We have all seen the negative impacts of COVID-19 on many businesses and the economy as a whole, and the long term impacts of the pandemic are uncertain. For these reasons it is important to be investing in asset classes that have stood the test of time and have shown resistance to recessions.
Multifamily assets proved to be the most resilient real estate asset class during and after the 2008 recession in 3 major ways:
- Multifamily had the lowest rent decline
- Rents recovered to pre-recession peaks faster than all real estate asset classes
- Multifamily experienced the longest period of rent growth after the 2008 recession
It was also the least affected real estate asset class during the start of the global COVID-19 pandemic. Therefore, the asset class has proved that it can be resilient during recessions, and our homes are now more important than ever. Whether the economy is in a boom or a recession, people will always need a roof over their head.
Unlike other investments such as stocks and bonds, real estate assets have intrinsic value and are bound to appreciate in the long term. These assets also serve as an inflation hedge as real estate has historically appreciated at a higher rate than inflation. This is important to consider as we enter into an inflationary economic environment since the government is circulating additional money in the economy.
Keeping all these factors in mind, CPI continues to look for new multifamily acquisitions, but will only consider properties that can remain cash flow positive even with a large drop in occupancy and rent collections. Our selective and rigorous acquisitions process ensures we are constantly discovering and presenting ‘diamond in the rough’ deals to our investors to maximize their profit potential while minimizing their exposure to associated risks.
– August Biniaz
CEO & Founder, Canadian Passive Investing