What Type Of Real Estate Investing Should You Avoid In A Recession
John's question: What type of real estate would I not invest in right now?
That's a great question and a really tough question. So right now I would be very nervous about investing, especially considering when we're going into a recession, and so spending is going to be down. It would make me nervous to invest in any commercial; any retail real estate right now. My instinct tells me that the world because of the pandemic is becoming more and more used to working at home, so businesses need less and less spaces. My instincts are telling me it wouldn't be bad to invest in those spaces because you would be able to get them for less money. I think at some point the government's going to have to start hedging.
When you go into a city, certain properties are zoned as commercial, and the municipality is going to be very resistive towards allowing you to turn that into residential. But if they did allow you to turn a commercially zone property into a residential zone property, then you would really hit the jackpot. And I feel like if you were to own, I know I'm contradicting myself here, but if you were to buy a commercial property and you got it cheap and the municipality changes its zoning, as I think they're eventually going to have to do. We only need so many businesses now that things are becoming automated and now that folks are more used to working from home, you would end up hitting the jackpot.
That said, I'm a very conservative investor and I personally would not take the risk. And also I think it will take time for things to catch up. Just because a need is there, it doesn't mean a city is going to identify that need quickly. I personally would stay away from commercial and retail shops. It just doesn't make sense to open up a store right now when somebody could just go to Amazon and is very used to the convenience of doing that. But if you did, I could see how you might end up winning. Personally, I am avoiding commercial and retail. Good luck!!!
