Riding Out the Storm: How Multifamily Properties Can Help You Weather Economic Uncertainty

Owning multifamily real estate can be a good investment in both high inflation and recessionary environments for several reasons.

One key benefit of multifamily properties is their relative stability during economic downturns. People will always need a place to live, regardless of the state of the economy, which can make multifamily properties more resistant to market fluctuations. In fact, during a recession, people may be more likely to rent rather than buy a home, which can increase demand for rental units. This was exemplified during the Great Recession of 2008, when multifamily properties were among the first to recover, with values beginning to rise again as early as 2010.

Another advantage of multifamily properties is their ability to provide a stable income stream through the rental payments of multiple tenants. This can be particularly beneficial in a high inflation environment, where the value of cash may be decreasing over time. By contrast, an investment in a single-family home may not provide the same level of consistent income. This was evident during the stagflation of the 1970s, when multifamily properties held their value better than other types of real estate.

In addition to their stability and income potential, multifamily properties can also offer a hedge against inflation. As the cost of living increases, so too may the rent that tenants are willing to pay. This can lead to an increase in the property's cash flow and overall value over time.

Finally, multifamily properties can offer economies of scale when it comes to maintenance and management. The cost of maintaining a single large building may be lower than the cost of maintaining several smaller ones, making multifamily properties a more cost-effective investment.

Overall, the historical examples of the stagflation of the 1970s and the Great Recession of 2008 demonstrate the benefits of owning multifamily real estate in both high inflation and recessionary periods. Its relative stability, income potential, inflation hedge, and cost-effectiveness make it a potentially lucrative investment, especially in the current economic climate.