Charleston, SC · Member since 2014 · 13 posts · 2 votes
Hey guys, I have a question about buy and hold strategy in a down market:
Taking the recent RE market crash of 2008 as an example, it seems to me that if that situation were to ever repeat itself, buy and hold REI may find themselves in a pickle, right? I mean, if an investor has maybe 20 multifamily properties that suddenly see high vacancy rates because people cannot afford higher rents, then he/she is stuck paying mortgages on 20 properties. And if one does not have deep pockets, then such a person would quickly find him/herself facing foreclosures on multiple properties. I'm sure folks have made this doomsday prediction (however seemingly unlikely)!!
Would folks kindly share what they'd do in that situation? I just like to know what exit strategies are tenable in such a situation. I pray it doesn't happen but one must plan for the worst while hoping for the best, right?
Said owner could always lower rent to attract tenants if this situation occurred. Buying properties based on Appreciation speculation gets you in trouble.... Not market variances. To me appreciation is a bonus.
You're thinking backwards. That type of economic change brings in more renters from the "no longer homeowner" pool. Those new renters will be paying less in rent than they paid for their mortgage payments.
Said owner could always lower rent to attract tenants if this situation occurred. Buying properties based on Appreciation speculation gets you in trouble.... Not market variances. To me appreciation is a bonus.
There are data sites that are tracking which areas are better for renters and which are better for owners. In some areas, for example, renters are paying more than 50% of their income on rent. It would be better for them to be owners, but maybe that isn't an option for them. Either way you can benefit.
Know your area, and you'll save yourself a lot of heart ache.