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Memphis Real Estate Investing

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A Turnkey Investor's Guide to Navigating a Housing Recession

Fri, Nov 29, 2019

navigatingarecession-investingduringarecessionIf you’ve been keeping up with real estate market buzz, you have undoubtedly heard the rumors of a housing recession on the horizon. We ourselves have made mention of this possibility. For many of us, even thinking of a recession gives us flashbacks to the Great Recession. That was a devastating time for homeowners and investors of all kinds. Though opportunity arose from the crisis, it was a tough time for everyone.

That said, it’s important to remember that there were unique circumstances that led to the Great Recession being as widespread and devastating as it was. Another recession will not carry these same circumstances — so we should not inherently fear every recession.

In a poll of some 100 real estate experts, Zillow released a report on recession predictions. Half of the experts point to a recession in 2020. Many expect it to begin within the first quarter. The key distinction here is that, unlike the Great Recession, the housing market is not expected to be at the center of the next one.

U.S. monetary policy with play a much larger role in the predicted recession. We’ve mentioned in the past that the slowing of a market isn’t necessarily a bad thing, either. By most metrics, the U.S. economy is doing well, particularly in terms of GDP growth and unemployment rates.

But what does all this have to do with turnkey real estate investing? How would a recession theoretically affect investors?

3 Key Factors to Remember When Investing During a Recession

Recessions Aren’t Necessarily Bad

We’ve been trained to fear recessions. It’s not surprising considering the disaster that came with the Great Recession. That said, it’s important to remember that the housing market and the economy move in natural cycles. As this Forbes article notes, we’re “overdue” for a recession. Booms and busts are natural. Recessions can even benefit the housing market by tempering wild home values and prices. They can bring over-inflated markets back in line with the norm.

Recession is the cure for inflation. As we’ve seen home prices inflate and home ownership (and even renting) become increasing burdensome and out-of-reach for Americans, perhaps a recession is necessary. 

Don’t get us wrong — there are plenty of downsides to a recession. We know that full well. However, there are opportunities that come through recession. Not only so over-inflated industries correct, but other industries grow. It also keeps us on our toes as investors: forcing us to re-evaluate and examine our portfolios.

Be sure to check out: What Savvy Investors Should Do With Recession Predictions.

Pick Your Markets Wisely

An impending recession makes it all-the-more necessary to plan you portfolio wisely. Part of that means diversifying your portfolio and exploring markets that have strong potential. The markets that fared well during the Great Recession were those that remained balanced. They had less room to fall during the market crash. Likewise, investors will want to set their sights on these types of markets: those with balance, economic and population growth, and a diversified economic base. 

Diversification is key to building a strong portfolio. If you’ve only ever ventured into one market, now is the time to begin investigating new opportunities in a variety of markets. 

Take Solace in Your Strategy

Let’s be honest: investors can be prone to panic. During a recession or perceived downturn in the market, it’s key that we don’t make rash decisions. Remember, as a turnkey investor you ascribe to the buy-and-hold strategy. So much of the strength in this strategy is that you don’t depend on the ebb and flow of the market to profit. Your eyes are on the long-term, not in the short-term hills and valleys of the economy and housing market. 

Allow yourself to find comfort in your strategy when you begin to feel nervous about your investments. Remember, there’s no pressure on you to buy low and sell high. You don’t have to get out before the recession. Instead, you can rest knowing that the market does indeed move in cycles. Even if you run into a tough spot, it will pass and the market will change.

If you’re feeling nervous, talk to your turnkey provider.

Our advisers would be glad to help you plan for a future of building wealth through turnkey real estate investment. 

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Chris Clothier
Written by Chris Clothier

Entrepreneur, writer, speaker, ultra-endurance athlete, husband & father of five beautiful children. Chris puts these natural talents on display every day. As a partner at Memphis Invest, Chris addresses small and large audiences of real estate investors and business professionals nationwide several times each year. Chris is also an active writer, weekly publishing real estate, leadership, and endurance training articles.

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