Can Real Estate Investments Be a Hedge Against Uncertain Economic Times?

We all know that uncertain economic times are as certain as taxes. Only in the last 20 years we have moved through two distinct financial crashes – the dotcom crash at the change of the millennium and the global financial crisis of 2008. Essentially, these crashes and overall uncertain economic times are quite cyclical in nature. Already, many experts are suggesting that another economic crash is quickly approaching us. 

However, just as we have survived the last two crises, we can survive the next one. With that in mind, we thought we would examine whether real estate investment could help us, or, to be more precise, if it can act as a sort of hedge against uncertain economic times. 

It’s Better Than Stock Market Investments

For some 30 or so years, real estate has been beating the stock market by being less volatile on a daily basis. It's been doing that by a very significant margin, as well.

What's more, real estate is a form of passive income, and it's more certain than the stock market. It's a tangible asset making it more valuable, which is one of the reasons why it's been a good investment for the last three decades. 

Real estate investing is not only a hedge against uncertain economic times when we consider all of this, but it's also a hedge against inflation. As prices go up and inflation rises, your income from real estate rises as well because the value of your investment is increasing.

Smart Real Estate Investing Can Survive a Crisis

Many believe that you can survive an entire economic crash by making smart real estate investments. By buying the right property at the right price and in the right area, you will benefit in the long run, even in the case of a crisis.  

If you are ready to keep your property for more than a few years, the uncertain times will come and go, and you will be able to sell your property and make a profit when the economy bounces back. 

What's more, if you find a suitable property in an area where significant tax benefits exist, you'll be able to make a larger profit by keeping the property as part of your portfolio for a longer time.

Naturally, if you’re willing to take a risk, you can invest during a crisis. Real estate prices tend to drop when uncertain economic times start, and you can take advantage of that by finding the right property to buy. The prices will rise in time, and you will be able to sell and make a significant profit. 

The Bottom Line

As you can see, not everything has to be harmful during uncertain economic times. If you're willing and able, you can create a hedge against these times by making smart real estate investments.

With a little help from experts, you can do much better than you initially thought you could. For more information, you may reach us at info@cbicommercial.com.