Real Estate Investing Multi-Family Real Estate

Recession-Resilient Real Estate: High Unemployment to Drive Demand for Rentals

At 14.7 percent, the unemployment rate has reached a level we haven’t seen since the Great Depression. The April 2020 rate was 31 percent higher than during the height of the 2008-2009 economic crisis, when unemployment rose to 10.2% in October 2009. Uncertain times are a reality for many Americans, but with real estate, you have the opportunity to gain an upper hand by making smart decisions that can positively impact your finances.

Recession-resilient real estate can provide investors with a solution for a down economy. During recessions, rental demand often rises – and as a result, rental prices may also climb. As rental revenue increases, a property’s net operating income (NOI) begins to grow, resulting in higher property values – and gains for investors.

For example, during the Great Recession, multi-family property was one of the most resilient asset classes within the real estate industry. In times of economic decline, families are prone to downsize out of single-family homes and move to more affordable multi-family housing. A recent Gallup poll indicates that only 50 percent of Americans think now is a good time to buy a home, which represents an all-time low reading.

To select the best option for multi-family investments, you’ll want to consider several factors:

Location of your Investment

Geography plays a large factor in profit for a multi-family investment. Recently, Texas has typically fared better than most states during a recession. The Austin/Round Rock metropolitan area is predicted to be among the 15 least vulnerable cities to downward markets, according to research from SmartAssets. Four other Texas cities made the list, including Frisco, Plano, Denton, and Lubbock.  

Organization of your investment firm

It’s important to work with a company that carefully reviews all property space, actively searching for rental growth. At Rastegar Property Company, we standardize our projects using leading priority technology tools. This helps us make informed decisions to bring together all moving parts of property acquisition, management, renovations, and much more.

Want to learn more about recession-resilient real estate? Connect with our team of specialists today!

Competitive Advantages for Properties

Tenants prefer to do business with a firm that stays ahead of other rental properties. Offering extra amenities or perks to tenants builds loyalty. At Rastegar, our advantage is providing newly renovated properties with strategically lower rental rates due to our ability to effectively manage renovation costs. The combination of our rental prices, brand new amenities, and desirable locations – are something competitors simply cannot match. 

Overall, shelter is one of the most basic human needs. Americans are more likely to skip a credit card payment, but still make their rent. Because of these factors, it is a fair prediction that the multi-family Real Estate market will remain resilient, even during uncertain times, and with rising unemployment.

 

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Ari Rastegar
Author:

Ari Rastegar

Ari has built a portfolio network designed to reduce risk and provide strong quarterly cash flows, with an emphasis on asset classes such as self-storage, multi-family, office, retail, and industrial. He’s been recognized for his specialties in recession-resilient strategies and commercial real estate investments.