New Data: A Recession Is Coming, but Real Estate Should Be Fine (Especially If You Follow These Tips)

By: , Contributor

Published on: Oct 28, 2019 | Updated on: Oct 30, 2019

Most Americans think a recession is on its way, but real estate investors might not have much to worry about. According to recent data from YouGov, most people think real estate investments will weather the coming storm.

Real estate is one of the most recession-proof investments you can make, according to those surveyed by YouGov. The only investments deemed safer are gold and certificates of deposit.

Baby boomers are particularly confident in real estate, ranking it safer (or at least as safe as) government bonds and high-yield savings accounts.

Are you recession-ready?

All in all, 46% of Americans think a recession will happen in the next two years. Despite this pessimism, though, many are still planning to invest in the near-term.

Of all the possible investment options given, real estate ranked at No. 4 overall, behind only 401(k)s, Roth IRAs, and mutual funds. YouGov’s data shows millennials and Americans in the South are planning the most real estate investments over the next 12 months.

If you’re one of this cohort and are considering a real estate investment despite the oncoming recession, these five tips can help you protect yourself before the storm hits.

1. Up your liquidity

If you can cash in on any of your lower-performing assets, you might consider doing so. Freeing up cash will allow you to snap up bigger deals (and more of them) once the recession is in full swing.

2. Diversify into REITs

If you haven’t already, you might think about investing in REITs rather than physical properties. REITs that specialize in stable industries like healthcare, self-storage, or office buildings, for example, can be a good way to keep your portfolio producing despite downturns in the larger economy.

3. Think about offloading your vacation properties

If you’ve got vacation rentals in your portfolio, it might be time to consider selling. Vacation home values (and vacationing in general) tend to decrease significantly in recessions.

4. Consider multi family

Foreclosures rise in recessions, and home sales tend to fall. That leaves renting to pick up the slack. Though some may turn to single-family housing, multi-family options like apartment complexes, duplexes, and triplexes usually offer more affordable options and see more demand in trying times.

5. Snap up student housing

As long as college enrollment remains strong, students will need off-campus housing regardless of economic fluctuations. Just make sure you choose your market (and athletic conference) carefully.

The bottom line

A recession is only hypothetical at this point, but it seems many Americans expect one’s on the way. If you’re in the same boat, you may want to start making moves to recession-proof your portfolio -- or, at the very least, choose your next investment wisely.

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