How We Manage Risk In A Downturn | Durable Value Ep. 66

Durable Value: An Investor's Podcast

In this Episode, Joe and Ryan discuss the intricacies of managing risks during a downturn in the real estate market. They discuss the importance of focusing on cash flow, especially in challenging economic times, and the strategies they use to ensure stability and growth. This episode covers their approach to conservative debt, the necessity of having reserves, and the impact of market cycles on risk tolerance. They also highlight their shift in deal strategy, including walking away from deals that don't pencil out, and the importance of thorough due diligence. They also discuss the importance of effective property management, diversification across markets and tenants, and the positive trends in the office and industrial sectors. It is key to remain disciplined and selective while still finding great opportunities in a downturn.
00:00 Introduction to the Real Estate Downturn
00:28 The Importance of Cash Flow
00:58 Adjusting Risk Strategies
01:54 Conservative Debt and Leverage
02:28 Challenges in the Current Market
03:16 Risk Aversion and Management
03:57 Diversification and NOI Growth
04:53 Positive Outlook and Future Opportunities
05:37 Conclusion and Strategic Focus