REIN`s recommendations during the 2008-2009 downturn

[matthewrlee]

One of the selling points I use is when speaking with potential JV partners is that I`m plugged into REIN, a wealth of knowledge and experience.



Questions from a potential JV partner:

• How well did REIN foresee the market downturn in 2008-2009? Did the evidence indeed present itself as a negative change in the economic fundamentals prior to the downturn?
• What was REIN's recommendations during this time (in some of the major markets... say Toronto, Vancouver, Edmonton, Calgary, Hamilton, etc.)?
• What were REIN's recommendations in 2006-2007 leading up to the downturn?
  How did REIN investors protect themselves and their JV partners during this time (other than ensure that they bought with positive cashflow to ride out the storm)? Did the mortgage paydown still mean that the properties still turned a profit overall?
  How did rents fare during this time? Did cashflow positive properties turn into cashflow negative properties?
  When values dropped, did any lenders require investors to put in another downpayment to lower the LTV on their properties?

I`ve been a REIN member for only a couple of years, so I wasn`t around during this time. And since I wasn't an investor prior to 2008, I'm trying to mitigate the risk of a partner believing that I'm overly optimistic in the markets since I haven't been "thru the trenches" during the bad times (even though I'm modelling with MTO, as Thomas advised!)



Thanks for your help!

 

[Cory Sperle]

I was not a member during this time either, however I did follow the group and knew many people active in it at that time. Many folks were over leveraged, and a few were wiped out completely, however those that stuck with the principals of positive cash flow and solid management sailed through. If you are properly prepared and have an adequate reserve fund in place you will mitigate your risk substantially as return OF investment always trumps return ON investment! A great example is Grand Prairie, got hammered especially hard. There are a few gents on here that, although vacancies were double digit, rents down, prices falling, were still able to have low vacancies and high rents by setting a standard of excellence for their customers (renters). Their portfolio was tested and now they are stronger than ever. These downturns are good sometimes, as they say the tide goes out and you find out who is wearing swim gear and who is not.





I don't know if lenders on mortgages did margin calls or not, like the mutual fund companies did, but I know that I bought my first Apartment building in 2008, and I was still able to obtain financing and bring the value up in a short period of time so in my mind downturns are relative, and if you are prepared shouldn't affect your overall plan as you should be prepared for it.