08' Recession - How bad was it really?

As one of the lucky ones that came out of college in a bull economy, getting a job was easy even with my rockstar 2.4 GPA.

As someone that's planning on going back for a MSRED, i'm nervous about a possible slowdown and coming back out in a bad job market.

To those who actually went through it, how difficult was it really to get a job in RE development or related fields during the downturn? Coming from construction in DC, most of my peers said it actually wasn't too bad to stay employed, it only culled the bottom percentile and DC is a fairly recession resilient city as well.

Comments (71)

Aug 21, 2019

I don't know about the DC area, but in most of the country it was pretty bad. Lots of people laid off, and if you were looking for a job it was kind of like playing musical chairs. I graduated in 2008 and many of my classmates job searched for months, or had to settle in some way (less pay, not such a great firm, etc). And of the students who made it quite a few of them weren't working at the same place a year later. For a while it seemed like every conversation about the job market was overshadowed by themes of austerity and how bad things are.

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Aug 21, 2019

Was not working in RE in DC at that time but have heard DC remained fairly resilient comparatively. Might be an anomaly due to the largest employer being the federal govt. Take that with a grain of salt as I'm sure there were some that were still impacted pretty hard, especially a smaller developer whose pipeline goes dry or they get caught with their pants down and significant carrying costs.

My advice, in general, would be to get the MSRED part-time while staying gainfully employed. If you get let go during a recession, at least you'll be in the program and can crank out a few semesters from that perspective.

Aug 21, 2019

How bad 2008 was depends on who you talk to. I have spoken to people older than me who were lucky enough to stay employed during the crisis. One 50-year old person I spoke with recently said of it "That one wasn't so bad - it was only a few months."

But for the many 22 year olds at the time who didn't have work experience yet - they had get used to being told that they are worthless in the job market, even with a college degree.

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Aug 21, 2019

Also interested in hearing stories. Next recession will be first. I am in CMBS and when I look at the conduit deals done during the last recession, it is shocking. There were literally zero conduit properties originated in 2009. We had over 2,000 properties being originated for conduit last year. I cant even imagine such a precipitous drop. This will create a ripple effect. If there are no deals to originate, then originators & underwriters have little to do (though some UW's can transition to balance sheet loans, credit and structuring people have little to do. I guess some will transition to asset management and special servicing but there would be mass layoffs. But one advice I am given by two of my bosses whom were both laid off from Credit Suisse is that we will 100% get back on our feet, it is not the end of the world. Its a hiccup and almost everybody got back on their feet.

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Aug 21, 2019

No input, but a side question. How is multifamily in a recession? In terms of lending and IS.

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Aug 21, 2019

Nationally, multifamily rents decreased ~6%. I don't remember from the report I read a while back what happened with vacancy.

That compares with most other asset classes which saw a 10-25% drop in rents.

Aug 22, 2019

Rent decreases are one thing, but if lenders and investor demand goes down, cap rates will also widen out pretty substantially.

Aug 22, 2019

Supply>demand, unfavorable cap rates, different/declining lending risk appetites, etc.

Aug 22, 2019

Supply>demand, unfavorable cap rates, different/declining lending risk appetites, etc.

Funniest
Aug 21, 2019

Not too bad if you're at a BB frat, but some of the LMM and Botique houses on campus had to slash tailgate budgets 10 - 20% during the last downturn. Definitely makes it harder to get laid but if you're at a top house with a solid alcohol contribution/consumption ratio you should be able to keep your spot on the composite.

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Aug 21, 2019

@CodyParkey 2009 - 2011 was horrific. 2008 my income was off 50% from 2007 and that is a lot more money than the years that followed.

Lending was still getting done on MF, just not a lot of deals. I can't believe the deals I could barely sell. I had a 10 unit property 5 doors down from the beach for $165k a door in 2012. Seller was going to carry a 2nd so that the buyer would only come in with like 15% down. I couldn't give this deal away. Heavy hitters in SD still buy smaller complexes by the beach and they scoffed at this property because it wasn't a 5 cap on actual. Today the property is worth 400k a door and if I brought it to the same heavy hitters they would feel like they stole it at 350k a door.

I financed a nice office building on PCH in Encinitas in 2012. Everyone turned it down. Finally got Wells to do it.

Multifamily was trash in the 90's. People were feeding their buildings back then.

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Aug 22, 2019

There were a few big construction projects in Chicago that ended up getting scrapped after breaking ground because of financing problems post-Lehman. It was so weird to see the skeleton of the abandoned Waterview Tower incomplete right in the middle of the city for several years.

Waterview Tower

Chicago Spire Building

Aug 22, 2019

Dc was its own world then. Huge fiscal stimulus. Tons of government spending. It was boom times I'd assume in dc if anything.

Array
Aug 22, 2019

I graduated in '08 and honestly it wasn't that bad for our class. Pretty much everyone I know who wanted a banking or consulting job at my semi-target undergraduate school got one (provided they did what they needed to do to network and get interviews).

I did hit some major speed bumps on the road after graduating though, and was laid off from my job, though thankfully ended up going to a better firm afterward. Others from my year hit similar bumps, but I don't think it really negatively impacted us too much in the long term. I came to DC to work in the summer of '08 so we were somewhat insulated, but my friends who graduated and were working in NYC/Boston seemed to be in a similar boat.

The big "oh shit" moment for me wasn't when Bear Stearns failed in winter '08, it was when Lehman and AIG failed in September '09. I remember being at a bar in downtown DC and overhearing an economist from the Fed or World Bank speculating on how bad things could get and he was basically right. There was so much uncertainty and nobody knew where the bottom was.

The class of '09, on the other hand, was a different story entirely. It was just a total bloodbath. Good buddy of mine at a target school said that companies were cancelling their on-campus presentations, or just showing up and interviewing in order to maintain appearances.

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Aug 22, 2019

I could confirm similar timeline of events. I was an 08 undergrad and managed to find an ER job in June. It was bumpy, but a workable environment. A few of my friends had another semester to go and graduated in December, but by then there was nothing working for them and the spring 09 graduates. I became unemployed in the spring on 09 and the job search was horrific. At networking events, I met tons of solemn middle aged people who were just laid off.

The few employers who had job openings had a tendency to be really arrogant, and I remember a few interviewers being jerks and saying rude things during the interview. Basically they knew how desperate the job market was and got a power trip talking to candidates. If you lacked some qualification from the job description, they wouldn't be afraid to say you don't have enough "experience", or worse, say insulting things about your degree or background.

My fiance at the time (now wife) found a job as a head hunter at Adecco, and her clients were ridiculous in their expectations. Because so many people were unemployed, some offices wanted to take advantage of the situation to try finding overqualified candidates. They were looking for people with Master's degrees to do secretarial type of work filing papers and answering phones. I don't think things started to normalize until maybe 2013.

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Aug 22, 2019

By the way, I can tell you a strategy that did work if you were looking for jobs was to be an hourly contractor. Employers didn't want to do any hiring, but if they needed work to be done they were willing to give you a full time gig on an hourly wage as 1099. Doing it that way has advantages - like overtime pay!

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Aug 22, 2019
Hayek:

The class of '09, on the other hand, was a different story entirely. It was just a total bloodbath. Good buddy of mine at a target school said that companies were cancelling their on-campus presentations, or just showing up and interviewing in order to maintain appearances.

As an '09 grad at a target, I can confirm this. You could log on to the OCR portal and actually see the # of interview slots dropping day to day. I knew people who had their full-time post-internship offers withdrawn by reputable companies.

Aug 22, 2019

interesting to hear the RE side of it. got a close family member in healthcare DCM, took a big paycut and then his company got bought by another one so he was axed and the acquirer's banker took his territory, took about a year for him to get back to normal

in my first job, our division shuttered (also on the debt side), starting salaries were abysmal (grads were pleased to get $30k to start at that time in the southeast), and while PWM stayed pretty resilient, there was a lot of panic because of all of the M&A back and forth. smith barney was citi's golden goose and wondered what a MS (well, really mitsubishi) deal meant so lots of attrition, retention bonuses then followed to keep good guys put, merrill wondering what BoA was going to do (hint, BoA destroyed a wonderful culture, they really fucked it up), smaller guys start googling "counterparty risk" and more, but mostly just a lot of sleepless nights trying to keep clients from panicking at exactly the wrong time. most of the stuff PWM guys pushed wasn't caught up in the debacle, may have been a couple of bond funds that bought some shady MBS's or had a stock manager who held onto lehman too long, but from where I sit, everyone came out OK

TLDR - it was bad, but in retrospect, relatively short lived. I could not imagine going through the depression.

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Sep 11, 2019

Can you expand on how BoA ruined Merrill's culture?

Sep 11, 2019

By being BofA

Aug 22, 2019

I started just after the GFC. I was actually part of the first analyst class hired at the bank where I started. I did the whole off-site analyst training program for several weeks before being placed in my full time position in my home market. When I walked into my permanent office on the first day, I noticed that the office was at best 50% full. Since I was the dumb rookie, I asked if this was all expansion space and my manager responded "no, these were all the people we let go a few years ago". It was a pretty sobering first day experience. Over the next several years the space filled up to maybe 70% full. Before I left it had never fully recovered, although I suspect they are back to full by this point. (This was for a balance sheet lending group)

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Aug 22, 2019

Pretty difficult. There were no sales and no construction, and therefore no loans, no appraisals, etc.

Look at a chart of CMBS issuance and you'll see after a crazy 2007 in volume, there were virtually no loans for the next three years. When CMBS did come back it was probably late 2011. They started with big loans $20MM and up, then $10MM, then eventually lent $5MM.

But, knock on wood, we're unlikely to have another recession like 2008 soon. People (including my bank) seem to be preparing for the last recession, instead of the next. You can't predict these things. If you're in school you may or not miss a recession, but you'll figure out how to make it work. I actually did not enter into CRE until 2009, had to take a job as an Investment Sales Broker because no one was hiring, but I found a place.

Keep the Faith.

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Aug 22, 2019

This makes me nervous as someone looking for a job ~3months out of graduation. I have a few opportunities in the pipeline right now; should I base which job I take on which I think would hold up during a recession? Example: MF fanne/freddie originations analyst vs underwriting analyst.

Aug 22, 2019

Completely depends on your personal risk profile

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Aug 22, 2019

I wouldn't. This might sound naively optimistic but I (and many others) don't think the upcoming recession will be like the last, at least we doubt it will be real estate related. The banks have had to really change how they evaluate risk and hold reserves.

Like CRE said though, depends on your risk profile. I believe your first opportunity is really important in that it can catapult your career trajectory if you get the right role with the right group for what you want to do. If you think you've found a great opportunity, I would be wary to pass simply because of recession fears. Additionally, you can always ask your potential employer what their plans for the economic cycle are and factor their response into your decision.

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Aug 22, 2019

I graduated in May of 2009 which was right in the thick of it. Had a 3.9 GPA BBA Econ / BBA Fin Honors college and I worked shitty jobs for 13 months before getting on with a regulatory body and then to one of the big 4 banks.

My introductory analyst training started off with explaining the origin of debits and credits and I just sat there for three years through this redundant/remedial training.

I guess you could say I wasted some time, but I can't point to anyone else in my graduating class who works in finance today.

So yeah, it wasn't only tough to find a finance job, it was prohibitive.

Aug 22, 2019

Although I was 10 years old at the time, I lived in Manhattan and many of my friends dads worked in banking. These dudes lived in nice buildings on the upper west side and were often forced to to sell there pads after living a high class lifestyle. I know lots of families whose business's were destroyed and lost their jobs.

Aug 22, 2019

A family member of mine was an MD at Lehman/Bear Stearns (won't say which) and part of their fixed income group.

His stories of 2008 are honestly depressing. He had worked at the company for years and was friends with everyone he worked with.

"Work ethic, work ethic" - Vince Vaughn
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Aug 22, 2019

Definitely keep it private as to which bank he was at given this huge reveal. Would be a terrible thing to out him by narrowing it down to just 1 bank.

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Aug 22, 2019
Net Work:

Definitely keep it private as to which bank he was at given this huge reveal. Would be a terrible thing to out him by narrowing it down to just 1 bank.

yeah bro what a HUGE and SCANDALOUS reveal this would be!!

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Aug 22, 2019

Thanks for the responses, definitely seems like we've got good representation from the finance side. Anyone have significant input from the more Ops heavy roles? AM, Dev, brokerage, etc? Planning to roll through with grad school regardless, input appreciated on how to weather if there is a storm.

Aug 22, 2019

It was pretty bad on several levels for me:

  1. Work - I'm a business owner. We were rolling out financial services in community banks (retail) and had made great progress in '07. Signed up a few banks, started operations, etc. '08/09 hit and the community banks just stopped adding services cold. A few of the banks we were in went under. One major account was given a cease and desist order by the regulators and was only allowed to do primary banking functions which meant we were out. Lost a lot of revenue
  2. RE - FL was a hotbed of residential investment property. Idiots who had NO IDEA what they were doing were using the Option ARM loans to buy several houses and flip. Eventually the music stopped and they defaulted on lots of homes. For a long period following '08 in Tampa, an obscene percentage of home sales were short sales as people were walking away. Killed our home values (from 700k to 450k overnight!)
  3. As a business owner who needed capital, it was almost impossible to borrow money. The banks wanted nothing to do with small businesses as they were getting TARP money and using it to bolster there books, not lend it out. Was crazy they were bailed out without requirements to lend.

Pretty bad time!

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Sep 13, 2019

really late to thread but curious what your was selling?

Sep 14, 2019

If you're referring to our offerings within the community bank space we were providing the retail investment and insurance platform (wealth management). Essentially, we provided the investment rep, management reporting and compliance oversight and the bank provided office space and leads for a revenue split. Most smaller banks aren't good at these services so they outsource.

Aug 22, 2019

In 08/09 my GF at the time's dad was part of the AIG team that had been peddling these now infamous products. Obviously when shit hit the fan he was let go. Managed to keep their house is suburbia, continue to go on vacation, etc. so good for him. Not the point of this post.

The afterburn was real. He was untouchable, essentially blacklisted from the financial services industry for having been part of this now stigmatized team. Couldn't get looks anywhere even when we were in recovery mode! I think he was a pretty sharp dude, although I was pretty naive at that age so who knows.

We talked about the situation once. He'd said he was just following orders from the top... that's all and now he was gutted. Pretty sobering and sad stuff honestly. Dude was a muppet and had his life derailed. Pretty sure AIG is doing fine now...

and that's when I knew, I HAD to work in high finance.

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Aug 22, 2019

Wasn't just AIG at fault. I blame the consumer at least as much as the lenders and the folks securitizing the loans. The consumer was simply greedy. Banks made it way too easy to buy RE with no money down and with a product that was negative amortization which means unless the value of the property increases substantially, you'll owe more than the property is worth. So people just walked away from their obligations.

Never quite understood that part other than that they could. You borrow X. Just because it goes down in value doesn't mean you can't afford to pay the loan. You were going to pay it if it went up in value. The lender doesn't get to change the terms just because of appreciation so why do you get to walk when there's depreciation? I know some lost their jobs so they were unable to pay, but around here, lots just walked away even thought they could pay.

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Aug 23, 2019
rickle:

I blame the consumer at least as much as the lenders and the folks securitizing the loans.

YES. No one ever wants to hold the people accountable that actually signed the dotted line. Same thing happening today with the student loan debate. Don't blame the student taking out 120k in debt without a single thought as to how their psychology degree is going to enable them to pay that back. Don't blame the home owner taking out an ARM without taking the time to understand what they are really doing or how it really works.

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Aug 27, 2019

To say consumers share as much of the blame as the people who created the financial products is absurd. The banks found a way to bundle crap and model it so complexly that it was treated as gold. They sold off the loans as mortgage backed securities knowing full well that they had a high chance of failure. Rating agencies treated the securities as AAA because they had no idea how to question the models the bank supplied to them! Then many of the banks took out bets against the very loans they had sold through credit default swaps with AIG. AIG sold these without knowing what the hell they were doing. It was a very small team that ended up blowing up a huge company.

In the end banks facilitated bubble buying of sketchy borrowers because they didn't have to hold the loans. Texas was one of the markets where this didn't happen, why? Were people in Texas somehow more virtuous than people in other states? (I mean ask a Texan and they will say "Hell yeah we are!") No, they had regulations in place after the savings and loans crisis of the 80's to prevent these stupid loans. A lot of people tried to keep paying and endured hardship when they should have just walked away. Raw business says if you owe much more than an asset is worth then walk away. Don't throw good money after bad.

https://www.investopedia.com/terms/n/ninja-loan.asp https://www.thisamericanlife.org/355/the-giant-poo...

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Aug 23, 2019

I know the former MD of a particularly famous GFC-era MBS structuring desk. When it all hit the fan of course he and his team were canned.

Same story as your GF's dad - guy has not worked on the street since. Has tried to start a fund, has (presumably) tried to join other banks, no dice. Does visit the Hamptons on the reg though, so he seems to be doing okay.

Aug 22, 2019

Not RE related but I remember talking to a HF in late August-early September 08 who scoffed at the idea of covering transportation from Boston to NY for an interview and said the PM was out of the office at the Open. Never heard from or about those guys ever again.

Aug 23, 2019

Some crazy stories here.

Non US perspective, NAMA took over pretty much every small business in my hometown in Ireland. It was a small fishing village with a massive tourism industry. Suddenly every hotel/coffee shop/restaurant was under new ownership or entirely done for.

The economy there struggled to recover. Even today there's a massive abandoned hotel in town. I even remember one neighbor moved to Australia to mine for a few years and bring back some money to his family. It was disastrous. Ireland had gone through a massive boom that nobody saw ending, so many of these people had never seen hardship before. There was a massive tower in Cork called the Elysian which was derelict for years following - showing just how badly RE was hit.

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Aug 23, 2019

In another post on this website I recall someone commenting that a lot of guys in Ireland dropped out of school to pursue RE and construction and made a killing. I will try to dig that up later.

Edit: I found it here.

technoviking:

google the Irish pre-2008 real estate bubble. Half of those cowboys left school at 16 to work construction and at the peak were worth 8-9 figures

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Aug 23, 2019

Wow great find! Entirely true too. The boom just wasn't stopping and a ton of kids would pass junior certificate and drop out, working as a builder and eventually doing development.

Very true too that they made a killing. There were more houses being built than the population needed, so when the crash came it hit so much harder.

Keep in mind the country has a population smaller than Massachusetts, so the lows are really low

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Aug 24, 2019

My boss bought a house near Tiger Woods in Florida for 40% less during the crisis than it was listed for a year earlier. Now it is worth triple that. When his real estate billionaire father in law heard what the cap rates were in FL at that time, he flew in from the other side of the world and bought forty units for cash in a matter of a few weeks. Prices on all of those units have at least tripled.

The lesson: stay liquid my friends!

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Aug 24, 2019

I think it is every real estate investor's dream to be able to capitalize on depressed prices... as it is most investor's dream. The thought of being in position to do so is effing mouth watering. Let's hope a couple of us get a couple good runs in our careers. That's when you earn the big bucks boys.

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Aug 24, 2019

Amen

Aug 26, 2019

I was not in RE, but worked in industry which was also hit pretty hard. Recruitment went from red hot to ice cold in like 6 months. Sucked bad if you were a relatively fresh grad or junior worker...lots of grads that never got a chance to even try, because all hiring seized, and didn't start until a couple of years later. By then, they'd found other lines of work, and new fresh grads were standing in line for the spots. Same story as with CS people right after the dotcom burst.

But as far as real-estate goes: I know lots of people that made a killing. Not just professional investors, but regular people with no debt and cash to spend. My first apartment has doubled in price since then.

Aug 27, 2019
Dumpster Fire Yuppie:

As one of the lucky ones that came out of college in a bull economy, getting a job was easy even with my rockstar 2.4 GPA.

As someone that's planning on going back for a MSRED, i'm nervous about a possible slowdown and coming back out in a bad job market.

To those who actually went through it, how difficult was it really to get a job in RE development or related fields during the downturn? Coming from construction in DC, most of my peers said it actually wasn't too bad to stay employed, it only culled the bottom percentile and DC is a fairly recession resilient city as well.

Uhhh, this is hard to imagine, even in the D.C. area--I'm a Washingtonian of that era. The most brilliant project manager at Toll Brothers (he's my brother-in-law and now is making something like $700k+ running his own construction firm) was let go. My brilliant now-former boss who makes something like $400-500k base salary running a private real estate company for a rich family was nearly put out of work after 10 years wth JLL. My best friend who today makes more than $1 million originating SF loans was terminated from his job as a loan originator. My other closest friend--my college roommate--had a 3.8 GPA as a finance major and was never able to break into the real estate biz. He works in consulting today. I was laid off from my RE job.

2007-2010 was nightmarish for persons trying to break into CRE or RE in general. I got incredibly lucky to survive despite my layof. Highly talented people had their industry careers annihilated or blown up on the runway.

Aug 27, 2019

Sounds like the cream rises to the top. Most of the feedback I received from weathering the storm came more from the subcontractor base and those in renovations, the jobs i'm CMing right now. I'm sure C&S and new construction would have significantly more impact.

Aug 27, 2019

it sucked a bag of hammers. I still got a mid-career front-office job at a BB, but it wasn't the type of team and role that I would have wanted. I just wanted in to a high-paying job in the midst of the shitstorm, so I had to take what I could get.

Aug 27, 2019

Everyone's post cumulatively sums it up well.

I only knew a small handful of individuals that weren't affected.

Aug 28, 2019

There were highly experienced commercial real estate brokers in my town who had to get creative - limo driver for example. I knew a biglaw real estate partner (he was a non-equity partner so maybe not a major bigshot but still) who took a job at Costco. I hope this never happens again.

Most Helpful
Aug 28, 2019

my experience is from the commercial/multifamily real estate space, so all this pertains only to that area. at the time, i was an investment sales broker with a big national firm and was able to come out the other side on a team that did extraordinarily well. it was a big office, so i saw a lot of it play out in real time. i think we went from like 80+ agents to 20-30 and probably one closing per year per agent average, if that many. i saw a lot of people go under and never come back. i saw a handful crush it later on the upswing and build great businesses.

1) every deal that was either bought, recapped, or refinanced in the prior 3-5 years was at the very least worth less than it was at the time of that event and in most cases outright underwater. lesson learned: plan for downturns. they happen. real estate is cyclical. it does not "always go up" regardless what your personal experience or anecdotal evidence tells you.

2) most of the people who supply capital to the guys in #1 (ie - the LPs, lenders, etc) have deep pockets and UNLIKE the RTC days (which everybody expected) they did NOT decide to "cut their losses" but instead decided to "kick the can" and wait for values to come back up. lesson learned: it is good to have deep pockets and control your own destiny. more than you would ever imagine. not being in control means someone else is in control and that means someone else controls your destiny. you will never be in total control, but be completely aware of how much control you do or don't have at all times.

3) this meant that transaction velocity screeched to an immediate halt. ANYONE who made their money off the transaction velocity (ie - investment sales, leasing, mortgage broker, CMBS guys, any intermediary essentially) all were pretty much screwed. most of these guys ended up in some other random sales-related job or got pushed out of the industry entirely. the few that remained were those that had saved enough money and built up a big enough war chest to make it through. this was a minuscule percentage. lesson learned: nothing is more painful to watch than nothing happening at all. especially when you are working WAY MORE than you were when lots of stuff was happening. and know that you can't do anything about it at all no matter how hard you try. also be acutely aware that other people can have an immense amount of control over your life just by not doing anything and that is a terrible feeling.

4) during the downturn, the few that made it through in #3 above did 10x the work and basically made zero money. spent a lot on marketing, travel, and entertaining. they especially courted the banks and special servicers, who for the most part went to big auction houses anyways when they wanted something sold but otherwise went to receivers. very few of the intermediaries got much biz from these other guys as the per-deal fees were drug down very far by price-sensitive banks and courts such that the only real option tended to be auctions for most things. lesson learned: u need a lot of faith to kill yourself for crazy hours and be confident that the market will come back. u also better love whatever it is you are doing.

5) when things started to pick back up on the other side, the guys from #4 absolutely crushed it. they were the only guys in town with the herd of guys with no track record or experience having been washed away a long time ago, now tending bar or washing cars. these are the guys who went from making like $300k/yr prior to the crisis to losing $100k/yr during the crisis to making $1mm+ just a year or so after. crazy bounce back. no competition around at all. lesson learned: it takes a lot of money and big balls to bet with the big boys.

6) lots of other people came back into the market and work for these guys who made it through. lesson learned: if you aren't the one who sticks it through, get on board with one of the guys who did.

7) the investors who never sold (b/c they didn't have to) or the banks who never sold (b/c they weren't forced to) came out fine. lesson learned: if you can afford to do it, think long term.

so to sum it all up, the only difference i saw between the guys who were totally destroyed and those who were made the new kings of the industry was staying power. lesson learned: as with most things, if you don't really need the money and have patience, the world is your oyster.

lesson learned: if you go into a downturn as an intermediary and you don't have a huge nest egg with a huge expense load, probably best to cut your losses early, switch industries and maybe come back as an investor after you make a lot of money elsewhere. sticking around as an intermediary is not worth your entire life savings, credit rating, marriage, etc. get another job and move on.

lesson learned: if you are young enough, maybe see if your parents will let you live with them for free and eat ramen noodles for 3-5 years while you work 80-100hr weeks with zero income and MAYBE you'll come out the other side with big bucks. or you will be the world's last buggy whip salesman. at this age, u can afford to swing for the fences.

note: all of this happened in most markets, but it got progressively worse as the markets got more remote. in gateway markets it was bad but if you were in some random tertiary market it was an absolute blood bath. capital fled those markets like the plague. lesson learned: the bigger the real estate market, the safer it seems to capital markets and therefore, deals will still get done there in downturns. flight to quality is your friend if you are in these markets.

another note: some people tried to capitalize on the downturn with other-peoples-money but they screwed up the timing and were too early. what they thought was the bottom was simply a pit-stop on the way to hell, like stopping at the gas station down the street from your house before you drive across the country. those people had no idea what they were getting into and got clobbered. they frequently levered up a lot expecting a huge bounce and got destroyed. the guys who were still early but not the "first ones in" did amazing. lesson learned: real estate moves down fast and up slow, you can miss the exact bottom by YEARS and still probably come out pretty good.

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Aug 29, 2019

Really good insight, thanks for the post. Good thing I eat a lot of instant noodles already.

Sep 1, 2019

Not my own experience but I remember my coworker telling me his experience. He graduated from a well known university in the NY Tri-State area in 2007 and landed a job at a large capital markets firm. His team in 2007 consisted of roughly 20 people (10 Brokers and 10 analysts) by the time everything took a downturn their dealflow was cut to literally almost nothing, the analyst team was cut down to 2 analysts. The deal flow was cut so drastically that he was sitting on his phone playing farmville and billiards and was lucky enough to even be employed at the time, there was just nothing or very little to work on during the time.

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Sep 6, 2019

Yo who was slinging Mortgages in 2007? did those guys make enough to stick around?

Sep 6, 2019
Sham Wow:

Yo who was slinging Mortgages in 2007? did those guys make enough to stick around?

My best friend was originating mortgages from 2004-2009 before he was let go. He got into the business by a friend of a friend who was in MS-13. For a brief while, mortgages were so profitable that violent gang members were getting into the business.

For a year-and-half after his layoff my buddy was working at Starbucks. He encouraged me to get into the mortgage business, at which point I did, I opened up my own branch and hired him. I ultimately quit the industry (I was really good at it, but the hours were overwhelming and I didn't enjoy the business). Today my friend does about $100 million in annual production. He told me on Monday evening that his goal for the next 3 years is to reach $330 million in annual production, at which point he wants to hire me to run his team.

I don't know if I can do it--I just don't know if I have it in me again, but he said, "How about $250,000/year?" and I was like, "Umm, well, I would at least listen." [although the number would really have to start with a 3] So let's put it this way--the industry is highly profitable for those who can produce. At $330 million in production, less some overhead costs, he'd be making something like $3 million/year. But to put that in perspective, $330 million in 2005 would equal something like $6-7 million/year in income.

Edit: to your original question, no, virtually every originator was eviscerated. Today, there are very few originals. Top producers today are dominated by young Gen Xers and Millenials.

Sep 6, 2019
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Sep 6, 2019
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Sep 13, 2019