Preparing for Economic Downturns: How to Succeed with Real Estate Investing During a Recession
Facing a looming recession can no doubt be scary for any business owner, including a real estate investor. After all, you may have worked for years to acquire your current properties, and the thought of losing it all is almost too much to handle.
The good news? It is possible for you to prepare for an economic downturn and potentially come out of it relatively unscathed.
Here’s a rundown on how to succeed with real estate investing during a recession.
Stay the Course with Your Criteria
When it comes to buying property during a recession, make sure you have well-defined criteria, rather than making an attempt to time the market. If you buy according to certain proven criteria, you can better avoid getting into financial trouble no matter how the market happens to be performing.
For instance, pay attention to market cycle stages for your target area. In a market suffering from a recession, you can expect your vacancy rate to increase. Meanwhile, the opposite is true for an expanding market.
Also, try to diversify your assets. In other words, rather than pouring all of your eggs into one basket—for instance, single-family rental properties—make sure that you also pour some money into apartment communities as well.
Invest in Existing Properties
Let’s say you’re seeking real estate investing opportunities during a recession but can’t seem to locate any deals. In this situation, consider investing some of your cash into your existing rental investment properties instead.
This may decrease your costs or increase your rent prices. Ideally, the investment you make in the property should make it stand out even more to potential tenants so that you can keep your property as in-demand as possible during an economic downturn.
Make Sure That You Can Access Money
Another way to prepare for a recession is to avoid spending and focus more on saving. Cash reserves can come in handy for taking advantage of any new deals that come your way.
In addition, consider getting a credit line on one of the investment properties you own. A credit line can be helpful because you only have to worry about paying interest if you use this money. This can give you access to capital right away if you need it for a major unexpected repair, for example, during your recession.
Recession-Proof Your Real Estate Investing Business
Although recession fears remain strong, your confidence in your business—and the business itself—can remain just as strong. I’m here to help you to navigate an economic downturn by showing you how to approach real estate investing during a recession, including buying new property during a recession.