I just wanted to share with you a couple of pointers today on why I feel like fourplexes are a very recession-resistant asset.
Nothing is recession-proof, but when we can adequately deal with the terms of our financing and the income streams associated with the asset then we have something that's a little bit more recession-resistant.
So when we talk about a fourplex it really is a unique asset because you get many of the same benefits that you get with a large apartment building and due to the diversity of your income streams but you're not tied down to the same kind of financing that you would get on a commercial asset. Nothing wrong with apartment buildings I'm just saying that if you're a smaller investor looking for something that’s a little more recession-resistant, you’d like a fourplex.
You'd get true 30-year fixed-rate financing on your asset…
This means typically the lowest interest rates and the most flexible term. If the economy gets bad at 5 or 10 years, if you got your income there nobody's expecting you to pay off sell or refinance the building. If you can make your mortgage payment, you keep the asset and you can ride through these short-term problems that happen in a recession.
You have four streams of income.
When you compare this to a single-family property, when you’re vacant you’re 100% vacant because you only have one tenant. But with a fourplex, you’ve got four tenants
If you’re 100% vacant that’s a “you” problem, right? You need to lower your rents, you need to adapt to the market… but when you’ve got that four streams of income coming in, you at least have something coming in to service that dip to get you through a hard time.
I would never say a fourplex or any asset is recession-proof but fourplexes definitely recession-resistant.
So if you’re concerned about that it could be a good source of income and investment for you.