Should YOU Own Rentals in a Recession?

As whispers of a potential economic downturn grow louder, many are tightening their budgets, reassessing their investments, and asking the age-old question: where’s the safest place to put my money right now? And while stocks feel shaky and interest rates remain in flux, real estate, specifically rental properties, might just be the steady ship.

Here in Central Oregon we’ve seen housing values appreciate at record levels over the past several years. As the market cools slightly and buyer urgency fades, one thing hasn’t changed: people still need a place to live.

In fact, in uncertain economic times, the rental market often strengthens, not weakens. Here’s why:

Would-be buyers start to hit pause on homeownership, whether due to job concerns (remote jobs dwindling), interest rate anxiety (rates have been in flux but in the past 2 years, plateaued around 6-7.5%), or tighter lending standards (increased requirements for lending). This pause doesn’t eliminate their need for housing, it just shifts those would-be buyers into a rental pool.

That means demand for well-maintained, reasonably priced rentals goes up. If you’re the person who owns one? You’re sitting in a position of long-term leverage. When inflation rises, rent prices often do too, helping your income stay aligned with increasing costs. In some cases, it might even be enough to offset a shaky income stream or provide a cushion during a layoff or career pivot.

Bonus: If you’re willing to live in your rental, you can offset your own monthly mortgage expenses to below the average monthly payments on a single-family home!

Even if home values soften temporarily, rental prices rarely follow in lockstep. In fact, economic slowdowns often tighten rental inventory as fewer people move or build. For investors thinking long-term, a temporary dip in value doesn’t matter if the property cash flows and holds its place in a growing market like ours.

Rental properties come with a laundry list of potential tax benefits: depreciation, mortgage interest deductions, operating expenses, cost segregation tax saving strategies and improvement deductions. These can be powerful offsets during tax season, especially if your income from other sources (current job) fluctuates during a downturn.

Unlike a stock portfolio, this asset is tangible: you can improve a rental property, refinance it, furnish it, live in it, pull equity out of it, change how you market it, or convert it into a 30+ day mid-term rental down the line. In a time where so much feels uncertain, real estate offers a rare level of personal control.

—Kenzie Carlstrom is a licensed Realtor® in Oregon who specializes in helping buyers find investment properties, creative financing options, and long-term equity plays. She’s based in Bend and works across Central Oregon.

This article appears in Source Weekly June 19, 2025.