Investing in real estate during an economic downturn, or when the "knife is falling," can be a challenging and risky proposition. During such times, property values and rental incomes may decrease, making it difficult to turn a profit or even to maintain the value of your investment. We cannot know if we are entering another Global Recession, but I feel we are in recession in America now, January 2023.
However, it's also possible to find good deals on properties during a downturn. Prices may be lower, which can make it possible to purchase properties at a discount. Additionally, rental properties may be in high demand if people are unable to afford to purchase a home. Perhaps this is the perfect moment to get preapproved for a home loan and be shopping for deals.
If you are considering investing in real estate during an economic downturn, it's important to do your research and to be aware of the risks involved. It's also important to have a clear strategy in place, such as focusing on long-term investments or looking for properties in areas that are less affected by the downturn. My best advice is to stay the course on you job. Show up early and become more valuable. Having that W-2 income will make it easier to close on your investment property with a conventional loan. Even though interest rates are high, you will find property that cash flows.
Additionally, it is important to have a good cash reserve, as the market can be more volatile during an economic downturn and it can take longer to find tenants or buyers. Save your nest egg my grandmother always said.
Be prepared to close and immediately fill the rental with an excellent tenant. What is an excellent tenant? One with no evictions, FICO of 680, four times the rent as income that you verify, and who "fits" your location.
Overall, investing in real estate during an economic downturn can be risky but with the right approach and due diligence it can also be an opportunity to find good deals on properties.