Recession Resistant Properties

[Daniel Ramirez]

Hello BP Community - 

Precise market timing is impossible or at the very least extremely-difficult to attain (otherwise we would all be multi-millionaires/billionaires). However, there are a few indicators in my market (Charlotte, NC) that point towards it being a bit on the overheated side: deceleration in construction projects, house flip rates very close to 2007/early 2008 levels, price expansion (appreciation) slowing down (according to some articles). One major positive is the influx of people into the city is still high. Based on what I'm seeing though, it might be prudent to start look at more recession resistant properties. My intention is not to debate macro market trends, but rather to discuss what constitutes a recession resistant property?

In a slowing economy, depreciating property values, where do you place your money (within the scope of real property)? I'm looking toward multi-family units (mid-lower income areas). 

Thoughts?

[Dawn Brenengen]

@Daniel Ramirez While the current market may definitely be a sellers' market, holding rental properties does generally well in a recession, no matter what kind of housing you have.  Sales prices might come down during a recession, but unless you are selling, it doesn't matter.  As fewer people qualify to buy homes, more people rent, increasing demand for your properties.

During this last recession I saw no increase in vacancy. As long as you're not holding some sort of creative financing-type mortgage (interest only, ARM, balloon payments), your payments stay the same and rental demand goes up.