recession proof cash flow level

[Mike R.]

Hi all and thank you for your replies,

we own several multifamily properties (duplexes and six units) with a buy & hold approach.  All have been cash flow positive since day one and, given they are all in the pacific northwest, has enjoyed significant price appreciation (1x-2x on all of them since '08).  

now the problem, i am concerned about a recession (i bet either by end of '18 or in '19) and longer term i am concerned about 1) public unfunded pension liabilities 2) interest payments on US debt 3) impact that automation will have on employment/renters...basically longer term i am worried about a S^%$ Hitting the Fan scenario.  So my question is, what level of net cash flow (net of all expenses, debt payments, 3-5% rent reserves) is recession proof?  is it $300 per door/month?  $500?  you can assume we have adequate reserves to cover 6 months of expenses.

[Bettina F.]

I lived in Tacoma for 30 years and know that market well.

I would not worry about Port Orchard.  You are protected by the demand driven by the naval base.  The investors that need to be worried are the high flyers investing in luxury apartments in Seattle.  They will be the first and hardest hit.  (It is already happening in San Francisco).  If Boeing or Microsoft were to leave, the high flyers,  who lose their jobs, would move down INTO your apartments while the leaving the luxury properties vacant.   Class B multifamily did well during the '08 crash.

In my opinion, Washington is more  at risk by the Democrats in Olympia who want a state income tax.  Washington is only on the lists of "best states to do business" because of no state income tax.  Washington already has high sales, gas and property taxes and high regulation.  A state income tax would be the last nail in the coffin.