Are there any investors who started in 06-07?

Buying & Selling Real Estate
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Are there any investors who started in 06-07?

Nathan Hui
New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes

I would like to hear from investors who started in 06-07. Are you guys out there? What did you do in terms of investment strategies that protected you from the recession? 

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y

I had a few pre 2008. All in Vegas. They fell from $150-$170k down to $100k. Luckily rents continued to rise right through the recession and now they’re worth about $250-$270k. Of course the money makers are the dozen I bought after that for half price. 

Time solves almost any real estate mistake. Imagine buying or not buying a $100k house for $110k by “mistake” 30 years ago. At 4% appreciation it’s worth over $400k. 

I lost soooo many deals haggling over $5k here and $10k there because I had just bought an identical house for less the week before. 

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  • David Stumpf
    Rental Property Investor · Baltimore, MD · Member since 2017 · 142 posts · 125 votes
    7y

    @Nathan Hui. There are a few in the podcasts that have talked about starting right before the recession and how they had to do some creative things to keep cash flowing. I can't think of any of the top of my head but if I come up with one I'll let you now

    0Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    Please do. Your profile says that you purchased a home in 07 and it is cash flowing more than $4000. Is that annual CF? I guess you qualify for starting in 07. How did it go? Can you share your own experience?

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    7y

    I started in 2004.  I bought in good locations and my rents actually went up a little in the last recession.  Real estate is very local.

    All economic recessions are different though.  The last one was accompanied by a housing crisis, which buoyed the rental market in many areas (continues to this day).  That may not happen with the next recession.

    5Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    I flipped my first property in 2003. I bought my first buy and hold in 2009.

    [email protected]301-893-4635Podcast Guest on Show #192
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    3Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y
    Originally posted by @Mike Dymski:

    I started in 2004.  I bought in good locations and my rents actually went up a little in the last recession.  Real estate is very local.

    All economic recessions are different though.  The last one was accompanied by a housing crisis, which buoyed the rental market in many areas (continues to this day).  That may not happen with the next recession.

    I am surprised your rental income increased. I can't make sense of that. But it is somewhat reassuring that rental rates can remain isolated from economic downturns. 

    0Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y
    Originally posted by @Russell Brazil:

    I flipped my first property in 2003. I bought my first buy and hold in 2009.

    Arguably, those were solid times to do those things...

    3Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Nathan Hui:
    Originally posted by @Mike Dymski:

    I started in 2004.  I bought in good locations and my rents actually went up a little in the last recession.  Real estate is very local.

    All economic recessions are different though.  The last one was accompanied by a housing crisis, which buoyed the rental market in many areas (continues to this day).  That may not happen with the next recession.

    I am surprised your rental income increased. I can't make sense of that. But it is somewhat reassuring that rental rates can remain isolated from economic downturns. 

     Rents in the DC area skyrocketed during the last recession. They strengthened in many places. Suddenly people who wlhad been homeowners became renters, creating more demand for rental units. But of course all real estate is local. There are other places rents just went to zero because there wasnt enough renters to fill available units.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    3Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y
    Originally posted by @Russell Brazil:
    Originally posted by @Nathan Hui:
    Originally posted by @Mike Dymski:

    I started in 2004.  I bought in good locations and my rents actually went up a little in the last recession.  Real estate is very local.

    All economic recessions are different though.  The last one was accompanied by a housing crisis, which buoyed the rental market in many areas (continues to this day).  That may not happen with the next recession.

    I am surprised your rental income increased. I can't make sense of that. But it is somewhat reassuring that rental rates can remain isolated from economic downturns. 

     Rents in the DC area skyrocketed during the last recession. They strengthened in many places. Suddenly people who wlhad been homeowners became renters, creating more demand for rental units. But of course all real estate is local. There are other places rents just went to zero because there wasnt enough renters to fill available units.

    This is definitely contrary to what I was thinking. Others also are echoing the same thing...

    https://www.biggerpockets.com/...
     

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    7y

    @Nathan Hui I purchased my first properties in 2004 and then more in 2005 and 2006. It was honestly much harder to find tenants in 2006 and 2007 than it was after the bubble burst. Keep in mind there was record home ownership and rental property supply was building. Although people think the crash was hard, it was harder for me before the crash. The crash increased supply of renters in my city.

    It is not all roses though because it was very location dependent. My city had population increase during the recession. One of my tenants moved from Michigan where he lost his job, his house and all his rental properties to foreclosure and then he filed bankruptcy. Many cities were hit hard and the renter base disappeared over night.

    In a recession people lose jobs. That means tenants lose jobs. Tenants need jobs to pay rent. If your tenant loses their job, they will stop paying rent. The best advice I can give is have a 6 month buffer to ride through any difficulties. That buffer should cover your living expenses and payments for your properties. I think that is enough to weather most anything.

    6Reply
  • Will GastonPro Member
    Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
    7y

    @Nathan Hui I bought my first and 5 subsequent rental properties in the summer of 2006. I've done a lot stupid things in life but those were 6 of my dumbest decisions. I bought in the highest market ever and paid full price assuming there would be endless appreciation. 

    The thing that kept me afloat was that they were all student rentals and the economy didn't seem to affect the rents on them throughout the downturn. It took a full decade for the values to come back to the original purchase price.

    Students are not the most fun to manage but they (i.e. their student loans) absolutely pay their rent every month. The recession-resistant aspect of this niche is something I've grown to be increasingly thankful for.

    5Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Joe Splitrock That is very practical advice. I am glad I actually found an investor who was buying properties in 06. I guess with loans being so easy to acquire the rental market was probably taking a hit overall. It makes sense demand increased once it became more challenging to buy homes.

    0Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Will Gaston I love it. I am assuming it is only now that you are finally appreciating. Are you looking to sell now or are they actually making you money?

    0Reply
  • Account Closed
    Member since 2018 · 214 posts · 175 votes
    7y

    I bought my first Las Vegas property in 2007.  The house price had dropped 30% from 2005 peak ($500k) to 2007 ($350k) before I purchased it, 30% dropped, I thought I got a very good discount.  Who would have known that it dropped another 43% (from my purchased price $350k in 2007 to $200k in 2010) after I purchased it.  

    Mortgage include HOA was $2400 per month. Rent was $1700 per month. I had negative $600 cash flow each month, not counting repairs/maintenance. Fortunately, it was my only rental during last crash, I was able to chipped in $600 each month from my own saving. I sold it in 2017, and still had a $50k loss after all the mortgage, HOA, rent, selling fee etc. It was my worst investment that I bought it after last crash in 2007.

    I bought my second and more Las Vegas rental starting 2010, the rental I bought after 2010 are good, but not the rental I bought in 2007.  

    0Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Ran L. Wow that is a terrible investment! But I am with you if I saw that kind of drop in price I wouldn’t hesitate to think it was an incredible deal. I’m glad to hear you made it through and even picked up some killer deals at the bottom of the market. Thanks for your input.

    1Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    I wished I was investing then 🤗 even with the recession that happened after...

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    totally location dependant.. you had your melt down areas were nothing went up and everything went down including rents

    those were

    Vast areas of FLA   ATL metro  PHX  metro  VEGAS  MI OH central CA. to name a few.

    Portland were we were living stagnated rents held pretty well commercial was hurt very bad some strips centers 50% or more vacant. etc. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
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    1Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Jay Hinrichs What were the factors that made those areas more vulnerable? Also, which areas do you think remain more isolated from economic fluctuations? If there are any.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Nathan Hui:

    @Jay Hinrichs What were the factors that made those areas more vulnerable? Also, which areas do you think remain more isolated from economic fluctuations? If there are any.

    one big one was new construction.. it virtually stopped and all the subs found themselves out of work..  areas that had or have very little new construction were not hit as hard. 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Jay Hinrichs That makes total sense.

    0Reply
  • Will GastonPro Member
    Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
    7y
    Originally posted by @Nathan Hui:

    @Will Gaston I love it. I am assuming it is only now that you are finally appreciating. Are you looking to sell now or are they actually making you money?

    They are making money but I am selling all of the ones I bought in 2006. The opportunity cost of that equity is too high for me not to sale. Much better deals are (still) out there than what I originally bought.

    0Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y

    @Will Gaston That is wild, good luck liquidating.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    I had a few pre 2008. All in Vegas. They fell from $150-$170k down to $100k. Luckily rents continued to rise right through the recession and now they’re worth about $250-$270k. Of course the money makers are the dozen I bought after that for half price. 

    Time solves almost any real estate mistake. Imagine buying or not buying a $100k house for $110k by “mistake” 30 years ago. At 4% appreciation it’s worth over $400k. 

    I lost soooo many deals haggling over $5k here and $10k there because I had just bought an identical house for less the week before. 

    8Reply
  • Jasmine H.
    Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes
    7y

    @Nathan Hui

    I remember right around graduating from college 2006/2007, I was looking at houses in Texas because I couldn't afford to live in my local area (Northern VA). Condos were around $300k when homes in Texas were around $130k.

    Then the great recession came and in 2008 I was finally able to afford something. Manassas took a bit hit because of ice's crackdown on illegal immigrants. The house I bought went from $340k in 2006 to $133k. I rented the rooms out while living in it for years and now it's assess for $260k. It now rents for about $1,800.

    0Reply
  • Luciano A.
    Developer · Houston TX · Member since 2018 · 423 posts · 400 votes
    7y

    @Nathan Hui

    Started buying foreclosures in Houston back in 2006-2010. When markets everywhere else crashed, but Houston was not suffering the same effect as other cities were. Was buying at $30 per sq ft for duplexes and SFR. Rents were going up. Cashflow normally was north of $300 but most higher given you were able to buy 3/2s in great school districts for under $90k. Still own a handful of them since 2006. Appreciated 3-5x and cashflow is very healthy but taxes and insurance is starting to become problematic but still cashflowing after refi cash-out to buy other properties.

    I believe those who bought with positive cashflow didn’t suffer the same faith as thought who bought for appreciation with negative cashflow. Not all us investors lost properties in the last crash.

    1Reply
  • Meir Greenblatt
    Rental Property Investor · Houston TX / Tacoma WA. · Member since 2019 · 166 posts · 89 votes
    7y

    @Will Gaston

    Why not just to do a heloc or a cash out refinance in order to use the equity?

    0Reply
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