3 Reasons to Invest in Real Estate During a Recession

During a recession, prices of many assets tend to pull back. Sometimes that includes real estate… but sometimes not.

Right now, real estate is coming off of strong performance over the past two years. But a slowing economy and rising interest rates will likely cause prices to take a breather. That could make for an excellent long-term opportunity for investors.

The pros tend to outweigh any short-term downside. That’s because rental properties, particularly single-family housing, are still a basic necessity. And a well-kept home in the right area should continue to generate steady cash flow during uncertain times.

Even better, homes have been less volatile that commercial real estate. Office space tends to be far more cyclical. And in the post-pandemic era, the rise of remote work means the space is likely overbuilt in most markets at this time.

To best succeed in real estate, investors need to consider cash flow. As long as a property earns more than it costs each month, including financing costs, it should perform well.

And given that homes have a fairly steady return above inflation on average, investors should be protected in the long term. For many who gravitated towards fast-moving financial markets, the slower, but steadier, returns from real estate can likely add up to better returns over time.

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