INVESTMENT STRATEGY
RECESSION HOW-TO’S
Investing in Real Estate During a Recession REAL ESTATE INVESTING CAN BE A SMART PLAY WHEN THE MARKET COOLS.
by Luke Babich
hether the U.S. is in a recession may not be clear for a while,
often do, that doesn’t have a direct impact on the real estate market. Of course, the real estate market may cool, but it’s not directly correlated to stock market performance. If the housing market does cool, then investment properties will be more affordable. You may even be able to purchase multiple properties at lower prices. So, which is right for you—passive investment or active investment? You can invest in the real estate market many different ways. First, you’ll need to decide whether you want to invest passively or actively. When you invest passively, you don’t play an active role in managing a property, while an active investor is more hands-on. Both options have their pros and cons. With passive investing, you may earn less, but you’ll save time and energy. With active investing, you can earn a larger profit, but you’ll spend more time and effort managing your properties. PASSIVE INVESTMENT HOW-TO’S If you decide to invest in real estate passively, one of the most popular methods is to invest in real estate investment trusts. You can also invest in crowdfunding real estate projects. Choosing this option typically requires less money
upfront and less knowledge about the real estate industry, although familiarizing yourself with market trends can help you make better investment decisions. Another way to invest passively in real estate is to buy properties remotely. You can do this by hiring an outside property management company to take care of the property for you. You won’t earn as much of a profit because you’ll need to pay your property management team, but you can save yourself time to pursue other real estate ventures. ACTIVE INVESTMENT HOW-TO’S If you want to be a more present investor and have the opportunity to turn more profit, you might prefer active investing. If you’re interested in buying, selling, or renting properties, partnering with an experienced real estate agent can help you gain access to homes as soon as they hit the multiple listing service or even properties that are off the market. FLIP HOUSES. One way to actively invest in real estate is to buy properties that are inexpensive and slightly outdated. Flip the homes by remodeling and repairing damage, and then sell them for a profit. This method can generate a hefty profit, but it requires a lot of legwork and capital.
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but the economy is noticeably experiencing a downturn. Inflation remains high, and many experts worry the Federal Reserve may respond too aggressively, raising interest rates and sending the economy into a more traditional recession. Recessions, which are typically marked by economic downturns and a high unemployment rate, offer opportunities to invest for less money. Investing in the stock market is one option, but seeking real estate investment opportunities is another avenue to consider. With that said, here’s everything you need to know about investing in real estate during a recession. IS IT SAFE TO INVEST IN REAL ESTATE DURING A RECESSION? There’s no such thing as a safe investment. But investing in real estate during an economic downturn does have some advantages other investments lack. For example, stocks are often volatile during a recession. But people still need a place to live. The U.S. rental market is hot, so investing in real estate and renting properties could be a worthwhile pursuit. Consider too that when stocks plummet during a recession, as they
54 | think realty magazine :: november – december 2022
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