Tips For Recession-Proofing Your Investment Portfolio
If the forecasts are accurate, there is a good chance we are heading into a new recession, if not already there.
That makes a thorough investment portfolio checkup a smart move. Some may want to restructure some of their holdings. Others just need to find more ways to recession-proof their current assets to get the most out of them in the years ahead.
Multifamily Real Estate Investing
We are all aware of the advantages of tangible assets like real estate in bear markets. In this post, we recently specifically covered why multifamily apartment buildings are so much more resilient in a recession. If they aren’t in your portfolio yet, it is time to take a look. If you have already been investing in multifamily, it may be time to increase asset allocation to this sector.
Here are just some of the ways you can get even better recession-proofing in your multifamily investment portfolio.
By taking advantage of multifamily real estate syndication opportunities, investors can diversify across more assets. It may also be time to geographically diversify into new markets to have assets in all phases of the market cycle.
If you’ve used financial leverage, today’s low-interest rates provide a smart time to restructure debt for longer terms to provide more stability. Non-recourse financing is also highly desirable. Those averse to debt can look for equity partnership opportunities.
Know Your Local Renter Pool
All real estate is local. That includes tenant profiles — credit, income, tenure, etc. The better you track your pool of potential renters, the better you can adjust qualifications and pricing as applicable to maximize occupancy and NOI.
Those who are thinking bigger and longer than just covering next quarter’s bills and dividends know how important tenant loyalty is. You don’t want renters jumping ship to the next special offer. You know lease renewals are typically far more profitable than new leases. With a diversified portfolio, brand loyalty can be very valuable too. Maybe you have a building in Seattle and Atlanta. Those leaving Seattle for more affordable housing or new jobs shouldn’t have to leave your brand. You can re-house them elsewhere, and already know your tenants.
Eliminate Waste & Improve Efficiency
The better the margins you can operate on, the more cushion you will enjoy in the worst case scenario, and more net cash flow to be enjoyed in the best scenarios.
There are two fronts to this. The first is eliminating waste, eliminating waste on unit turnarounds, utilities, and labor in property management. Better systems and technology can go a long way here.
There is a lot of new technology to help improve efficiency in property management and investor management too. The leaner and faster you operate, the more recession-proof your investments.
ABOUT THE AUTHOR
Bill Zahller is the Managing Partner of Park Capital Partners, LLC and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Partners, LLC in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalPartnersLLC.com for more information.