How Did You Win in 2008 With Apartments?

[Tony Nguyen]

Hi all,

I'd like to ask the veterans how their apartments performed during the crash 10 years ago. My portfolio grew the most in just the past couple of years so I didn't experience what it was like being a Landlord during the crash. When looking at my portfolio of apartments, I ask myself where I see risk, which I know it's there, but I can't find it:

• The mortgages are all on 10-15 year balloons 
• No capital improvements are needed as all units were renovated once purchased
• I bought B-class properties in C-class neighborhoods at 9-10%+ cap rates 
• Our overall LTV is about 60%
• Overall revenue is over $675K a year (ie, one property can cover the other should there be surprises, etc)
• I have a management team who only manages my properties, not a third party

If you see where I can further protect my portfolio, please feel free to share because I'd love to hear your thoughts. Thank you in advance! 

[Mark Allen]

I didn't own until 2009; however I work with many apartment investors all over the country who have invested in more than one cycle. The consensus is that those who were "caught with their pants down" owned in C areas, were 80%+ levered, and had loans coming due during the recession.

I haven't had any tougher time selling B quality assets in C areas, but logically they seem like they would be the first to take a hit in a down economy.