1- if you are not in a Major Market how much do you expect if any your rent to drop? What percentage?

2. What is it that you would expect with people who have lent private money in the past? Would they be more or less incentivized to do it oh, and with the rates be lower or higher?

3. People who have only played in the stock market because that's all they know oh, will they be highly incentivized to pull their money and invest it privately?

4. If you have any balloons do in the next couple years does that concern you if you are in a high equity position?

I'm not in a major market. (Poor, rural, economy based on oil and gas.) The last time around, it had more of an impact on how long it took to fill vacancies, because people were staying put more, and the ones who were moving were undesirable. But it didn't really affect the rent rates themselves.

There is a huge rental housing shortage here, so I don't see the rents decreasing. I think rents will continue to rise.

Since I'm in the middle of one of the largest real estate markets, Los Angeles, I've done my home work over the past 35 years and reached out to other developers/contractors from all over my State (California). Here is what I learned:

In the 3 complete cycles that I've lived through as an investor, rents have only declined around 10% even when the underline values of property dropped between 40 to 50% -- in the major metro Los Angeles area.

This is not true for other smaller niche markets. Some examples:

Las Vegas a resort town. Small towns with military bases that rely on the soldiers spending/living in or near to the town. When the values dropped around 50-60%, do did the rents after time.

Also some college school towns that loose Federal Funding and then enrollment drops, so do rents.

Jen,

My experience is that people and banks pull back. Like Deanna said the good renters hunker down and stay put so vacancies are slower to fill.

Fewer applicants have jobs or move in money.

Jobs cut back so folks are laid off.

Banks call HELOC loans and slow payers to cover the bank’s exposure.

Buyers don’t buy because they are nervous and banks stop lending to investors.

My best advice: eliminate debt. Pay OFF loans. Paying the DOWN does not matter. Equity does not pay the bills.

Hoard some cash to cover emergencies and major repairs that WILL come. Roofs, furnaces, and AC don’t stop in a recession. More move outs. A single housebeater can cost you thousands and set YOU back.

Do NOT let ANYONE fall behind AT ALL.

I just sat thru a seminar where the guru admitted MANY of their students lost it all because they were over leveraged and could not keep up in the last recession.

There are no economic metrics that say a recession is coming.

Economists can't even explain why we are in such an amazing economic boom without inflation

There are always mild economic down turns and none last long

I do not waste my time on issues that are not present in my life

I hate to get political BUT. WHY are some states not in a major market-- or considered a major market-- because working people are getting smart. They've had enough of the GIVE AWAY MY PAY CHECK schemes of the politicians.

We are being flooded here in GA with people moving from the left coast country of CA, NE-- it's the whole NE corridor moving for things to be better and more cost efficient.

Here in GA your typical walmart shoppers and employees alike can live pretty well-- without being taxed taxed taxed to death.

My sister who lives on LI about 60 miles from NYC pays over 18000.00 in just property tax-- along with 8.75% sales tax-- that's not including car tags and all the other "special taxes". We live in metro ATL. Have the same size home-- we paid 650.00 property tax (yes same size home) and 7% sales tax and 20.00 for a tag.

When 2008 hit, vacancy went 30%. I dropped re t by 25% just get them filled. Then moved rates over the years while the market recovered. Could have tried to stay at the original rent, but it would have taken longer to fill...

Good topic for discussion Jen!

1.) I dont anticipate a DROP in rates, stagnation of rates at current levels.

2.) Re: private lenders - my guess is mild/moderate recession wouldn't likely affect you with a lender that you have dealt with in the past.....provided you were good to deal with.

3.) Not many will pull their market money are redeploy into real estate. Many will lose their market money and then enter RE without cash.

4.) Balloons should always be scary.

5.)Evictions are more likely to decrease during a recession.

I might be way off, but I had the impression that recessions affect homeowners more than they affect "the rental pool". Homeowners who lose their houses go off to join "the rental pool." Depending on your rental criteria, people who failed to be good homeowners can make very good tenants... not everyone's cut out to be a homeowner, and we all know how many people who shouldn't have been given mortgages were given mortgages just on the basis of "they ought" to have the opportunity, even if they had little chance of success of keeping and maintaining a $250k house on a fast food income.

One of the things that has been observed by others-- when many people tighten their belts, they don't suddenly stop eating out. Instead, they eat at the next tier down. If you're eating at a $100/plate place on a regular basis, you're not going to suddenly learn how to cook, you're going to start eating at a $50/plate place and be proud of yourself for your economy. If a $50/plate place is your usual go-to restaurant, you're going to downshift to, like, Olive Garden or Red Lobster. If Olive Garden or Red Lobster is your usual treat, you're going to downshift to Denny's. If Denny's is your usual dining destination, you're going to downshift to fast food or Waffle House.

Which is totally why I'd buy a Waffle House franchise in a heartbeat, if I could, but those are hard to come by...

Pmh- rv capital of the world. People left for South Carolina and Florida. Three years later, they came back home! Lol

AllyM maybe we could compare our theroy's. I have the big bang theory (13.8B yrs ago) , UFO's figured out and quantum physics i'm writing up as we speak.

I bought my rental after the recession started so I really don't have any experience yet as to how rents will go during a recession but I suspect mine would not really go down much if any.

Banking:

A) The time to develop the banking relationship you will need is to establish it BEFORE a down turn. Do this with a LOCAL bank like Andover Bank.

B) In a down turn NATIONAL banks are an excellent source for properties as they are dealing with too many properties and are dealing on a national scale. They are a royal pain to deal with in getting a loan in a recession. Use that local bank.

C) If the international exchange rate runs away like it did in 2007, the Bank of Scotland was unloading properties at 30% off, the Germans were at about 25%..........thanks to the young Euro. No Bank of Scotland near by? You might know it better as Citizens Bank.

D) Banks will look harder in a downturn, but if you already have a track record, the review is far less taxing.

Market Place -

A) You are in an steady market place. Property values didn't go down that much over all.....there are a lot of folks on fixed incomes where you are at.

B) Market times will increase a couple of months, but that isn't earth shattering where the typical market time is 4-6 months

Vacancy-

A) Vacancy rates can climb, so you need to know this now and lock in your keeper tenants.

B) Use your tools to incentive the behavior you want - if that is filling places offer that move in special that Jeffery mentioned at the convention with the discounted deposit for well qualified apps.

Hard Money

A) Everyone has money and access to cash today. If banks tighten up standards, more people will want hard money and the supply doesn't really go up in a recession.

B) Don't schedule balloons due in a downward market.

C) The time to pick up discounted notes is during a recession.

Last downward cycle, I was vacuuming up a deal about every three weeks. Now is the time you start to prepare for that time.

Where there are many nay sayers out there, I am expecting the market to start turning soon. The fed has even said they may even reduce rates in 2019. Couple that with the EU ramping up a round of QE2. Can I tell you what will be the shock that sets off the downward cycle - nope. Not going to try.......some things that might do it though: impeachment, war in the gulf, trade war, or oil shock to the economy to name a few.

With just a limited number of workers out there joining the workforce compared to the baby boomers leaving it - strain will be on to raise wages. Illegal immigration - Bad....legal immigration - good...just bring a skill with you.

The tariffs, have impacted my frig buying. Washers, driers and frigs are all up about $100 each. I don't see it yet on stoves for some strange reason.