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Is Multifamily Recession Proof?

Picture of Author: Rod Khleif

Author: Rod Khleif

Top Real Estate Mentor, Best Selling Author, Host of #1 Real Estate Investing Podcast

Is Multifamily Real Estate Recession Proof? Exploring Its Stability in 2025

With rising interest rates, inflation concerns, and economic uncertainty looming over the real estate market in 2025, one question has gained renewed attention: Is multifamily recession proof? While no investment is completely immune to market downturns, multifamily real estate continues to prove itself as one of the most resilient and recession resistant asset classes available today.

In this article, we’ll explore why multifamily real estate performs well during economic downturns, compare it to other asset types, and answer popular questions about investing in multifamily properties during a recession.

Image showing newspaper that says "the great recession."

Why Multifamily Real Estate Is More Recession Resistant Than Other Investments

Unlike single family homes, commercial office space, or retail properties, multifamily housing meets a basic human need: shelter. Regardless of economic conditions, people still need a place to live. During a recession, homeownership often declines, increasing the demand for rentals. This is especially true for affordable and workforce housing.

Here are several reasons why multifamily investing holds up well in recessions:

1. Consistent Demand for Housing

Even during economic downturns, people prioritize rent payments. If anything, demand for rental units tends to rise when homeownership becomes less attainable due to high interest rates, job loss, or stricter lending requirements.

2. Diversified Income Streams

Multifamily properties typically have multiple tenants, which spreads out the risk. Losing one tenant doesn’t result in 100% vacancy, unlike a single family home or small commercial space.

3. Cash Flow and Cap Rate Stability

Properly managed multifamily assets generate steady cash flow and tend to retain stronger cap rates even in a down market. Investors can maintain profitability while waiting out the downturn.

4. Government Support Programs

In times of economic stress, renters and landlords often benefit from government aid such as rent subsidies, tax incentives, and emergency assistance. These measures help maintain occupancy and rental income.

5. Increased Flexibility with Lease Terms

Multifamily leases are typically shorter (6-12 months), allowing landlords to adjust rent rates faster than office or retail leases, which may be locked in for 3-10 years. This flexibility is crucial in responding to market conditions.

FAQs: Multifamily Real Estate and Recession Risk

Let’s address some of the most common questions people ask in 2025:

Is multifamily real estate safe in a recession?

While no investment is completely safe, multifamily real estate is considered one of the most recession resistant options. The combination of rental demand, stable cash flow, and risk diversification makes it safer than many other sectors.

Do rents go down during a recession?

In some luxury markets, rents may decrease. However, in Class B and C housing (workforce and affordable housing), demand often increases during a recession as people downsize or delay buying homes.

Is now a good time to invest in multifamily real estate (2025)?

Yes. While the economy may be shifting, 2025 presents opportunities to buy distressed or undervalued properties, especially from over leveraged owners. Locking in assets with strong fundamentals can position you for long-term success.

How does multifamily compare to commercial real estate in a recession?

Commercial real estate, particularly office and retail, is more volatile in downturns. Businesses close, tenants default, and vacancies rise. Multifamily assets, by contrast, typically maintain higher occupancy and require less leasing effort.

Can you get financing for multifamily properties in a recession?

Lenders are generally more cautious during recessions, but multifamily is still viewed as a low risk asset. Government backed loans (like Fannie Mae and Freddie Mac) remain available for well qualified buyers.

Download our FREE Financing Your Multifamily Purchase Guide to learn more.

What Types of Multifamily Properties Perform Best in Recessions?

Not all multifamily assets are created equal. The ones most likely to outperform during a recession include:

Class B and C Workforce Housing

These properties serve working-class tenants who need affordable living options. During recessions, tenants from Class A (luxury) buildings often downsize into Class B/C housing, increasing demand.

Properties in Growing Secondary Markets

Cities with steady job markets, diverse economies, and population growth (e.g., Charlotte, Tampa, Phoenix) see stronger performance even in downturns. Investors should focus on location fundamentals.

Smaller Apartment Buildings (5-50 units)

These assets are more agile and often less exposed to institutional competition. They’re ideal for newer investors looking to build recession-resistant portfolios.

Value Add Properties

Recessions provide opportunities to buy underperforming assets at a discount. Investors can renovate, reposition, and raise rents post-recovery, resulting in strong equity growth.

Image showing 5 reasons why multifamily is recession proof

Strategies to Recession Proof Your Multifamily Portfolio

To thrive during uncertain times, multifamily investors should implement strategic risk-management tactics:

1. Stress Test Your Deals

Underwrite conservatively. Assume lower rent growth, higher vacancy, and increased operating expenses. If the deal still cash flows under stress conditions, it’s worth pursuing.

2. Maintain Healthy Reserves

Set aside 6-12 months of operating capital per property. This helps cover unexpected repairs, shortfalls, or tenant turnover.

3. Focus on Tenant Retention

Happy tenants are more likely to renew leases. Improve communication, offer renewal incentives, and respond promptly to maintenance requests.

4. Improve Operational Efficiency

Adopt technology like property management software, online payments, and digital leasing tools to streamline operations and reduce costs.

5. Stay Educated and Connected

Join investor groups, attend webinars, and learn from mentors like Rod Khleif. The more informed you are, the better your decisions during tough times.

Want to learn more about how to recession proof your multifamily asset? Check out this article here. 

Multifamily vs. Other Real Estate in a Recession: A Quick Comparison

 

Asset Class Recession Resilience Vacancy Risk Cash Flow Stability Demand Source
Multifamily High Moderate High Constant (housing)
Office Low High Low Business-based
Retail Low High Low Consumer spending
Industrial Moderate Low Moderate Logistics/manufacturing
Single-Family Rental Moderate High Moderate Individual tenants

Final Verdict: Is Multifamily Recession Proof in 2025?

While no investment is entirely recession-proof, multifamily real estate is about as close as it gets. It offers diversified income, strong rental demand, and adaptability that make it far more stable than other asset types in tough economic times.

Whether you’re buying your first 4-unit or managing a 300-door portfolio, now is the time to lean into the strategies that make multifamily thrive, even when the economy doesn’t.

Interested in building your recession proof multifamily portfolio? Explore Rod Khleif’s coaching program or download the free book How to Create Lifetime Cash Flow Through Multifamily Properties today.

Cover image of book How to Create Lifetime Cashflow Through Multifamily Properties book by Top Real Estate Investor, Rod Khleif

Stay focused, stay prepared, and remember fortune favors the bold, especially in real estate.

About the Author: 

Rod Khleif

Founder of The Lifetime Cashflow Academy, The Multifamily Bootcamp, and Warrior Program

Rod is a seasoned real estate investor, mentor, and philanthropist. He has owned and managed thousands of single and multifamily properties and is the host of the top-ranked “Lifetime Cash Flow Through Real Estate Investing” podcast. Rod is a best-selling author and one of the most trusted voices in the multifamily investing space. He’s been featured in major publications and has helped thousands of students achieve financial freedom through real estate.

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About Rod Khleif

Rod Khleif is a best-selling author, speaker and philanthropist, and the host of the top-ranked Lifetime Cash Flow Through Real Estate Investing podcast. He is widely regarded as one of the nation’s leading experts in multifamily real estate and has helped thousands build financial freedom through real estate investing.

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