Experienced investors: What do you wish you did in 2008?

Question

We're entering a whole new world with this recession. Likely new banking rules, new ways to make money, new ways to go broke! I'm watching the Coronavirus start to impact the markets, and I'm really curious how things will go from here. Banks went super-low interest rates, and now they're holding off on that, but money hasn't frozen yet. AirBnBs could be done for a long time, until tourism recovers. Restaurants/bars and hospitality could be decimated. We've never seen a hold on evictions in my lifetime, and we don't know how that'll effect rentals.

Taking a more defensive business posture - stock up cash, reduce risk, be prepared to adjust holdings quickly - seems like a given. While this is an unprecedented event in modern history, what lessons do we have from 2008 and previous recessions/depressions that are relevant in the next year or so?

JD Martin · Answer

This is exactly what I was going to say. Because I had been burned bad in RE before that I was too gun-shy to pull the trigger on anything even though I knew inside houses were ridiculously cheap and so was the market.

Russell Brazil · Answer

I simply wish I bought more stocks and more real estate then.

Joseph Cacciapaglia · Answer

I completely agree with the above comments. I would have figured out how to buy more, if I knew then what I know now. I realized the there was some opportunity at the time, but struggled with raising capital. I think if I realized just how special of an opportunity it was, I would have done more to get deals done. That will not be an issue this time around.

One thing that was very surprising, is that the deals that popped up early during the panic were much better than most of the deals at the eventual bottom. I worked for a commercial investment company that passed on some single tenant NNN properties at a 12 cap. These were credit tenants. That opportunity lasted 48 hours, in the very early days, and then I never saw another deal that was even close. I don't think I saw anything trade for close to that outside of that very narrow window.

I think this time is going to be much different though. We don't have the same structural issues in the mortgage market that we had back then. We also shouldn't have a new version of the CFPB, which caused a ton of problems last time around. There were so many things done wrong, imho, that caused the prolonged downturn. I'm hopeful that we've collectively learned some lessons from those mistakes.

I will not be waiting for huge price improvements, but will be trying to pounce on any opportunities as they arise. I saw a lot of people waiting through the last downturn for some magical price point that we never actually reached. I'm sure things will get worse before they get better, but there is no telling how much worse. As long as you're not over leveraged, and you're stress testing your model, there is no reason to wait and see.

Experienced investors: What do you wish you did in 2008?

Experienced investors: What do you wish you did in 2008?

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