During a recession, many first-time investors can feel wary about embracing a new economic opportunity. However, failure to act is often a mistake that removes years of potential return from an investor’s financial future. Othman el Ballouti, a real estate expert, advises opting into real estate investment in a down economy is a relatively safe option, particularly when the investor is prudent while locating new properties.
Find more safe options in real estate
Othman el Ballouti reports real estate investment, particularly in fairly valued properties, can be insulated from more regular market fluctuations. Real estate can also be purchased with the same retirement products traditionally used to invest in the stocks, such as IRAs and 401(k) plans, and are entitled to the tax advantages with each plan as long as the funds stay within the financial instrument.
Realize shelter is essential
One reason real estate is fairly safe during a recession is shelter is always a need and a priority for people. There is a consistent demand for residential real estate and rentals, and recessions may frequently drive more people to rent as they wait for a better economic climate to explore homeownership. While diversifying the portfolio is always important, Othman el Ballouti reports, a solid investment in residential properties is a great place to start in a recession.
Seek out bargains
When the economy takes a downward turn, it can often correct high real estate prices, particularly overinflated prices based on demand versus actual home value. First-time investors should look for fairly valued properties, even if they need a little elbow grease before becoming rentals or a flip, and always jump on bargains to realize the benefits of a real estate portfolio as quickly as possible.
Look for options to maintain cash flow
Grabbing bargain properties makes it possible for real estate gurus to increase their portfolio while maintaining something very important — cash flow. With a solid investment, the rental income each month can cover the mortgage and the cost of any improvements while still providing a return in cash. Having a property pay for itself is amazing, but it’s even better when it adds to the bottom line as soon as possible, Othman el Ballouti reports.
While residential rentals are one of the safest places to stash real estate investment funds during an economic downturn, it’s still a good idea to look for other areas to invest in. If a prudent commercial real estate deal presents itself, don’t hesitate to take it, and also review commercial options outside business leases. Other types of units, such as self-storage, can be hot tickets whether the economy is booming or shrinking at a given time. Find multiple profitable revenue streams within real estate to make a portfolio truly recession-proof.