Statesboro, GA · Member since 2015 · 99 posts · 24 votes
The economy crashing is obviously something people will have to worry about in this business. How does the economy in a time like 2007 impact multifamily rentals, though? It's obvious how it would be negative for people trying to do flips, but do rental rates drop drastically at a time like this, or are they usually pretty consistent? If you're in a place where rentals are usually relatively stable, does a time like '07 make any drastic changes to that?
Toluca Lake , CA · Member since 2015 · 13 posts · 12 votes
10y
@HunterGroover You pose an important question to consider during times of economic uncertainty, recession, or worse.
Back in 2008-2009, I found that rental demand increased and asking rents softened slightly in Southern California. Even though houses and apartments were appreciating prior to the 2008 crash, many renters had left the rental market for home or condo ownership in the run up to the financial crisis. A significant percentage of these folks returned to the rental market in 2008-2009 which created increased demand. However, along with this increased rental demand came more price sensitivity and compromised credit scores and/or credit "issues." Overall, a well-maintained and well-managed property in a desirable area can withstand a challenged economy, but owners will need to shift their approach a bit.
Houston, TX · Member since 2016 · 2 posts · 0 votes
10y
Rent stayed the same for me in 2008 and in fact I had a couple more people looking to rent because of losing their homes. I had one family that the husband lost the job but the wife made decent enough to where they could still afford a mortgage just not their current one. Their hosue was worth $345,000 and they owed right at $300. Amazing property I mean everything was great. People just get in bad situations sometimes and we both benefited. I pretty much told them that I other homes they might be interested in and talked of the possibility of purchasing their current one. They loved it. Long story short they walked away with renting out one of my homes for half of what their old mortgage payment was and $25,000 in their pocket. This was in 2008 and I still have the home to this day. I'm not sure about your area but I am in Houston and it wasn't as bad as some of my fellow associates who were doing flips. Seen a lot of bad stuff for some people but I did decent with my rentals. I have always bought homes to keep and rent to build equity and even when the market crashed did pretty decent thankfully.
Statesboro, GA · Member since 2015 · 99 posts · 24 votes
10y
@Christopher Hall, so do you have any multifamily rentals? I've always thought the idea of having a bunch of units in one place was more appealing than being scattered. Property management is the part I would be most worried with.
Toluca Lake , CA · Member since 2015 · 13 posts · 12 votes
10y
@HunterGroover You pose an important question to consider during times of economic uncertainty, recession, or worse.
Back in 2008-2009, I found that rental demand increased and asking rents softened slightly in Southern California. Even though houses and apartments were appreciating prior to the 2008 crash, many renters had left the rental market for home or condo ownership in the run up to the financial crisis. A significant percentage of these folks returned to the rental market in 2008-2009 which created increased demand. However, along with this increased rental demand came more price sensitivity and compromised credit scores and/or credit "issues." Overall, a well-maintained and well-managed property in a desirable area can withstand a challenged economy, but owners will need to shift their approach a bit.
Statesboro, GA · Member since 2015 · 99 posts · 24 votes
10y
@Jason Insalaco, thanks for the response. I had a hunch that they would be relatively the same or take a minimum hit, but I've had a good bit of people tell me they actually did a little better in those times. That's good news!