What’s the real downside of a market crash?

[Rich Rodman]

Hey BP community! I own a few units in Cleveland and live in San Francisco. I was rather young for the 2008 crash so I don’t have the hands on experience in a down market. What is the realistic downside of a market crash when you own Real Estate? Is it that your tenant might lose their job and not be able to pay rent? Is it that you have a likelihood of losing your job personally (although I don’t know how this would affect existing real estate investments negatively)? May be a negative question but I’m curious how this plays out.

[Mike Dymski]

Downside:

1. Loss of value
2. High unemployment
3. Increased vacancy
4. Increased turnover
5. Declining rents
6. Inability to make mortgage payments
7. Foreclosure
8. Lending freezes
9. Balloon payments come due

Defenses:

1. Good locations
2. Cash flow
3. Add value
4. Prudent debt
5. Reserves