Are there any investors who started in 06-07?

Buying & Selling Real Estate
7yFollow

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? 

3Reply
124 views

Most Popular Reply

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
See this reply in the discussion

56 Replies

Jump to latestLatest
  • Alvin Uy
    Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 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. 

    I started around 2003-04. I house-hacked my first one. In late 2005... i tried to flip a house with a buddy but he decided to buy me out and keep it. He ended up foreclosing on it because of a bad loan when the market crashed. I almost bought it back from him, but I couldnt pull the financing together. Looking back, perhaps luck was on my side i guess. Started again and bought an REO in 2009.

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

    @Alvin Uy Did you stay in your house hack until 09? Or did you by a primary residence before then?

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

    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. 

    I really like that perspective. 

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

    @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.

    Did you buy it at $340k or $133k?

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

    @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.

    I guess the market went sour in some places earlier than others... I really wanted to hear from folks that took immediate losses in equity from the market but it seems like you capitalized on those folks. I do agree with you, it seems like an appreciation play at the peak of the market is not a great idea unless you have good margins with cash flow. 

    0Reply
  • Alissa Engel
    Great Falls, MT · Member since 2017 · 97 posts · 172 votes
    7y

    @Nathan Hui

    I moved from SoCal to Bozeman, MT in May 2007. I was completely unaware of how inflated and over-built the area was. I was used to SoCal prices, so Bozeman felt affordable. By Fall 2007 the market crashed. People lost jobs. People had to move and couldn't sell so the market was flooded with rentals. 80% of the condos in my HOA became rentals over-night, which meant I wasn't able to refi or sell. It's a college town, so there were students to rent, but that's not my ideal renter. Rents dropped due to over-supply. I broke-even for 9 years. Then I was able to cashflow $250 a month for 3 years before finally selling at a nice profit last month. The HOA was still allowing too many rentals, so I had to find a cash buyer....12 years later. SO MANY MISTAKES.

    How I survived a really dumb purchase: I put 20% down even though I could have used my 0% down VA loan. I didn't panic and sell when I was 60K underwater even though I had a lot of pressure to do so. I didn't have any debt other than mortgages, so I was not financially over-extended.

    3Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    7y

    I think too many people focus on "national" trends they hear about in the news and don't pay enough attention to local trends. We've all heard ad nauseum that all real estate is local but it applies all the time, every time. If you have rentals near a military base that gets slated for closing, it doesn't matter what the rest of the nation is experiencing, there's going to be a HUGE drawback in housing of all types. If you live near an area where someone is building a large manufacturing complex that will require many workers of all different skill levels, your area is going to be great no matter what is going on around the rest of the country.

    A lot of people think we're "due" for another recession. Maybe or maybe not but if you think one is coming (and of course they are cyclical) then consider your leverage position. That's what hurt a lot of people the last go around. Many of them would be fine now if they could have weathered the downturn but they couldn't because they owed too much and didn't have the larger than expected reserves required. Paid off properties are not "dumb" if a similar economic event occurs.

    3Reply
  • Alvin Uy
    Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    7y
    Originally posted by @Nathan Hui:

    @Alvin Uy Did you stay in your house hack until 09? Or did you by a primary residence before then?

    I bought my first 3/2 house in Dec'03.. with 3% down. I guess you can say that was my primary residence. House hacked it to help with payments. My second house which I house hacked again was purchased in ‘09. That one is a 6/4 house that was purchased as an REO...with 20%down this time. I wasnt married with kids at the time so i rented out all 5 other rooms and was Cashflowing $1k a month. I actually ended up keeping this house as my primary to this day but bought several other rental properties.

    1Reply
  • Nathan Hui
    OP
    New to Real Estate · Rome, GA · Member since 2017 · 107 posts · 34 votes
    7y
    Originally posted by @Alissa Engel:

    @Nathan Hui

    I moved from SoCal to Bozeman, MT in May 2007. I was completely unaware of how inflated and over-built the area was. I was used to SoCal prices, so Bozeman felt affordable. By Fall 2007 the market crashed. People lost jobs. People had to move and couldn't sell so the market was flooded with rentals. 80% of the condos in my HOA became rentals over-night, which meant I wasn't able to refi or sell. It's a college town, so there were students to rent, but that's not my ideal renter. Rents dropped due to over-supply. I broke-even for 9 years. Then I was able to cashflow $250 a month for 3 years before finally selling at a nice profit last month. The HOA was still allowing too many rentals, so I had to find a cash buyer....12 years later. SO MANY MISTAKES.

    How I survived a really dumb purchase: I put 20% down even though I could have used my 0% down VA loan. I didn't panic and sell when I was 60K underwater even though I had a lot of pressure to do so. I didn't have any debt other than mortgages, so I was not financially over-extended.

    What a wild ride! I like to hear that not being financially over extended helped you survive. Did you buy the condo as an investment property or was it initially your primary residence? 

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

    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. 

    great point if your flipping the 5 to 10k is a prudent move but long term buy hold  not so much as you have experienced massive appreciation and cash flow.. who says its all about cash flow  right ?  gots to have both 

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Jasmine H.
    Rental Property Investor · Houston, TX · Member since 2014 · 139 posts · 140 votes
    7y

    @Nathan Hui $133k

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

    @Jasmine Feeney I see, that’s great, way different than 340k!

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    7y

    By the time of the GRC I had 3 dozen rentals, mostly smaller commercial multifamily 7-10 units.  2 I purchased with 20% vacancy rates and cap rates of 12-14.  I had them improved and stabilized before '08.

    The recession saw a lot of turnover, but rents rose dramatically.  I am renting now easily at $1000/mo what were $500/mo in '05, $375 in '03. 

    The sweet spot for me has been b class 1000 sqft side by side.  Up/downs and less than b's have challenges that don't go away in favorable market conditions. A class inventory can saturate and did suffer as people tightened their budgets.

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

    By the time of the GRC I had 3 dozen rentals, mostly smaller commercial multifamily 7-10 units.  2 I purchased with 20% vacancy rates and cap rates of 12-14.  I had them improved and stabilized before '08.

    The recession saw a lot of turnover, but rents rose dramatically.  I am renting now easily at $1000/mo what were $500/mo in '05, $375 in '03. 

    The sweet spot for me has been b class 1000 sqft side by side.  Up/downs and less than b's have challenges that don't go away in favorable market conditions. A class inventory can saturate and did suffer as people tightened their budgets.

    right place right time took action  !!!   I think as well if U think about your area there is no abundance of old run down neighborhoods like in many rental markets were there are literally more vacant houses in a city than in the entire city of the big W.. As well as Not a huge amount of new construction that turned into rental product.. this happened in the Bend Redmond area and for a time it was quite soft.  And of course being one of the best kept secrets in the US there is still demand for people that want to relocate there and live there your area is what millions dream of living in..  So you have in migration..  Then you have the change over from Apples to Grapes and other dynamics. 

    So in my mind U have one of the better situations of anyone I see posting on BP..  great stable  local hands on .. in a place that is a joy to live and work in and around your tenant base..  

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Will GastonPro Member
    Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
    7y
    Originally posted by @Meir Greenblatt:

    @Will Gaston

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

    Because the properties weren't good deals in the first place. Just because there is equity in them now doesn't make them any better. The knowledge I've gained in the last 15 years makes it much easier to get rid of the underperforming assets. I've got confidence I can replace them with better assets.

    3Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Nathan Hui:

    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? 

     My first property (8 unit) was bought 7/07.  Second property (16 unit) was bought 10/07.   I normally don't share this info but here is the stuff I bought just before the recession, during, and just after.    I believe all markets have pros/cons.  ALL of them.  The "pro" back then was cheap property.  The "con" was no financing.  The pros and cons today are 180 degree different.

    1Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Nathan Hui:

    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? 

    There are about a million investors who aren't responding because they went through foreclosure and/or bankruptcy. Many never got back into real estate. I saw properties go from $110K to $25K and I bought some of them in the lower end of that spectrum... but not in 2007. From 2005 to about 2009 I did very little buying. Those who started in 2006-2007 in the Raleigh area were decimated. I saw them on BP too (like the "see you at the top" guy) but they were like a fart in the wind;) I started full time in 2002 and was part time before that (1987-2002).  The starters in 2006-2007 who survived are rare creatures. 

    2Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    7y

    In some sectors, though, realize that 2007 is really like... today... since these areas never recovered. Case in point below of a property bought for $210K in 2006. Ready to buy? 

    3Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    @Chris Martin damn did that place get firebombed? It looks more like a rust belt SFR than a house close to you in the SE?

    0Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Steve B.:

    @Chris Martin damn did that place get firebombed? It looks more like a rust belt SFR than a house close to you in the SE?

    Nope. Just Land. I see this occasionally (but not uncommon) in many counties throughout the Carolinas. People got ahead of themselves. Way, WAY ahead of their normal, rational 2007 brain functions... since they thought at the time prices always go up. I am sure there are tulips growing on that parcel. You may or may not understand what I am talking about. 

    I've seen other places where they owners have lost more than 100% of their investment. 'How can that be', you say? Well, they paid for the HOA dues and taxes on improved lots for the last decade... on lots in a failed project. Sad but true.

    Lessons of the great recession. For me... lesson learned. 

    1Reply
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    @Chris Martin interesting, but don’t underestimate Dutch tulips, they have the same upside potential as Beanie Babies and Cabbage patch kids

    1Reply
  • Joe Scaparra
    Investor · Austin, TX · Member since 2013 · 680 posts · 1k+ votes
    7y

    Here are my two cents on this subject. I began investing in late 2002 and have periodically continued buying even through this year.  I only buy multi-family, usually duplexes.  I have never been forced to reduce rents and the average turnover between tenants is less than a month. 

    Supply and demand is still the driving force for rents.  So if you want clear sailing during a recession, consider these factors:

    1.  Is the population of your area growing, or declining?  Growing is good, declining is bad.  Texas, where I invest has been gaining in population even through the recession.

    2.  Property values reasonably priced compared to the nation?

    3.Are your rents on the low end?  For Austin, 1200 or below?

    You see during a recession the lower rent sectors experience a surge in potential renters as people lose jobs, and cannot afford their mortgage or high rents.  This causes them to filter down to the lower tier rents.  During a recession, mid to high-incomes employees are more prone to lose their job than lower-income people.  Most small multi-family renters are in the lower-income sectors and more of them have stable jobs.  Think fast food or everyday retail like a grocery store or convenient store clerk.  

    1Reply
  • Angelo Mart
    Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 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. 

    Rental rates got stronger during the RECESSION because less and less people were not qualified to purchase homes due to STRICT underwriting, thus, creating an over supply of renters = increase in rents 

    1Reply
  • Alvin Uy
    Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    7y
    Originally posted by @Cody L.:
    Originally posted by @Nathan Hui:

    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? 

     My first property (8 unit) was bought 7/07.  Second property (16 unit) was bought 10/07.   I normally don't share this info but here is the stuff I bought just before the recession, during, and just after.    I believe all markets have pros/cons.  ALL of them.  The "pro" back then was cheap property.  The "con" was no financing.  The pros and cons today are 180 degree different.

     where were these properties located?  where they in CA?

    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    7y
    Originally posted by @Chris Martin:
    Originally posted by @Nathan Hui:

    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? 

    There are about a million investors who aren't responding because they went through foreclosure and/or bankruptcy. Many never got back into real estate. I saw properties go from $110K to $25K and I bought some of them in the lower end of that spectrum... but not in 2007. From 2005 to about 2009 I did very little buying. Those who started in 2006-2007 in the Raleigh area were decimated. I saw them on BP too (like the "see you at the top" guy) but they were like a fart in the wind;) I started full time in 2002 and was part time before that (1987-2002).  The starters in 2006-2007 who survived are rare creatures. 



    "The starters in 2006-2007 who survived are rare creatures."

    I'm happy to be rare...

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free