Putting Your Property to Work During a Recession
Do you have a property that you are not currently using? Does it contain an additional house, guest house, apartment, or cabin? Do you have a seasonal cabin or unused farmland or even land to rent for campers? Does it currently cost you in rent, mortgage, or taxes but bring nothing in? Consider renting it out to bring in more income. In this day and age, most folks cannot afford to have their property sitting idle. Renting an unused property can offset the cost of the mortgage and taxes if you own it outright.
There is no denying that our country is worse off now than it was five years ago. Between the Covid pandemic disaster and the wildly differing policies of our recent and current political leaders, this country is in a state of flux. However, this too shall come to pass. Everything goes in a repeating cycle. Things get bad, then they improve. This is not new. With a little extra effort, we can get through the hard times while working towards making things better. We may need to make some uncomfortable adjustments now but they will help us get through until things improve.
Using Unused Property
If you own property that you only use seasonally such as a summer cabin, consider renting it to skiers or snowmobilers for the winter months. Or longer if you are willing to forego your seasonal occupancy. This is provided that the property has adequate heat and accessibility. If you have a mother-in-law apartment but no mother-in-law in residence, that space could be rented out with little impact on your daily life. Do you have an empty shed that could be secured and rented for storage? Some people will even rent out a room in their home or take in boarders or roommates. This is a riskier option. Be very careful and do a deep screening first or you could put your family in direct contact with someone who could cause your family harm.
Give Your Property a Job
Property can bring in an income in a variety of ways depending on how you use it. Farmland can be used to grow crops or livestock. These in turn can be sold and generate income. Property can be used as a business location. Of course, zoning laws for this property area may prohibit certain types of businesses so make sure you know your local zoning laws first. For instance, you may not be able to run a trucking company out of a property zoned for agriculture. And you may not be able to raise cattle on a property zoned for commercial business use. Another avenue is to rent out the entire property, especially if it is just sitting idle.
During a recession, property values often decrease. This is due to several factors including job loss, inability to keep up with mortgage payments, and resultant foreclosures. Many homeowners try to sell in anticipation of avoiding foreclosure but this causes a surplus in the market. More homes are for sale than people are able or willing to buy. On the bright side, if you can buy, this is a great time to get a really good deal on a property. For renters, availability may decrease causing rental prices to increase.
The Case for Rentals
When owning a home becomes out of reach during a recession, people will by necessity turn to rentals. This will increase the demand for rental property and may lead to an increase in the cost to rent. This can make things especially hard on those with lower incomes. If you already own property this can be a great time to rent it but make sure to do a thorough screening. This is also when more people will default on a lease agreement due to unexpected changes in circumstances. Make sure to have a cushion set aside to get you through a time when your property is unoccupied.
If you choose to rent your property, it may be wise to list with a rental management company. They can take much of the work and worry off your shoulders. In Durango, talk with The Property Manager. They would love to help you professionally manage and advise you on your rentals. Established in Durango, Colorado for almost 35 years. Give us a call to set up a time to talk, at (970) 259-0222 or you can also send an email to rentalinfo@rentdurango.com.
Resources
This article is not intended as legal or financial advice. If you decide to rent your property, be sure to adhere to all applicable laws in your area.
https://www.forbes.com/sites/forbesrealestatecouncil/2020/07/08/commercial-property-values-during-a-recessionand-when-to-buy/?sh=4598118ad173
