The COVID-19 stay-at-home mandates and social distancing guidelines are redefining how businesses work and even whether they can work. My niece Sara, for instance, has had to shut down her ‘non-essential’ local bakery. While watching and waiting for the pandemic shutdowns to end, she had to let the employees go. She is now faced with closing down her business completely and finding a new career.
As Sara and I discussed her options, I recalled how I, too, was in a similar situation two decades ago. Back then, my decision to ditch a supposed recession-proof job raised eyebrows. But, I count it as one of my best decisions ever. As an experienced real estate investor now, let me take you through some career options that were thought of as recession-proof and why I vouch for real estate investing as the option that has survived and thrived through every market condition.
The So-Called ‘Recession-Proof Careers’ Most Affected By COVID-19
Most people think of recession-proof careers in terms of industries least affected by the past downturns. Do you remember how the Great Recession in 2008 led to job losses in the manufacturing and construction sectors? Yet, there were a few industries that continued to expand even during that time.
However, the current economic slump is unlike the ones we have experienced in the past. To start with, the cause of this recession is not related to oil prices, the financial market, or the policies governing it. A public health crisis causing rapid economic collapse and affecting multiple industries was previously unheard of. No business was really prepared to handle this pandemic, leading to the realization that most of the so-called recession-proof careers were not immune to the economic effects of the outbreak.
The following are some of the industries that have historically fared well during economic slowdowns—but not this one.
Back in 2008, just as the housing bubble was bursting, McDonald’s outperformed the S&P 500. Yum Brands was another stock that too did well during the period. People facing job losses during a recession preferred to spend money on occasional eat-outs at restaurants offering more budget-friendly menus. In the past, these businesses have performed well regardless of the economic environment. So, a career in food services was thought to be a secure one.
However, during COVID-19, the social distancing rules have made it impossible for food businesses to operate normally in most parts of the country. Diners are avoiding crowded and enclosed spaces for the fear of catching the virus. People are preferring to eat at home or order food deliveries online. As a result, foot traffic has been drastically reduced inside restaurants and even takeout joints.
Even as early in the pandemic as April, it was estimated that around 8 million restaurant industry employees had already been laid off or furloughed because of the pandemic. A clear sign that a career in the foodservice sector is something you should stay away from during this recession.
Auto repair is a solid business since people need to keep their vehicles running. When job cuts and furloughs hit, drivers tend to spend on repairs rather than splurging on buying new vehicles. The high demand for auto repair services in 2008 was reflected by the robust stock performance of companies such as AutoZone and O’Reilly Auto Parts.
Social distancing during the COVID-19 outbreak has led consumers to limit unnecessary travel. With drivers spending less time behind the wheel, many are delaying avoidable repairs. Even some government transportation agencies are relaxing the deadlines for mandatory vehicle inspections. Even though auto repair and supply shops have been allowed to remain open as essential service providers, they are being hit hard. It’s a classic example of how a previously perceived recession-proof industry is being negatively affected in the present times.
The demand for self-care services including hairdressing, massage, nail treatments, and others continued to grow despite a slower economy during the Great Recession. Economic slump or not, people would like to look presentable when out socially or at work. And, salon services can be tailored according to a customer’s budget, making them affordable for most. In addition, this type of business has been immune to automation so far, ensuring job safety in the sector. Hence, it was not surprising that in the tough economic climate of 2008, hairdressers and barbers belonged to one of the few industries that grew by 8 percent that year.
But coronavirus has made it impossible for salons and barbershops to continue their business and comply with social distancing mandates. With salon services being called out as non-essential in many regions, a career in this sector seems pretty shaky.
There is no denying that this coronavirus-driven recession is not a typical one. It has affected nearly every sector, at least to some extent, and has put our prior certainty about many recession-proof careers into question.
Yet, in comparison, real estate investing as a career has stood the test of the time and has even thrived during past recessions. As a real estate investor who had started in the middle of a recession, let me explain how this career is fast adapting to the challenges of the current situation.
Consider Real Estate Investing as a Career
When I suggested to Sara that she explore real estate investing as a recession-proof career, she sounded apprehensive. Aren’t financial services and real estate supposed to be risk-prone during a recession? As a seasoned real estate investor, I would say no.
In past recessions, the returns on real estate investments have been less volatile compared to those on stocks and bonds. Though COVID-19 economic slump is a different ballgame, stock values have still been experiencing extreme volatility. This is driven by general panic and businesses have had to shut down or reduce operations due to containment measures and social distancing. But, the real estate market nationwide is tight—creating investment opportunities.
Let me share a couple of recent trends that could benefit your bottom-line during the current recession.
- Unemployment remains high while federal support for mortgage holders has ended. As a result, you have an opportunity to help distressed homeowners get out of an “ugly” situation.
- More demand than housing inventory, especially outside of city centers, which is boosting prices. This means that when you find an investment house, you can potentially sell with solid ROI.
The big question is how to get in touch with the homeowners who want to sell their houses. In the current situation, you might not be able to freely roam around the neighborhoods in search of houses on sale. The homeowners, too, would not want you to knock on their doors to take a look around their properties.
How Being A HomeVestors® Franchise Makes Your Real Estate Career Recession-Proof
This is where the nationwide network of independently owned and operated HomeVestors® franchisees pitches in. The nationally-known and trusted “We Buy Ugly Houses®” marketing campaign has been around since 1996, so distressed homeowners know who to call when they need help. HomeVestors® franchisees, like me, have been there for homeowners through two prior economic downturns and we know the complexities investing in uncertain times.
If you want to explore a real estate investing career path that is truly recession-proof, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.