Did anyone own any fourplexes (or other multifamily) during the last housing crash in Seattle? If so, would you mind sharing your insights on how it performed during the crash? Did the property value dip X%? Were you still able to maintain cashflow positive without dipping into reserves?
Rental Property Investor · Everett, WA · Member since 2015 · 458 posts · 386 votes
3y
@Evan Ghang I owned a duplex outside of Seattle during the 2008 housing correction. During that time, I saw the value of my property fall by roughly 20% off it's high. While this did hurt my pride that the value of my property had fallen, it didn't have any impact on my occupancy and rents actually increased during those years. I did not have to tap into any cash reserves but I know people who did. The key determining factor in my opinion was the amount of leverage people had taken on and duration of the loans. People with fixed rate / longer duration debt were able to ride out the market turbulence.
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
3y
@Evan Ghang Welcome to BP! I am now a LL south of Seattle. 2007 I had rentals south of San Francisco and they never missed a beat. Single family homes-non rentals-went in the toilet all around the country; some markets worse than others. As long as you are not forced to sell you will make money.
Rental Property Investor · Everett, WA · Member since 2015 · 458 posts · 386 votes
3y
@Evan Ghang I owned a duplex outside of Seattle during the 2008 housing correction. During that time, I saw the value of my property fall by roughly 20% off it's high. While this did hurt my pride that the value of my property had fallen, it didn't have any impact on my occupancy and rents actually increased during those years. I did not have to tap into any cash reserves but I know people who did. The key determining factor in my opinion was the amount of leverage people had taken on and duration of the loans. People with fixed rate / longer duration debt were able to ride out the market turbulence.
@Evan Ghang I owned a duplex outside of Seattle during the 2008 housing correction. During that time, I saw the value of my property fall by roughly 20% off it's high. While this did hurt my pride that the value of my property had fallen, it didn't have any impact on my occupancy and rents actually increased during those years. I did not have to tap into any cash reserves but I know people who did. The key determining factor in my opinion was the amount of leverage people had taken on and duration of the loans. People with fixed rate / longer duration debt were able to ride out the market turbulence.
John
This is the viewpoint I'm talking about! Great insights thank you @John Barrett
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
3y
Hey @Evan Ghang - if you have a fixed rate long term mortgage, and you property is already rented out, you'll be able to ride out any crash (even if your property value drop puts you under water for a short while).
When markets crash, people rent, when people rent, you have lower vacancies.
I have 2 and 6 unit properties in Eugene, OR and they likely decreased 30% from there peak during that time. I was a newbie and It was depressing especially since you didn't know how much lower it would go. My lines of credit were frozen, my w-2 income diminished-basically a full blown liquidity crisis. On the positive, the properties all cash flowed and rents started going up-I didn't understand why at the time but it's clear now. Also, it was surprising how many real estate agents and loan officers inquired about a rental stating that they had been foreclosed upon. These people were highly leveraged likely on adjustable rate mortgages and there was a major rug pull of their income streams.