The economic volatility in US markets has had everyone worried about one thing: a recession. The recent downturns have also had an effect on the real estate market, which has already experienced difficulties with supply chain constraints and low inventory. But when markets turn volatile, savvy investors turn to stable assets, and nothing exemplifies this more than long-term rental properties. This asset class remains one of the most resilient types of investments, because livable properties are always going to be in demand. For brokers, helping clients invest smartly will become one of the most crucial services you can provide in times of market volatility. Continue reading as we explore why long-term rentals hold strong despite economic uncertainty, and how brokers can position themselves to guide clients effectively and grow their businesses.
Let’s start by covering the basics of why rental properties are such a smart investment. During times of economic downturn, buyers tend to delay homebuying and choose to rent instead. Also, renters will tend to stay at properties for longer, reducing vacancies and tenant turnover. As a result, rental properties become strong cash-flowing assets that help investors weather the economic storm. These investments tend to maintain or even grow in value despite broader market conditions.
As a broker, you can highlight the benefits of this asset class to your clients and encourage them to strengthen their portfolios by investing in it.
In comparison to other investments like stocks or cryptocurrency, real estate is a tangible asset that has consistent demand regardless of economic conditions. This aspect helps rental properties resist the effects of inflation and continue to appreciate in value during recessions. At the same time, these investments offer owners cash flow in the form of rental income, which other assets do not provide, and this can improve ROI even further.
Again, brokers should highlight this aspect of rental properties, and help clients identify specific properties in high demand areas that are poised for future growth.
Understanding the mindset of an investor during times of economic uncertainty can help you provide more relevant insights as a broker. Many investors become more conservative during a recession, seeking investments with lower volatility and risk. Long-term rentals fit the bill perfectly, especially when backed by strong demand in the local market. As a broker, you can provide value to your clients by conducting market research to identify areas and specific properties that have strong investment potential. Position yourself as a guide to helping clients pivot to safer and more resilient investment strategies.
It’s also important to recognize how the lending landscape shifts during periods of recession. Traditional lenders like banks and credit unions tend to tighten their guidelines, which means credit scores and income requirements get stricter. On the other hand, private lenders who offer financing programs like DSCR and asset-based loans remain just as accessible, and these become valuable alternatives. For brokers, offering a variety of lending options including private loans can be a great way to secure financing for clients who have less than stellar credit or non W-2 income and may not qualify for a traditional loan.
Market downturns can also create buying opportunities for investors, as demand slows and motivated sellers lower pricing on real estate properties. As the market recovers, these properties often grow in value at a faster rate than the market average, making them lucrative investments. Brokers should strive to get clients access to reliable funding options, as it positions them to take advantage of these market opportunities. You can provide additional value by offering market insights, helping build lasting relationships with these clients that will lead to more business in the future.
The best way to save on a real estate investment is to obtain financing from a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate professionals. If you are looking to provide rental property financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.