Amid talks that a global recession is on the way -- and the fact that Alberta, Canada is currently experiencing a tough economic environment -- you may understandably be wondering what the best place to invest your money is. Specifically, in real estate, should you target commercial properties, or should you focus on workforce housing? Savvy investors today are sticking with the latter, according to Investar USA. Not sure exactly what this type of housing is? Here’s a primer on workforce housing and what this type of multifamily housing has to offer the modern investor.
The idea of workforce housing today stems from past efforts to provide workers at luxurious resort communities with housing. This was done years ago because these workers otherwise would not have been able to afford to reside in their employers’ towns in light of the huge disparity between housing costs and income.
A common misnomer, though, is that this type of housing is essentially “affordable housing.” The truth is, to be more accurate, you should call workforce housing “housing that happens to be affordable.” That’s because it doesn’t target members of the lower class; rather, it caters to many middle-class..
The challenge with investing in workforce housing is that renters might not be able to absorb increases in rent during an economic downturn. After all, over 33% of modern workers are paying rents that take up nearly a third of their incomes. In addition, during a recession, the demand for housing will decline. Still, compared with other types of real estate assets, workforce housing should do relatively well considering the circumstances.
In light of this, many institutional investors have been focused on investing in workforce housing. If you’re interested in keeping your bottom line strong in the years ahead, no matter how well or poorly the economy performs, it may be in your best interest to follow suit.
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