Hello,

I’m interested in hearing from people who had portfolios during 2008. Some insight on what to expect, things to think about and general planning would be awesome. Who knows what’s going to happen and I would like to prepare for the worst.

1. What did rents do? Decrease? Stay Stagnant?

2. How were section 8, voucher programs and government subsidy apartments affected?

3. How does the unemployment rate affect the rental market?

This has been asked recently in another thread, so you may not get new answers here, but you could search for recent threads.

1. Short version from me this time, rents tanked in Silicon Valley when I was managing a 25 unit building.

2. Section 8 properties would also have had the rents lowered, because they are based on market rents.  Housing authorities do market analysis whenever the leases are about to expire.

3. If people don't have jobs, they can't pay for apartments.

@Hamill Alex my experience is a little different.  Rents were mostly flat, due to step down effect.

Section 8 in Cincinnati is very inefficient, so I was feeling like I was getting above market rents for my properties.  But as we came out of recession, they did not keep up with market, hence why I stopped renting to them.

Yes, unemployment effects rental properties, but again this is very dependent.  People will go to great lengths to not be homeless.  As I have mentioned, rent is always the second bill on people's mind, right after putting food on their plates.  And looking at 2008-2011, multifamily as a whole (not single family rentals) had the lowest foreclosure rate of any real estate asset class.  So yes unemployment effects rentals, but not as dramatically as other sectors of the economy or classes of real estate.

@Evan Polaski

Thank you. This is logical. Your market is probably more similar to mine than Silicon Valley. If there is a “recession” or “depression,” the dilemma for me is to buy up cheap real estate, or retain that $ for operating income in case people can’t pay rent....? Who knows what the unemployment rate will do and how quickly people can/will go back to work, but any insight on this line of thinking would be appreciated.

That's why answers on BP don't matter. Rents for Vegas SFR rose faster than any other time I can remember. We had way less competition for tenants and way more tenants to choose from. People who just lost their house were not going back to apartment rental. That looks way too much like failure to you and your family. Renting the same or nicer house for the same or less than your purchase payment is just moving.