Where to invest for stable rent in a down market?

2 Replies

I am interested in finding locations, property types, and markets that have stable or appreciating rents and stable or decreasing vacancy rates to protect from the inverse in overall market downturns / medium income downturns so business can go on as usual (or better). The idea is to still cash flow and build equity as I would before and wait for an expansion or peak to sell if I want to. I have found there to be a lack of easily searchable and reliable information on this, besides for this thread.

https://www.biggerpockets.com/forums/48/topics/159564-when-a-housing-bubble-bursts-do-rent-prices-decrease-accordingly

So, in your experience in previous down markets, what has worked best? residential, commercial, industrial, certain micromarkets, certain price ranges, certain cities or rural areas, certain property types etc.

Thanks in advance

@Vlad Morel I've only ever invested in major metropolitan areas, Class A, or B neighborhoods, the last downturn I never had a vacancy for more than 30 days, never had a late payment, and have never had to evict a tenant. I think being in the markets I'm in are the reason. These markets also allow me to be more stringent on the tenant selection process and not have it affect the tenant candidate pool. This is my strategy for success in good or bad markets

Hi Vlad, 

I am a newbie that hasn't even invested in one property so take my advice with a grain of salt.

My logic here is that rents and economic downturn will be positively correlated with one another (Less people able to buy houses means more will be renting since no matter how irresponsible you are you still need a place to live at the end of the day). The main concern of any market where you want to set up a rental property is the population trends(more possible renters) and job outlook (is the city losing jobs which means a probable population decline as mentioned is important as well as less reliable tenants to choose from). I think the best you'll get in a market as a newbie is little no appreciation( those are the markets you'll be able to afford easier since appreciating markets will have risen so much in value by now that they'll be too expensive) and a strong cash flow so you can gain a ROI. This is the reason I am looking in the Midwest for properties. Reinvest all the cashflow you get from these properties to get more properties--> Repeat.

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