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As inflation continues to ramp up, fears that economies are about to head into recessionary territory also increase.

Staking out recession-proof investment opportunities takes understanding the foundations of the current economic situation and how certain investments are better suited to overcome those liabilities.

Inflation is the price of an item that increases based on demand and limited supply for that item. This function can be seen in everything from food to heating oil and gas to housing prices.

A stagnation is when an economy slows for some time, freezing growth and wages.

A recession is defined as an economy contracting its growth for 2 consecutive quarters of a year and often leads to limited funds for loans and job losses in multiple sectors.

These economic factors all impact the rates at which loans can be provided, the amount of security needed for a loan, and the qualifying scores borrowers need.

For many home buyers, these economic trends make it more challenging to secure funding for a home purchase. As a result, they may end up pricing people out of home ownership entirely for the foreseeable future.

All that aside, homeownership is still a formidable way to hedge against inflation, especially as an investment.

Real estate historically is more stable than many other investments; they lack the volatility of stocks and have higher yields than most bonds.

There are plenty of investment vehicles to park money into real estate.

More than the traditional buying and holding of real estate, there are plenty of ways to park your money in real estate and make money even in the face of inflation and a possible recession.

You can buy and hold a home to sell once it appreciates enough equity to be a worthwhile time to sell.

This strategy is suitable for a long-term approach to an investment as real estate typically rises in value over the long term and doesn’t have the volatility associated with stocks.

Another option is to buy a property to rent or lease it out.

By renting out your property, you’re having someone else pay down your long-term debts while also paying you a small residual income every month.

If you plan your rentals according to good metrics and budget for vacancies and repairs, you could make a lifetime of passive earnings.

Once the property accrues enough equity to make it even more valuable to sell, you could sell it for a profit, much like traditional buy-and-holds.

Wholesaling houses is another way to invest money into real estate and make a sizable amount on the deal, even during high inflation. Wholesaling real estate is a transactional process that includes three parties; 1) the original seller, 2) the investor is known as a wholesaler, and 3) the secondary buyer.

It works like this; the investor researches and finds a property that the seller is willing to sell below market price.

There can be a lot of reasons for this, from family debts, sudden loss of income, deployment and relocation orders, or some other reason.

Once the investor finds a property, they enter into a purchasing agreement with the seller.

However, before the terms of the transaction are met and concluded, the investor finds another partner to whom the investor will sell the property at a markup for the investor.

Ideally, an investor would already have buyers for wholesaling the property before entering into the purchase agreement to avoid the risk of assuming ownership. However, that’s a strategic point that the investor needs to make on their own.

Best of all, even with higher interest rates for borrowers, real estate provides a way to build generational wealth by leveraging other people’s money to make your own profits.

By borrowing a significant amount in the form of a mortgage, you’re taking a loan at a set percentage rate for the duration of the loan to purchase an asset that will appreciate over the length of the loan, sometimes at double the amount of the loan terms.

Choosing to turn that investment over in the short term, like with a buy and flip or wholesale, or holding onto the asset for the length of the loan, you can make 2-3x on your initial loan amount, which you typically will possess with as little as 3% of the loan amount.

Where else can an individual investor secure 1 million in funding for $30,000 with the opportunity to make 2x the loan amount?

While the economy may be heading toward recessionary territory, investing in real estate is an excellent hedge against those concerns.


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