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What is a recession resistant market, and why does it matter for real estate investing? Click play to learn about my favorite recession resistant market.
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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. As I like to say, people will always need a place to live. In fact, sometimes a recession can even drive up demand for rental properties. As we’re seeing right now, it’s getting harder for people to buy homes as interest rates rise, so they turn to renting until the tides change.
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.
So, 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. What is the unemployment rate, and how has it changed historically with economic recessions? What are the housing costs in the market, and how are those prices impacted by fluctuations in the economy? This is why thorough market research is a crucial part of any investing strategy.
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. This is due to a few key metrics:
- Change in unemployment rate during the Great Recession
- Change in housing prices during the Great Recession
- Percentage of the population that relies on public assistance programs
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, particularly west Texas, for years. In this video, I'm going to share more about my favorite recession-resistant rental market: Lubbock, Texas.
Most Recession-Resistant Cities of 2020: [ Ссылка ]
Rental Market Checklist: [ Ссылка ]
Texas Is Home to More Fortune 500 Companies Than Any Other State: [ Ссылка ]
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Clayton Morris is a financial news host and real estate investor, Clayton believes that everyone has the right and the ability to achieve financial freedom and works to help others to know how to do so.
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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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