How does the economy crashing affect multifamily rentals?

[Account Closed]

The economy crashing is obviously something people will have to worry about in this business. How does the economy in a time like 2007 impact multifamily rentals, though? It's obvious how it would be negative for people trying to do flips, but do rental rates drop drastically at a time like this, or are they usually pretty consistent? If you're in a place where rentals are usually relatively stable, does a time like '07 make any drastic changes to that?

[Jason Insalaco]

@HunterGroover You pose an important question to consider during times of economic uncertainty, recession, or worse. 

Back in 2008-2009, I found that rental demand increased and asking rents softened slightly in Southern California. Even though houses and apartments were appreciating prior to the 2008 crash, many renters had left the rental market for home or condo ownership in the run up to the financial crisis. A significant percentage of these folks returned to the rental market in 2008-2009 which created increased demand. However, along with this increased rental demand came more price sensitivity and compromised credit scores and/or credit "issues." Overall, a well-maintained and well-managed property in a desirable area can withstand a challenged economy, but owners will need to shift their approach a bit.