Recessions are terrible for property owners, right? This is when people go out of business or lose their jobs, stock markets crash and property prices plummet! The media would have us believe that there is only doom and gloom everywhere. However there is a silver lining to this situation as well, as I have found over the decades of personally investing in real estate and helping thousands of others do the same. So here’s how I answer when they ask me, what do I do if there is a recession?
The seen and unseen impacts of recession.
Let’s talk about the terrible recession of 2008 which went on for a few years. Just previous to that recession, there had been a couple of years of boom time. This was when property prices had appreciated significantly. So in the years from say 2004 to about 2006 or so, property values in areas such as Phoenix were nearly doubling in just two to three years! During recession, however, those valuations were seen to plummet. So those were the seen and distressing aspects of recession. (Check out this short episode where I crunch some numbers and explain what I mean).
However, recession is also the time when property rentals go up. This is a time when people are unsure about their jobs and future earnings. They don’t want to buy property and run the risk of being unable to pay for it. So they play it safe and opt to continue to rent. This is the hidden benefit of recession for property owners.
Why you must learn the art of doing nothing.
So as I always tell my clients, you have to learn to do that most difficult of things during the recession: do nothing! When valuations plummet, one can feel a lot of pressure to just sell and cut one’s losses. I have seen this in new investors, this tendency to panic-sell. If you ride out the recession, you will see the valuations of your homes going up again.
I created a video to explain the importance of doing nothing. I also outline the basics to keep in mind about investing in real estate and why this is the one truly recession-proof investment you can make. Check out this short video now – it will be the best return you can get on a five-minute investment today!
