Market changing? Too aggressive? Stress testing your portfolio.

[Javier D.]

Good morning BP. In no way is this a doom and gloom post. Watching the stock market lately and seeing how great the RE market has been since the crazy 08 crash I have been analyzing my properties to see how a market correction/crash/apocalypse would affect me. Since 2014 i have controlled my leveraging maybe more than some. I am naturally an aggressive investor and strongly believe in the power of leverage. Real estate shines in this arena. My south florida market looks overall healthy: overconstruction is heavy in the condo market, 1M+ market is cold. Rates are going up but there isnt much inventory. Unemployment is low(then again we will see how this continues). This post is to see how my fellow investors analyze a hypothetical down market. Can i survive a 15% vacancy rate? A 20% loss of value? Can my multifamily properties cashflow if interest rates go up 3 points 4 years from now? Have i been dipping into my reserves with the mindset” ill put it back when i sell this flip or parcels”. If my helocs get frozen will my portfolio survive? I had this conversation with a group of friends here whom are developers, hml, vp of a public reit. Deep pockets just buy more. They buy...well maybe yours..

sorry if this was long winded. Id love to know what everyone’s strategy is in these hypothetical scenarios.