Property Assets That Do Well During a Recession

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Generally, the real estate industry remains one of the less volatile and risky industries to invest in during times of economic upheaval. Of course, no investment is ever truly “recession-proof,” but real estate investments can weather the storm better than other kinds of investments because it helps to diversify one’s portfolio, which then helps reduce risk exposure. Some properties, however, pose less risk than others, and it’s crucial to choose the right kind of property if investors want it to be financially beneficial in a year like 2020. Here are the types of property investments that are worth considering in the time of a pandemic and a recession.

Mobile home parks

There’s a reason why mobile home parks have been dubbed as “the darling of all commercial real estate”—they’re recession-resistant, as evidenced by them outperforming other real estate sectors during this most recent recession. This is because the demand for more affordable housing goes up when the economy goes down. This particular reality is favorable for mobile home park investors since this asset can produce risk-adjusted returns. Mobile homes are also much more low-maintenance and require fewer capital expenses, there’s not a lot of competition due to the stigma of mobile homes, and it opens up opportunities for one’s portfolio since there are a lot of REITS looking to invest in stabilized assets.

Self-storage

Also known as one of the most recession-resistant properties, the self-storage industry continues to thrive in 2020 because of the different personal troubles brought on by the COVID-19 crisis—divorce, downsizing, eviction, joblessness, and death. Because of the pandemic, many students will be heading home not just for the school year, but permanently. Many couples have found themselves divorcing, which means many newly single people will have to look for a place to store their belongings while looking for a new place to live. People who have had to move out of their residences due to rising rent fees may also have to look for a place to keep their possessions while looking for a new home. During the 2008 recession, self-storage REITs were the only real estate asset sector that saw itself thriving.

Food truck parks

As the U.S. Centers for Disease Control and Prevention announced that dining in enclosed restaurants might pose a high risk for infection, more investors and business owners would do well to transition to outdoor spaces—and food truck parks are an excellent alternative. First finding ground in Southeast Asia and eventually finding a footing in “trendy” cities like Portland and Austin, food truck parks are open spaces that allow food trucks, coffee carts, and other mobile restaurants to park permanently. It’s a great way to allow consumers to dine in without exposing themselves to high risks of infection, provide a platform for small restaurant owners, and revitalize communities that have lost a lot during the COVID-19 crisis.

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Open spaces

In a similar vein, investing in open spaces could be a wise option as they can be turned into any kind of business that makes sense in a time where physical distancing is mandated. Open spaces can be easily turned into a drive-in movie theater, an outdoor gym, or a dog park, depending on the area’s zoning ordinances and regulations. They can also be turned into an outdoor garden for special events, giving the events industry another option for venues where guests don’t have to violate guidelines for mass gatherings.

Warehouses

With many retail stores shifting from brick-and-mortar spaces to e-commerce, an uptick in the demand for warehouses will continue because retailers will need to find homes for their inventory, especially once they’ve closed down their physical stores. Unlike other properties, warehouses are relatively low-maintenance since they’re more about efficiency than aesthetics. Tenants of warehouses are also more likely to sign more long-term leases. This particular property fulfills a perpetual need that’s not going away anytime soon, regardless of the state of the global economy.

Vacation properties

It may sound counterintuitive given the widespread travel bans and restrictions across the globe, but investing in vacation properties now may be a good idea since the prices may not be as high as they would be in normal circumstances. Consider snapping a vacation home now while not a lot of property investors have the same idea, otherwise, the prices will go up.

Consult with Experts

At the end of the day, only you and your financial consultants will be able to truly see your current financial circumstances, and help you act and invest in ways that will be beneficial for you in the long term. So don’t hesitate to consult with financial experts and enlist their help in looking for the best property investment for your current situation.

 

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