The Blog of Andrew Syrios
  • Home
  • About
  • Writings and Interviews
  • Contact

The Blog of ANDREW sYRIOs

How Stewardship Properties Survived the 2008 Financial Crisis

8/17/2018

Comments

 
My father wrote this piece for our new Stewardship Properties Facebook Page on how we survived the 2008 financial crisis which sunk so many other real estate investors. Anyone interested in real estate investment and how to manage crises should gain from it:

We routinely get asked this questions by new private lenders, banks, and other industry professionals. 

Well, sometimes it's better to be lucky than good. While that somewhat provides the answer to this question, there is more to the story.

Stewardship's initial real estate financial foundation rests on campus rental properties primarily around the University of Oregon in Eugene. I (Bill Syrios) have been investing in campus rentals there since 1989. This sub-market has experienced tremendous appreciation since then and we have done a good job to keep our properties rehabbed and current with the times. 

In a downturn, people go back to college because they are out of work, want to upgrade their skills, or just have nowhere else to go. This means campus properties usually fare quite well in a recession and, as a matter of fact, they were the only locations in the country that saw an upturn rather than a downturn during the Great Recession of 2007-2010. 

But there was another factor at work for Stewardship. Even in a downturn, buy and hold investors (which we primarily are) experience financial stability or financial peril on the basis of their rents and cash flow, not property values. Our properties produce lots of positive cash flow and so were basically immune to valuation drops (if they would have taken place in our market.) 

And, what is true for buy and hold investors in campus locations, is generally true in other rental markets as well: as buy and hold investors, we are all about increasing cash flow by upgrading and keeping properties well maintained. It would be possible to experience difficulties in a recession but ONLY if the rents went significantly down, something that is unlikely to happen except in the very worst of times. 

As one friend of mine likes to say, "people have gotten used to living indoors." Because of this we will always have renters, even if we might have to occasionally drop our rents to accommodate a severe downturn. So, as long as our rents and therefore our cash flow is relatively solid, we will have no difficulties. 

One final epilogue to the story is this: stock investors often do something called "dollar cost averaging." This means they put a certain amount of money into the market (say $5,000 a quarter into an index fund) no matter where the market is in any given moment. Over time, the market goes up as does their particular stock investment. Something akin to this happens in real estate for buy and hold investors. 

We keep on keeping on (since 1989) investing in real estate. The early investments have appreciated, and their mortgages have been paid down. This allows us to keep investing with more confidence because, although prices are now higher, we have other, older properties that were purchased at much lower prices. It's a form of dollar cost averaging applied to buy and hold real estate investment.



Comments
comments powered by Disqus

    Andrew Syrios

    "Every day is a new life to the wise man."

    RSS Feed

    Archives

    November 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017

    Picture
    Business Websites

    Stewardship Properties
    333 Rent
    Blog Roll

    The Real Estate Brothers
    The Good Stewards


    Bigger Pockets
    REI Club
    Meet Kevin
    Tim Ferris
    Joe Rogan
    Adam Carolla
    MAREI
    1500 Days
    Worcester Investments
    Just Ask Ben Why
    Entrepreneur
    Inc.
    KC Source Link
    The Righteous Mind
    Star Slate Codex
    Mises Institute
    Tom Woods
    Michael Tracey

    Consulting by RPM
    The Scott Horton Show
    Swift Economics
    The Critical Drinker
    Red Letter Media

    Categories

    All

    View my profile on LinkedIn
Powered by Create your own unique website with customizable templates.
  • Home
  • About
  • Writings and Interviews
  • Contact