Recession-Resistant Property Types Worth Considering:

[Mohamed Youssef]

With economic uncertainty making headlines again, I've been researching truly recession-resistant property types beyond the usual suspects.

• - Mobile home parks continue to demonstrate remarkable stability. Unlike apartment tenants who might downsize during tough times, mobile home residents rarely move due to the $5-10K relocation cost of their homes. One investor in our network shared that their collections remained above 95% even during 2008-2009.
  
• - Self-storage has evolved from being recession-resistant to actually benefiting during downturns. As people downsize housing, demand for storage increases. The operational simplicity (minimal staff, low maintenance) creates impressive cash flow protection.
  
• - Medical office properties with long-term leases to healthcare systems offer another layer of protection. These tenants invest heavily in specialized buildouts and equipment, making them unlikely to relocate even when budgets tighten.

Less obvious: car washes. People still maintain vehicles during economic slowdowns but might switch from professional detailing to automated washes. Several express car wash chains have shown remarkable growth during previous contractions.

What recession-resistant properties are you considering for your portfolio? Is anyone having success with niche asset classes not mentioned here?

[Mohamed Youssef]

Quote from @Brian Burke:

I've seen mixed results from these asset classes over the last several market cycles.

MHPs do seem to have some resistance to recessions and some stability, in part due to the reasons you gave.  They do have some risks, however--such as big-ticket capital improvements like water/sewer systems and roadways.  This can be mitigated to some extent by thorough due diligence, but for long-term ownership you'll probably get hit with these eventually.  This can be especially painful when the cost of labor and materials is high--as is the case now.

Self Storage has seen rent declines in the last couple of years.  I'm not sure that this is recession-related because we haven't been in an recession (officially?).  I think it has more to do with over-building, which can be just as bad as a recession.

I agree with your thesis on medical office, however I've noticed a lot of doctor consolidation in my area with doctors either leaving the area due to high costs or partnering up with other doctors and/or larger medical groups.  Our class A medical office seems to be doing quite well but I see a lot of vacant B&C class medical office that wasn't vacant a few years ago.

My addition to this list is senior housing, specifically assisted living, memory care, and skilled nursing facilities.  I believe in it enough that I'm about to launch a fund for acquiring just that, and have ten assets in contract already.  This is a needs-based use, so it has recession resiliency, but many states also have development restrictions so you don't see the over-building problem like we've recently seen in self storage and multifamily.  The downside here is you need specific industry knowledge and relationships to make this strategy successful, so it's out of reach for a lot of sponsors.

 Thanks, Brian, for mentioning the capital improvements cost on the mobile homes. I agree with you on the senior living facilities, these places make a ton of money.