What types of Apartment Complexes Weathered the Great Recession ?

[Account Closed]

So maybe this comes off as a novice question but I'm wondering if certain types of investment properties did better during the last housing crash than others.

Let's say that another great recession happens, how would you best insure yourself to weather that storm if you were gonna be buying multi-family units going forward ???

If I can understand my potential downside it would help me make better decisions.

[David Thompson]

Hi Ken,

@Mike Dymski mentioned one solid data point.  Worth repeating, during the last recession, MF mortgage delinquency rate was 1% (take out speculative markets like Vegas, Phoenix and Miami, and it was almost nil) according to my friend@Paul Moore who did some great research when putting together his excellent book on MF investing.  SF homes were running about 4-5% in contrast.  

Here's some practical experiences.  We had a property mgt company in Houston that had 10 + value add B/C properties when oil fell from $100 barrel to $50 barrel (a significant local economic shock due to its dependency on oil related jobs) and their occupancy stayed steady at 92% and even tailed up a bit to 93% during that timeframe while class A fell from 95% to mid 80s. The service jobs in staid industries that make up the demographic tends to hold up better than the $100K oil jobs that went fleeing and favor class A apts.

Secondly, I had an investor recently who wanted to know what the average occupancy was in Richardson, TX (a Dallas suburb) at the worst point in the last recession, where we were acquiring one of our four apartments there.  Worst year was 2009 at 85%. We compared that with the sensitivity analysis on our deal where we could still be making a positive return at 81% and B/E was going to be 75%. That was a comforting data point to share with him.