Marginal multi-housings properties struggle

The multi-family income properties on the lower rungs of the real estate ladder continue to have a tough time. Financially strapped tenants are having a hard time making a living these days and a hard time making the rent payments. Every slowdown in the economy provides fewer dollars to spend and and even those remaining dollars are shrinking in value,

Landlords and investors who bought marginal (they were marketed as "affordable") properties at the height of the last market upswing (i.e., when prices were the highest) are feeling the pinch first. With a high debt-to-equity ratio, no cash reserves (they spent all their money buying the building, right?) and a couple of shaky tenants, many are now on teetering on the edge. In these older, high maintenance properties, the cash flow may have looked like it provided enough to pay the high mortgage payment, taxes, heat, etc. but with nothing leftover for those, predictable, surprise emergency repairs. And buildings do break. Especially "affordable" ones. Add to that mix a couple of tenants that can't pay the rent, and you have a full-blown foreclosure brewing-- and in 90 days or less, the property usually goes irretrievably "toes up.".

NEXT: WHAT HAPPENS TO THE PROPERTY ITSELF?