Investing In Property During A Downturn?

Downturns and recessions are nothing new in this world.

One of the worst recessions on record was the Great Depression - which started in 1929 and lasted until the late 1930s. Between 1929 and 1932, worldwide GDP fell by approximately 15%. By comparison worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.

However since the Great Depression the average recession has only lasted about 11 months.

During the Great Depression a property investor would certainly have found many bargain buys at great value, but would have likely needed to wait a number of years to see price movements consistently move up to pre-recession levels.

During the average recession since then a savvy investor looking for opportunities might only have needed to wait a year or two to see prices increase to pre-recession levels.

The real question is not how long will you need to wait to time the bottom of the market so you can jump in a buy, but rather - how much can you afford to invest in before prices go back up.

Trying to time the market is folly - even some of the most experienced investors don't bother to try. It's always been about 'time in' rather than 'timing' for such investors - one only has to look at the strategies of the most successful investors like Warren Buffet - who has said on a number of occasions that investors should be 'greedy when others are fearful, and fearful when others are greedy', has maintained an overall strategy of buying and holding for decades in many cases.

This is easier said than done - we're all bombarded with negative news all day long in the age of social media - most media realise that humans are more interested in negative news (psychologists call this 'negativity bias' so it's become a race to the bottom to publish the most negative headlines to get the most views, clicks and thus, revenue). Switching off most news except for the most clinical, fact-based reporting is essential for fact-driven decision making, and increasingly, our own mental well being.

Even with that, it can be very hard to detach from current news in a digitally connected world - but if you still want to consider real estate as an asset, consider investing into a real estate Loan Note with a proven developer for a fixed term, or a well managed REIT with good liquidity (US REITs are structured to have more liquidity than UK ones as a general rule). You'll be able to draw on the benefits of Real Estate with the hassle of owning directly or needing to make major decisions about the asset during market dips and rises.

There are also a lot more developers offering more flexible entry into property ownership and investment, and some offer management and letting services so you can avail of a complete package, saving time and money.

Let's talk about how I can support you with property solutions across different markets. Contact me at [email protected] or drop me a message here on LinkedIn.

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