I think the BIGGEST RISK in what I do, multi-family investing, is making sure that the deal the way that you buy it. Because like honestly, the way you buy it means everything. I mean, if you don't buy it, right. Sorry, sucker. You know, whether whatever whether it's you know, you're not operating it right?
The point is, is you want to buy it at the right price to where there's a margin of error. There's a margin. So, for example, if you screw something up, it's like, OK, well, we have enough cash sitting over here, we can fix that problem. Or you want to be as far away from foreclosure point as possible. So and it's the same thing with what's going to happen here with the election coming and the economy changing. You know, everyone's everyone's freaking out honestly about, you know, these the cycle changing and coming, And it should have already happened, honestly. And so I think what's going to happen and I'm listening and I'm listening and, you know, you have to be aware. I think people are freaking out and that's going to cause an issue. I don't think that there really is going to be an issue probably for another three years. But I think because people are preemptively freaking out. I think something's going to happen in the next twelve months. The 12 to 24 months, honestly. But I'm just gonna go ahead and assume twelve months, worst case or best case or whatever, and prepare for that. You know, so to mitigate the risk.
What's cool about apartments? I'm going to read this line from this book. I just spoke at a trust company today and I was like, hey, guys, like multifamily real estate is so cool because of this statistic right here. So I'll read it for everybody, so this book is awesome. I don't know if you can see it, but it's. The Perfect Investment by Paul Moore. And it's great for my passive investors. I give it to all of them so they can see why this is so different in single family. So "the multi-family delinquency rate at its peak was 90 percent lower than the residential rate in most of the downturn since the Great Depression".
So meaning that Fannie Mae, Freddie Mac, nonrecourse loans, they do so much due diligence on the operators,the deal itself, everything. I mean, I just signed on a Freddie loan last week, you know, for this deal that we're done now. And they just have to vet all of us. We have to get an organization chart. We have to give them our track records. I mean, on and on and on. So it's not I can't say the word safe, but I mean, you have to mitigate risk. And so just knowing that that is happening because of the way the underwritten, a lot of my passives love nonrecourse loan debt on the deals that they might invest in because they know that's the case. So that's that's one thing I'll point out. As far as the difference between single and multi, that helps just inherently avoid some risk.
Then for us, we have to underwrite the deal conservatively. So everybody in their mother is going to say, oh, I'm conservative. What does that mean? You know, it's not I'm conservative like I'm a Republican. What it means is, like I've said, OK, so if you look at the market vacancy, the market rent, the market's expenses and some other things, and we'll just stick with those for now. What is the market bearing right now? What is it done in the last three years? What is it done at its worst? And what what could it do? Because I don't have a crystal ball. But there's some economists, friends of mine and some friends.
I've been in the biz for a long time. And I kind of use these stress tests, if you will, to test the deals. And if they pass these tests, then I feel comfortable moving forward with that deal, because like I was saying, you know, if you set it up right, you're going to make it through a recession versus, you know, the housing single family goes like this, you know, and you just have to ride the wave. And I don't want to ride the wave. And I don't want my people to ride the wave.
I don't buy these outright with my own cash. I use investors money to invest. So we have to buy. right. Because I would die if somebody was like, "oh, I gave you my educational savings account for my child" or "I gave you my retirement my whole life. I would literally die". If I ever screwed someone over by not doing my due diligence.
So one thing I build in to the underwriting on a deal is you want to look at the market vacancy. So for me, I go ahead and say, OK, let's look at the deal. If we have to drop the rents or if we have to increase vacancy 10 percent. So I do that and then I take the rent number or the rent amounts we think we can get. And when I reduce that 10, actually, no, I take the actuals. What it's doing today, not what we think we can, which is twelve. But on an actual worth doing today, I take that down 10 percent. Let's decrease rents 10 percent because we have nonrecourse debt on these loans. Right. So they required that we keep the student population under a certain percentage. That we keep the occupancy over a certain percentage, that we meet these certain things to keep the loan, to keep qualified for the loan.
There might be a time period where people aren't getting jobs and they're losing jobs. They don't have enough money to pay rent. And so to keep them in there and to keep our occupancy high enough to stay in that loan and not make it a recourse loan, we may have to drop the rents it up or an amount. So worst case they can see goes up 10 percent. Rents decrease 10 percent. That's a really good spread that I use. See how far it is both over the debt service. What we have to pay and then plus the bill to keep the lights on. One thing that I guess I automatically do this, but somebody else brought it up.
Hey, I check out the expenses and I use the expenses at the same rate of growth. So like if to expense growth every year. Expenses are going to increase. And so I say, OK, we're gonna go 2 percent every year. We're going to go at the rate of growth, 2 percent every year. So I think that's reasonable. It's not super low. Some people do like 1 percent or whatever. It's at the rate of growth which the wash. It makes sense. Anyway, I could talk on this forever, but there's there's several stress tests that we put our deals through to make sure that we can ride out a recession, which I think is the biggest risk.