There are many factors that have changed in the economy over the past few years. As an investor, the idea of losing your rental income can be scary. On today’s show, we’re going to talk about how a recession impacts real estate investors. You’re also going to hear why it’s so important to invest in a recession-resistant market.
I’m also sharing my favorite economically strong rental market, and the main reasons why it’s the best recession-resistant city for investors. If you’re interested in learning more about recession-resistant real estate investing, this episode is for you!
More About This Show
With all the changes Covid brought, many people were worried about their financial future, and real estate investors were no exception. I know many investors who worried their tenants might get sick or lose their jobs, ultimately leading to a loss of rental income. Luckily for the most part, the rental industry has recovered from these uncertainties… but of course we can never predict things like a global pandemic. That’s why I’m so passionate about making smart investments in recession-resistant markets.
The good news is – in most scenarios rental rates don’t typically drop during a recession. People will always need a place to live. In fact, sometimes a recession can even drive up demand for rental properties.
However, this doesn’t mean all investors are going to be automatically protected from recession. While real estate is the best investment you can make in an economic downturn, there are so many other factors that go into it: asset class, strategy, leverage, and of course, location.
What exactly is a recession resistant market?
A study conducted by Smart Asset in 2020 looked at data in over 200 US cities and used nine metrics across three categories, employment, housing, and social assistance, to find the most recession resistant cities in the US.
Specifically for landlords, it’s critical that you think about these factors before you invest in any market. If you haven’t seen my video on rental market research,
I’ll link it for you here.
With that being said, when you look at the data from this study, I think you’ll notice a theme. Many Texas cities are ranked as recession-proof.
At Morris Invest, we weren’t surprised by these findings. Our team conducts extensive market research, and we’ve been sharing the benefits of investing in Texas for years.
My Favorite Recession-Resistant Rental Market: Lubbock, Texas
Even before Covid hit, Lubbock was already considered an economically strong city. And now we’ve seen its resilience through the pandemic. In fact, in January, Lubbock mayor Dan Pope explained that the unemployment rate stayed consistent in Lubbock throughout the pandemic and there are actually more jobs in Lubbock now than there were pre-Covid.
The rental market in Lubbock is in great shape. Recent trends are showing that renter-occupied units make up nearly 50% of the housing market. The population in Lubbock is steadily growing, creating a high demand for rentals.
And in Texas in general, you’re going to see more affordability in housing prices, increased rental profits due to the lack of state income tax, as well as laws that are favorable toward landlords.
To sum things up, investing in a recession-resistant market is typically going to be a key indicator of your success as a real estate investor. Personally, my favorite recession-resistant market is Lubbock, Texas. No matter where you invest, it’s important that you take a look at some of these key factors like employment rates and housing data.
And if you’re ready to invest, but you want the market research done for you, be sure to get on our calendar. You can
schedule a free call at morrisinvest.com. We’d love to learn about your goals and how investing in a recession-resistant market can help you get there.
Episode Resources
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Head On Fire Show
Smart Asset Study
Rental Market Research Video
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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