Tell me how to NOT get screwed in a bad economy ?

[Par Attaran]

Experienced investors (10 + years) tell me how to NOT get screwed in a bad economy ? I ask this because, nearly every REI meeting or person I've talked to recently has said "The correction and or down turn is coming soon!"

As a 6 month noob, and someone who is in the processes of acquiring a 3rd property tell me what lessons you learned in 2006-2010?  What ends up screwing you over: too much leverage? vacancies? lower rents? too many mortgages? over paying? etc...

[Jeff B.]

Originally posted by @Par Attaran:

Originally posted by @Jeff B.:

I bought in 1997 and survived the 2008 down turn.  Yes, vacancies were up, good tenants were hard to find.  How DID I survive?  Owning a 6-unit MFU with good cash flow.  When I bought, I calc'd the break-even point - - how much occupancy does it take to end up with net zero profits.  For me that was 70% - - aka 4.2 units - - and that was THE METRIC I used for  the purchase decision.

Over the years, I've only had one occurrence of 3 concurrent vacancies and that was due to a fire, not normal vacancy per se.

Multiple rents saved the day.

 curious: did you own that multi family free and clear or carry a mortgage on it?

Bought it on a Commercial Loan, 70% LTV; That's the power of MFUs over time.