Whether you are into wholesale, buy and flip, or buy and hold, real estate investment can still be lucrative compared to other options, even in a volatile economic atmosphere. It can, to the very least, give your portfolio stability, which you cannot expect with stocks. When stocks do well, you can have more money in your account. But if they crash, you can lose all your hard-earned money in the blink of an eye. That’s why it is critical to diversify your income source so that you don’thave to worry about your finances,no matter how the economy behaves. There are various reasonswhy some people suggest real estate investment. Let’s take a quick look.
Reasons to invest in property even during volatile economic conditions
Stable income
As already hinted above, property investment can be a smart way to ensure additional regular income. If it’s a rental property, you can trust it to produce revenue during recessions also. As the owner, you can adjust monthly rents to make sure you don’t lose tenants. Also, it can help you deal with inflation and higher interest rates. At the time of renewal, you can increase rents to get some relief from inflation-driven price hikes.
Resilience to volatility
Whenever recession has hit in the past, stock prices crashed miserably. But housing prices were either stable or became high. In 2008, the housing market had also suffered and there was a financial crisis 2008. However, it was mainly due to the correction of overinflated prices. Real estate properties don’t directly depend on stock market conditions; hence, you can fall back on it as an investment opportunity. According to Phill Grove, the property market doesn’t move so fast, and therefore, it can protect itself from the harsh effects of the recession. It doesn’t mean real estate is recession-proof, though. It only indicates its slow-moving nature at such times.
Reliability
The slow construction process has created a gap between demand and supply in the housing market. And for things to change, it has to become dynamic. And during recessions, the supply shortages tend to increase even more. Hence, you don’t need to take stress with the prices. It cannot go dramatically low.
To benefit in these areas, you have to be wise with your choices. For instance, if you are a flipper, it would be ideal to buy cheap properties. Keeping your offer about 20 to 30% lower can act as a cushion if you have to sell it for less or hold it for a longer time. Besides, you can approach private investors for flipping or buying rental properties before exploring refinancing options. It is particularly relevant if you are new to this field.
So, if you want to avoid high-risk investments, you can rely on real estate to generate passive income even during unpredictable conditions. Your money can be safe, and on top of it, you can expect some returns also. And even if you let go of something due to an emergency, you can expect to secure a large portion of your investment.
