With talks of recession why wouldn't I just buy cheap?

[Gurjot Grewal]

With inflation from my understanding two things will happen. Either rates rise to the point where they lower inflation but we risk economic slow down, job losses, deferred debt etc. If the economy slows too much they may start cutting rates leading to more inflation.  

If rates rise, sure prices may come down but mortgage payments will still be unaffordable for most, and rents will go up. If they cut rates then more people are likely to park their cash into an asset like real estate leading to an increase in prices.

This is all new to me, im trying to educate myself. Im a Canadian looking at US real estate. My plan is to buy my first place before the end of the year, use the cash flow to finance a car.(Car accident led to my car getting written off) 

Theres something to be said about cities with economic diversity, maybe these areas will be more resilient. But why not just go to the cheapest market? Even if it drops by 10-20% if you cash flow long enough you can atleast break even. Not to mention as it gets more unaffordable everywhere else, people may migrate to where it is more affordable at times like this.

This is my thought process. Am I completely off on this? 

[Taylor L.]

It is tempting to go for the least expensive property you can find, but there are a lot of risks that come with cheap properties. They tend to be cheap for a reason. Many are older and need a lot more upkeep than newer buildings. The repairs and capital expenditures can get very expensive. When you're funding those with low rents, it's a double whammy. Materials and labor can only get so cheap. 

It's also not a foregone conclusion that markets hit by recession will ever come back, particularly if they don't have strong jobs markets with a diverse base of industry. There are a lot of areas around the US that used to be major employment hubs but which have completely fallen off the map. For example, textiles and furniture were huge in parts of VA and NC but those industries largely migrated away. Steel was a big part of PA's economy, but that is largely gone (and with it the jobs).

Economic diversity is going to heavily influence the long term success of any buy & hold real estate investment. If the jobs leave an area, that's it. Economic diversity means one single industry won't drive the ups and downs of your investment.