Rental Property Investor · Dallas, TX · Member since 2015 · 492 posts · 363 votes
I took the 18 page report released by Trump's committee yesterday and summarized it below.
I hope we can all see the light at the end of the tunnel. It’s not going to be as easy as turning the light switch back on but hopefully this plan gets executed properly and we can get things going again. As we all know before Coronavirus came into the picture we were in a very strong economy and what seemed to be an everlasting up cycle in the market. There was some signs beginning to show the market getting a little soft. However, 2020 was looking to be another hot year. With more of a slow down in 2021. I focus on acquiring large Multifamily properties and I'm still very bullish on this type of Real Estate Asset.
What are your thoughts on the plan to Open America Again and what this means for Real Estate Investing?
The administration's 18-page guidance document details three phases to reopen state economies, with each phase lasting, at minimum, 14 days. They include some recommendations across all three phases including good personal hygiene and employers developing policies to ensure social distancing, testing and contact tracing.
Phase one includes much of the current lockdown measures such as avoiding non-essential travel and not gathering in groups. But it says large venues such as restaurants, places of worship and sports venues "can operate under strict physical distancing protocols".If there is no evidence of a resurgence of the coronavirus, phase two allows non-essential travel to resume.
The guidance says schools can reopen and bars can operate "with diminished standing-room occupancy".Under phase three, states which are still seeing a downward trend of symptoms and cases can allow "public interactions" with physical distancing and the unrestricted staffing of work-sites. Visits to care homes and hospitals can resume and bars can increase their standing room capacity.Some regions could begin returning to normal after a month-long evaluation period, at the earliest, according to the document.Dr Deborah Birx told Thursday's briefing that as states work through the three phases, they could allow for more and more employees to return to work in increments.
Phase three would be the "new normal", she said, and would still include suggestions that vulnerable people should avoid crowded spaces.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
6y
There's no way to calculate what all of this is going to do to the country, but my opinion is we need to get it up and running as soon as possible, in a safe way. What this has shown is that all the scientific data that they have means absolutely nothing, because there are as many opinions and models as there are scientists and universities; all coming to different conclusions, and so far none have been accurate. None of the models factor in the new drug treatments, or the mistakes made early on with ventilators that caused deaths, etc. The whole thing is a crap shoot. Until everyone in the country can be tested for antibodies, there's no true way to calculate anything. The virus has probably been here for far longer than imagined and more people are immune than realized. We cannot shut America down until nobody new gets the virus.
As to the economy, there's so many unknowns. How many people didn't pay rent and will have a huge nut to crack when things start back up and won't be able to ? Are we going to have a huge increase in evictions? How many property owners aren't going to be able to carry their properties, and go into foreclosure? How many businesses won't have the capital to restart? Will suppliers for the various businesses and industries be able to get things out fast enough to help? How many offices are closing because they can't carry the overhead? Is there going to be a glut of office space? Retail?
@Joel Owens curious as to what you're seeing and hearing on different niches, office space, hospitality, retail, etc.?
What about manufacturing, are we going to see a race back to America? Will consumers be willing to pay the prices? What will tax rates be to cover all the "free' money that's been given away?
EVERYTHING is going to be changed forever. Let's just hope this ends soon before we can't come back.
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
6y
@Jorge Abreu
Personally I believe it is still to early to tell.
Some states will open up to early and areas get a 2nd outbreak which will hurt more in my mind as staying shut down for a little longer typically would be less painful than starting and stopping.
We also do not know the full extend of govt intervention on this.
Will real estate be impacted in a negative fashion - I think we all can agree it will, but how much no one knows yet.
Rental Property Investor · Dallas, TX · Member since 2015 · 492 posts · 363 votes
6y
@Chris Seveney I agree with you 💯. We have to be smart and careful as we open things back up and we don't want to find ourselves right back here. And then we don't know how much of an impact this will have on Real Estate bc a lot of it depends on how we execute open back up. I have no doubt though that at least Multifamily Real Estate will be strong again and sooner than later. How long that takes depends.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
6y
There's no way to calculate what all of this is going to do to the country, but my opinion is we need to get it up and running as soon as possible, in a safe way. What this has shown is that all the scientific data that they have means absolutely nothing, because there are as many opinions and models as there are scientists and universities; all coming to different conclusions, and so far none have been accurate. None of the models factor in the new drug treatments, or the mistakes made early on with ventilators that caused deaths, etc. The whole thing is a crap shoot. Until everyone in the country can be tested for antibodies, there's no true way to calculate anything. The virus has probably been here for far longer than imagined and more people are immune than realized. We cannot shut America down until nobody new gets the virus.
As to the economy, there's so many unknowns. How many people didn't pay rent and will have a huge nut to crack when things start back up and won't be able to ? Are we going to have a huge increase in evictions? How many property owners aren't going to be able to carry their properties, and go into foreclosure? How many businesses won't have the capital to restart? Will suppliers for the various businesses and industries be able to get things out fast enough to help? How many offices are closing because they can't carry the overhead? Is there going to be a glut of office space? Retail?
@Joel Owens curious as to what you're seeing and hearing on different niches, office space, hospitality, retail, etc.?
What about manufacturing, are we going to see a race back to America? Will consumers be willing to pay the prices? What will tax rates be to cover all the "free' money that's been given away?
EVERYTHING is going to be changed forever. Let's just hope this ends soon before we can't come back.
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
6y
@Jorge Abreu
There are several states that have rent moratoriums in place. Those states also seem to be the ones where restrictions will be removed at the latest date. Those landlords will probably suffer the most from the shut down. Landlords in other states where there are no rent moratorium shouldn’t have the same issues and once the economy opens back up things will go back to normal for them.
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
6y
I think retail comes back some before hospitality. People with limited incomes will be tired of staying at home. Buying a 50 meal to dine in is much cheaper than traveling or taking vacations to far away places. I do not see a lot of hotels for vacation or business travel recovering soon.
Necessity based retail is hard to do from home. People want to get out and experience things. I think apparel stores and the like had problems before and now many face extinction versus reinventing themselves. Brand new open air malls still have a chance for great success. The old stagnant malls made up of retail models that have moved to cheaper warehouse space and online operations could be in serious trouble. The best locations can be readapted but the outlining areas might become self storage to church type spaces at very low cost rent per ft. The problem is if a landlord can only get so much low rent then penciling a project that needs new parking lot and roof on a larger building could be millions of dollars and the rent is not there on stabilization to support it like in a stronger area.
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Jorge Abreu
While reopening sounds great on the surface, only time will tell. Maybe reopening will be very positive and more and states will move through the phases quickly and safely...Or maybe states open and a lot of coronavirus hotspots start popping up again all over the country, and we have to start all over again at square one. Praying it's not the latter.
Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
6y
Considering the countries showing the most promise for re-entering a life of some sort of normalcy are the ones who took the strictest measures of lockdowns and testing. I wonder why we would choose any other path.
Rental Property Investor · Easton, PA · Member since 2013 · 357 posts · 92 votes
6y
@Jorge Abreu Thank you for the summary . Think testing will be key , because what happens in say Florida, where thy relax the restrictions in phase I and as they start to ramp up in phase II, they get a spike in cases ? Do they go back in lock-down ?
Question foe the real estate market in general , is what will the lending environment look like? Unlike 2009 , where the banks were in the middle of the crisis and no one could get a loan , what happens on Phase I/II/III as people start to go back to work. Will they be pro-active , especially with rates so low, to help spur the economy , or are they going to wait until their balance sheets clean up for the deferments and forbearance that are going on now ?
Rental Property Investor · Dallas, TX · Member since 2015 · 492 posts · 363 votes
6y
@Anthony Gayden that's why we specifically only own properties in landlord friendly states. And I agree with you that the states with rent restrictions will open slower than others. I too think the economy will come back just not sure how long that will be. I'm naturally very optimistic and the fact that this recession was forced by a virus and not a financial or economic crisis leads me to be think it will be sooner than later.
There will of course be some younger people flush with properties that are paid in full. Until there's a cure we will be in a cycle where single digit groups of infected people can restart a local/regional crisis. With the amount of freedom American's are afforded, and already hitting the limit for willingness of people to remain inside, I refer to my first my first statement.
Investor · Houston, TX · Member since 2017 · 34 posts · 29 votes
6y
The economy is already hit by Covid-19. You do not just start the economy with just a switch. 22 million Americans lost their jobs in the past 3 weeks. Half of those jobs are not coming back any time soon. The economy is in a deflationary recession (not inflationary).
Economic Environment has quickly shifted like never seen before. Commercial and residential real estate asset prices will fall and possibly worse than 08 crisis. A lot of uncertainty exists, including social distancing that will be enforced even once the economy is back open. Restaurants and businesses will have to follow 6 ft rules and events involving a large group of people will not be allowed. Revenue of many commercial real estate assets has decreased while risks have increased. Therefore net income will decrease and cap rates will rise leading to a lower valuation of commercial real estate assets for 1 to 4 years.
The % of decrease will depend on the location and type of real estate. Residential real estate where COVID-19 effected jobs much more will take a higher hit than cities that were less hit by COVID-19. No city was protected by the COVID-19 recession and all cities will feel pain. Commercial Real Estate like hotels, retail centers, hospitality, etc..., will decrease by a huge % compare to Multifamily, Storage Units.
Let's talk about COVID-19. Many states and cities have different peaks! If we get our guards down, a high chance of probability that new peaks will be created or even larger peaks in states/cities that have not reached a peak. Only time can tell if states across the United States can keep the peak much lower than the hospital capacity to handle COVID-19. It did not work out so well for New York. Many major metropolitan cities can easily become the next New York.
Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
6y
I think the vacation rental market is going to come back strong and fast once we open the economy back up. People are tired of being cooped up and not able to leave their houses. I know I am itching for a weekend getaway to the beach or the mountains!
Investor · Monterey, CA · Member since 2014 · 174 posts · 55 votes
6y
If history repeats itself, we are going into a major depression. If economics stats are correct, we will be going into a major depression. Hold on to your *** ets and hunker down for a long one. I would be interested to find out what things are going on in other states? Are there really food shortages? Are folks getting rent? Are prices of SFRs going down? Are banks lending? We are (so far) good here in SF Bay Area, California.. no food shortages... I’ve had renters paying the rent and everything seems calm. Maybe before the storm....again, I’m very curious as to what’s happening in other states?
Las Vegas, NV · Member since 2019 · 8 posts · 11 votes
6y
With this being an unprecedented event, everyone's opinion is an educated guess at best.
The biggest factors that are and will effect the housing market over the next few months to a year are unemployment, lender liquidity and state moratoriums on evictions/foreclosures. What makes predictions so difficult is how these factors will be handled by the industries, the government and the people. So there are too many if, ands and buts for anyone to know for sure. Whoever's prediction ends up rights will have less to do with the level of intelligence and more to do with the fact that even a broken clock is right twice a day :) But, here's my predictions anyway.
Real Estate sales will definitely slow down for the next ~10 months while employers evaluate how to get businesses back to capacity, slowly hire back employees and customers/clients slowly start to trust the economy enough to start spending again. During this time government/investors/lenders will have to re-define underwriting guidelines and the rate/risk relationship to allow for Buyer's to be willing & able to purchase. Depending on what happens there will effect the amount of demand. Because were in such a hot market pre-Covid19 I don't foresee a huge decline in prices, but rather less demand/competition which may result in longer days on market and slight decrease (or at the very least less increase) in prices. Now this is assuming Lenders will still have reasonable products available for Buyers - see comments above).
Given the uncertainty there will likely be alot of adjustments in policies, rates, underwriting guidelines, consumer confidence, etc. and people, governments and industries struggle to find what works best to solve problems and to solve the problems that the solution to their problems unexpectedly created, there may be more volatility in the real estate industry than usual.
With all that said, I believe by 2022 things should be back to "normal" so long as some new unforeseen, unrepresented event doesn't occur.
Storage and Commercial will be hit the hardest. Owned two storage facilities in the heart of Salem Oregon during the last down turn and the overall vacancy rate in the market for storage was 30% after the recession. If people can't pay for their mortgage or rent then storing stuff becomes a burden on their finances. On the flip side if you are able to buy the property based on the higher vacancy numbers then you will be in a great position to take advantage when the market comes back.
Multifamily and rentals will stay strong. People need to live somewhere and we already had a lack of housing in almost every state so vacancy will be low. Commercial is going to take a beating as always so just like storage if you can buy at the lower price based on vacancy then you can make money when the market comes back.
Financial Advisor · Wimberley, TX · Member since 2018 · 12 posts · 6 votes
6y
My opinion is that Covid-19 is not the black plague. Though the media has treated it like that which has caused 60% of the country to be in full panic mode. So the economic damage has already been done. Unemployment will reach 20% by August 2020, though that will be the peak. It will slowly start to come down and probably be around 10% by Jan 2021. It will remain in the high single digits until late 2021. By 2022 we should be back to a similar economy we had in Feb 2020. But for now expect things to be tough, expect new legislation stopping foreclosures/evictions, expect discretionary spending to be way down for a long period of time. Expect prices to begin to rise for basics like food and medicine. Expect Universal Basic Income to really gain traction as people are finding the jobs they got laid off from are not coming back. It's going to be tough for quite awhile even if we open up the economy successfully over the next 2 months. Expect at least another $4 trillion in spending via the Federal Reserve printing money and more legislation passed extending more PPP loan funding since the 2nd wave of money just passed will be depleted within 1-2 weeks. I hope I'm wrong, but I'm preparing now for it to unfold like I said above.
Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
6y
Unfortunately it looks like states will open up first will not meet guidelines. The more that happens, the more I will be forced to remain in isolation. I am 64 years, overweight, have diabetes, high blood pressure and only one kidney. But before this virus hit I was not at death's door and I hate it when people treat us like we are expendable. Right now I am not in the market for new real estate for the simple reason I can't go out to look nor am I in any position to be showing properties interviewing new tenants. Luckily only one tenant has failed to pay their rent this month, and they came up with 2/3's of it.
Coeur d'Alene, ID · Member since 2018 · 74 posts · 129 votes
6y
I'm a really logically minded, data driven kinda guy. So saaay a month or month and change ago I was what I would call rationally pessimistic. I didn't think it was the end of the world like the people proper freaking out, but figured it would be a BIG mess. That was because of the data we had. It made things look really bad.
Thing is, now that we're getting in newer, better data, it's becoming pretty obvious that the whole thing was completely blown out of proportion. Antibody tests all over THE ENTIRE WORLD are showing that somewhere between 10-85 TIMES (read 1,000-8,500%) more people have caught this than we thought, and most of them didn't even know they were sick at all. What does this mean? The death rate is VASTLY lower than we thought. So low that if we'd known it upfront we wouldn't have taken ANY of these crazy measures beyond maybe killing sporting events and clubs.
Look up antibody testing in LA county, Santa Clara county, NY state, Germany, Denmark, etc. If it were only one or two showing sky high infection rates I'd be more cautious... But it's literally EVERY SINGLE TEST EVERYWHERE IN THE WORLD. Some scientists are trying to dismiss them as not being definitive... Sure no one study is, but that every single one all over the world shows the same thing... Logically speaking, it's highly likely it just spread more than anybody ever knew. They're trying to cover their own asses because they were spouting doom and gloom stories, and now that that's clearly not the case they don't want to admit their data/theories were BS.
The thing that scares me is the politicians who went all in on it being the end of the world seem to not be willing to admit it was all a mistake either. IMO it was an honest one, as I was OKAY with fairly strict measures when the data looked worse myself. I think with many aspects they overstepped their bounds even with the bad data we had a month ago, but it certainly called for more than the current numbers do. If they just came out and admitted it wasn't as bad as everybody thought people would forgive them... But they don't want to admit it, because they're spineless politicians, and are willing to further tank the economy and ruin peoples lives just to theoretically protect their polling numbers. Personally, I think this tact will bite them in the rear more than admitting things, as it's not a secret that can be kept under cover for long. You can't go from estimates of millions dying to estimates of LESS than a normal flu year without admitting it ended up being exponentially less deadly than initially thought!
So really, I just hope that sane politicians take the newer data and run with it ASAP. That's the only thing that will stop us from having an even bigger catastrophe on our hands. Other than people who have severe mitigating health issues or are really old, I'm pretty sure you can safely stop worrying about catching this thing. You may have already had it, and even if you haven't it seems like the true death rate is basically about the same as an especially gnarly annual flu. Don't trust me, google the data and make up your own mind about it!
Investor · Thousand Oaks, CA · Member since 2017 · 302 posts · 123 votes
6y
@Rebecca Graziano, I currently advise a company that just got a DOD SBIR award in AI/ML called MSB.AI and am using ML on some properties now. Personally only investing for the long term in structures built without Lead or Asbestos and if they have room for expansion. We will want to remodel some older units and Built new units to bring up to the new normal of health standards to be expected. Exploring adding indoor air quality sensors and whole home Filtration systems for Water and Air as some tenants have already asked. These tenants will pay a little higher rents and stay longer. to have Smart building monitoring and their own Electric vehicle charging. Opening up Schools and businesses this early will only prolong the problem. We've had 5 of these Pandemic alerts in 5 years with Covid2019 just being the worse. We need to prepare for more as the Permafrost thaws. I was in Alsaka in 2016 and visited the Frozen tissue lab at the University of Alaska, Fairbanks and this will only keep happening. Regardless we will see lots of bargains by summer with owners willing to finance.
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
The Covid is changing the way I do business. Specifically, how I show units, and when I show them. But, the "opening up"? I'm not willing to go there yet. I'm staying precautious and "opening up" to the way I was doing things just a few months ago. Maybe in June. Maybe in July. Maybe in August. I don't know. I'm going to let the doctors tell me, and the numbers of Covid cases tell me, and never let the politicians tell me when it's safe. How it's going to effect the country or real estate as a whole, I really don't know.
Interest rates are as low as 2.7%. People will buy if they want to regardless of the "debt".WE must open the economy now...or nothing will matter.
We will recoup. Trump said it. There are those politicians, ( I'll be nice) who want the economy to tank. It' s all about control and servitude.
I hope that Trump puts us back on the gold standard and flushes out the FED REServe..which is not Federal and they don't have a reserve...they have a lot of paper.
Perhaps if Trump cleans up the Fed REs ..maybe just maybe most of the peoples loans will all go away.. and we can have a clean start.
The thing that scares me is the politicians who went all in on it being the end of the world seem to not be willing to admit it was all a mistake either. IMO it was an honest one, as I was OKAY with fairly strict measures when the data looked worse myself. I think with many aspects they overstepped their bounds even with the bad data we had a month ago, but it certainly called for more than the current numbers do. If they just came out and admitted it wasn't as bad as everybody thought people would forgive them... But they don't want to admit it, because they're spineless politicians, and are willing to further tank the economy and ruin peoples lives just to theoretically protect their polling numbers. Personally, I think this tact will bite them in the rear more than admitting things, as it's not a secret that can be kept under cover for long. You can't go from estimates of millions dying to estimates of LESS than a normal flu year without admitting it ended up being exponentially less deadly than initially thought!
I agree with much of what you're saying, but the death rate is already past an average seasonal flu 33,700 (avg over last 10 years from CDC data) and past the highest year for flu in the past 10 years ( 2017/18, 61,000 deaths) , and more in line with pandemic flu (although it probably will not hit Spanish Flu levels). It's looking like the death rate for this, even with all the measures in place, is going to be somewhere between .2% and 1% (heavily skewed towards older people) compared to seasonal flu's .1%,
The thing that scares me is the politicians who went all in on it being the end of the world seem to not be willing to admit it was all a mistake either. IMO it was an honest one, as I was OKAY with fairly strict measures when the data looked worse myself. I think with many aspects they overstepped their bounds even with the bad data we had a month ago, but it certainly called for more than the current numbers do. If they just came out and admitted it wasn't as bad as everybody thought people would forgive them... But they don't want to admit it, because they're spineless politicians, and are willing to further tank the economy and ruin peoples lives just to theoretically protect their polling numbers. Personally, I think this tact will bite them in the rear more than admitting things, as it's not a secret that can be kept under cover for long. You can't go from estimates of millions dying to estimates of LESS than a normal flu year without admitting it ended up being exponentially less deadly than initially thought!
I agree with much of what you're saying, but the death rate is already past an average seasonal flu 33,700 (avg over last 10 years from CDC data) and past the highest year for flu in the past 10 years ( 2017/18, 61,000 deaths) , and more in line with pandemic flu (although it probably will not hit Spanish Flu levels). It's looking like the death rate for this, even with all the measures in place, is going to be somewhere between .2% and 1% (heavily skewed towards older people) compared to seasonal flu's .1%,
So without trying to get TOO OCD, there are a lot of funky bits if you really get into the weeds with this stuff. For instance, a huge number of flu deaths aren't counted in regular years, they're often written off as just an old person dying of old age. With Covid they're attributing deaths to it that weren't even necessarily caused by CV, but it was found to be present postmortem. There have been cases being reported of people having heart attacks or other obvious causes of death, no CV symptoms at all pre death, but when they found CV in their postmortem test they called it CV. Is that legit? Kinda, kinda not. Nobody really knows how prevalent it is either, but it's a thing.
Generally speaking though, I agree this is worse than a typical flu season... But if you go back a bit further than that wiki page shows we have annual rates that have got close to or hit the ~100K mark, and nobody freaked out about those. Did the universe grind to a halt when 61K died in 2017-2018? No. So this is a BAD flu season level of death. It may well surpass the worst flu seasons we ever have, other than the proper pandemic ones... That's not because the death rate is higher though, it's because more people are going to catch it. No vaccine and no built up immunity is the cause there.
But the thing is, if they'd come out and said "OMG we're going to have 2-3 years worth of regular flu season deaths amongst people that are on their death beads already!!! We need to tank the entire global economy and ruin everyone's lives STAT!!!" basically nobody would have been okay with that. They've moved the goalposts from this killing millions, including young people, to killing minuscule numbers of people, while keeping the fear factor maxed out as if everybody is still gonna die. That's to cover their rear ends. The real death rate for non old people that don't have serious preexisting conditions is basically zero. IIRC when NY was at 10-12K deaths overall they'd had 26 or so deaths of people under 60 who didn't have major pre existing health issues, and only a couple hundred period. But all those people were basically super screwed up young people but a handful.
So the whole thing is just being misrepresented all the way up and down, even with official numbers and stats used as the basis to argue against a lot of the paranoia.
I don't want to sound callous, which is what all the people freaking out irrationally keep calling rational people, but it's REALLY not turning out to be a big deal. If these antibody tests are remotely correct (And I bet they are... Every one across the world agrees, come on.), it's looking like we probably won't barely even hit .2% fatality rate. Which is right in the range of a bad flu. Granted, more people might catch it, but it's not a big deal. I have a grandma who's up there in years... My father has respiratory issues... I don't want them to die. Obviously. But the level of freak out and reactions is completely out of proportion with the level of the problem.
As I said, I'll cut them slack for taking some of these actions (even though many were obviously flawed even with older data), but there's just no reason for them to keep going down the road to self destruction at this point. IMO we need to keep stadium concerts etc **** down, and maybe even bars/clubs... But there's no reason the other 99% of businesses shouldn't be open and working.
