Did your real estate business survive the 07-08 crash?

[Michael Woodward]

@Joshua Dorkin , I wanted to ask if you could put together something structured (podcast, extended thread, book, etc) about the 07-08 real estate crash. A lot of us got burned badly during that time so it would be great to assemble something concise and specific that has stories and advice from investors that survived (or thrived), in spite of the crash, that we can use as actionable steps to fortify our current business plans.

Right now I'm only doing flip projects because it limits my risk. I'm in and out of a project in 3 to 4 months which means I don't have to worry about major market corrections.....but I really want to buy and hold some properties. I've heard a lot of stories from people that "had it made" with enough passive rental income to spend their days on the beach or the golf course, that eventually lost everything when the market collapsed.

I don't want to spend 5 or 10 years building up a portfolio of properties only to see it obliterated by a serious market correction. My business model wasn't prepared for what happened in 08 so I had to close my investing business and fall back on my engineering degree. I want to make sure that I"m smarter this time around so that doesn't happen again.

What do you think? How about the rest of the BP community? Do you want to participate in this kind of thing? I can offer some advice on how NOT to structure your business (for anyone that's not sure how to fail) but it would be great to hear from those of you that did well during that time....especially those that held rentals. I would really appreciate it. Thanks!

[Don Konipol]

Very simply almost all of my investments since 2002 were purchased with no debt so I was easily able to ride out the market decline. Being in this position allowed me to raise capital and purchase assets at a significant discount in 2008 and 2009, some of which I held and some of which I sold at a profit - too early as it turns out.

It is said that every general fights the last war. So it is with investors. Stock market investors who remembered the 1932-1938 depression were unable to take advantage of the boom markets that followed. Seems like @Michael Woodward memory of 2008 is not allowing him to reap the long term benefits of holding real estate.

Leverage can magnify both profits and losses. But the decision is not merely one of expected value; very possibly financial losses may be more painful than financial gains, making the decision for those people one of ultra safety and hence ultimately a lower net worth than those whose decision process is less "emotional".

I see the risk of inflation must greater right now than the risk of deflation, hence I am in the process of strategically "leveraging up" on my real estate holdings. probably not as much as I should as I too now consider losses more painful than gains - as i have reached 60 years old and have no desire to step backwards in risk of out sized gains.