Combatting Recessions

There aren't many guarantees in this world, but one thing that you can count on with relative certainty is that economic conditions will ebb and flow with regularity. Good years and bad, recession and expansion. Many investments don't fare as well during a recession, but we'd like to discuss a few reasons that multifamily housing does!

Sector Performance Compared to Others

One of the major insights into the resiliency of the multi-family sector pertains to the effect on rental rates. In both the minor recession of 2001 and the Great Recession of 2008-2009, multi-family rental rates incurred a lower total rent decline and a larger, more rapid, post-recession recovery. While this doesn't guarantee the same results in the future, historical data suggests that during and immediately after economic recession, multifamily investment tends to be more resilient than its peers (office, industrial, etc.). 

Our Target Property Class

Multifamily properties are classified as A-D, with Class A being the newest and most luxurious while Class D tend to be the opposite of that: older, in need of major work and possibly in declining areas. In a downturn, Class A apartments will be the first to see a dip in demand and rents. By focusing on B and C class properties with value-add potential, we can still offer a quality living experience with nice amenities, but without the luxury price point that tends to see increased vacancy during a recession!

Information gathered from believed-to-be reputable sources, but should not be considered investment advice. BCGK always suggests consulting a financial professional before making any investment decisions.