Recession-Resistant Property Types Worth Considering:

[Mohamed Youssef]

With economic uncertainty making headlines again, I've been researching truly recession-resistant property types beyond the usual suspects.

• - Mobile home parks continue to demonstrate remarkable stability. Unlike apartment tenants who might downsize during tough times, mobile home residents rarely move due to the $5-10K relocation cost of their homes. One investor in our network shared that their collections remained above 95% even during 2008-2009.
  
• - Self-storage has evolved from being recession-resistant to actually benefiting during downturns. As people downsize housing, demand for storage increases. The operational simplicity (minimal staff, low maintenance) creates impressive cash flow protection.
  
• - Medical office properties with long-term leases to healthcare systems offer another layer of protection. These tenants invest heavily in specialized buildouts and equipment, making them unlikely to relocate even when budgets tighten.

Less obvious: car washes. People still maintain vehicles during economic slowdowns but might switch from professional detailing to automated washes. Several express car wash chains have shown remarkable growth during previous contractions.

What recession-resistant properties are you considering for your portfolio? Is anyone having success with niche asset classes not mentioned here?

[Henry Clark]

General comments. We have also been concerned about the economy and have taken actions.

1.  Self storage is our main investment.  You need to stratify the discussion into ABC markets.  Our investments in C markets say 10,000 population.   Our occupancy has been at 99% forever.  We have increased our rental rates by 25%.   Too small a market for both Large or small investors to attack.  “A” markets draw the large locations and large REITS and oversupply and unit price have deteriorated.  Our “B” market investments are Performing well.  Self storage is great in both good and bad economies due to housing movements up and down.  Having looked at many markets in the U.S. there are still many markets that are under supplied.

2.  MHP maintenance.  It’s been 50 years but sewer line, water line and road repairs aren’t that big of a deal for established parks.  
 MHP needs to be stratified between lot rental only or Park owned units.  
      
  MHP are  housing of the last resort or a low cost entry point.  Both are great for a recession.   

3.  Senior homes.  Ride the Silver Tsunami.  Demand is guaranteed.  Baby boomers with all their wealth.  Problem this is an intense customer, regulatory, secondary customer- children, dietary, therapy, medical industry, employee based industry.  The real estate part of it is large but the easiest part of the equation.      

More than investment type concerns for a poor economy we have looked at the following.      
 A.  Reduce debt.    
B.  Increase cash reserves.   
C. Diversification of asset types.       
 D.  Pruning investments.      
E.  Both hold off or Start new investments.  We have held off starting our next Self Storage location even though the market analysis is concrete.  We are bringing to market a Country Subdivision.  We don’t build houses and this is the worst time to start a subdivision.  Luckily recessions don’t last that long and subdivisions usually take a while to fill.  We are doing this with cash and not a loan. 
F.  I personally would not start a new asset type going into a recession. Unless it was small and I did it for experience so I could ramp up quickly coming out of a recession.