with the stock market taking a big dive we seem to be headed into familiar territory. What this means to you, is that if you can invest in real estate during this recession you probably should.
Generally multi-unit property ownership and rental property ownership is lucrative since it leads to steady cash flow from rent paying tenants. The cash flow can cover the bills and expenses that the property and maintenance come with and leave the owner with discretionary funds once all expenses are accounted for. This money be passive income that can be used for living expenses or it can be used to invest in other properties of investment opportunities. Our next post will cover the advantages of larger group/partnership investment opportunities for multi-family projects,(www.aminvali.com)
During a recession a lot of real estate and property exchanges hands, this is generally out of necessity and loss of income on the seller’s side and real estate investors seeing an opportunity that most people don’t, since the real estate market becomes a “buyer’s market” during a recession. Developing a property during a recession, given you have the means, can be beneficial since labor and materials can be high supply due to a decrease in demand from larger corporations and developers since their overhead expenses are hard to maintain during a recession, leading to high unemployment and projects being paused or halted.
In conclusion, a recession has historically been beneficial for real estate investors and developers who have the means to invest in a down market.