Recessions have an unerringly negative connotation, for good reason. They create a significant amount of hardship for everyone. Many experts have stated that they expect an economic recession to impact the country within the next few years. However, landlords shouldn’t panic yet, despite the looming recession. The housing and rental market is often dictated by supply and demand. Homes aren’t being built at a rate that outpaces their necessity, which means that a recession will have a far slighter impact on the rental market than the unemployment rates. A recession may impact rent and interest rates, but it will likely not have a devastating effect on the housing market.
What Landlords Can Do
There are multiple things landlords can do to help combat the affect that a recession can have on their business. First and foremost, it is important to consistently check the rental rates of your competitors. If you charge more than average rent, you will lose tenants at an excessive rate. Lowering your rent can help you retain tenants, which will bring in far more income than vacant units. Renting property during a recession may require sacrifices in your profit margins in order to keep your business in good health.
The Economic Impact
Though experts have predicted a looming economic recession, they have also predicted that it will be a shorter recession than the recent Great Recession. The value of homes will likely flatten and may even fall slightly, but it will probably not be a devastating amount. However, a recession may even provide positive benefits for the rental market, as it is likely to encourage more people to rent rather than buy a home. To protect yourself and your company, you should have 6 months’ worth of expenses in savings.
A recession can cause a great amount of hardship, but taking the necessary steps can go a long way toward minimizing its impact. To learn more about how to protect your business during a recession, contact us at the Keyrenter in Sacramento today!