Class C landlords - better build up some cash reserves

Class C landlords - better build up some cash reserves

Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes

To any LLs who rent to people who are working class but pay their own, unsubsidized rent: be advised that you should build up some cash reserves.  New England Journal of Medicine just published a case report of the disease course of the first patient in the US diagnosed with coronavirus, and it's not pretty.  Take home message is that this is highly contagious, is contagious for several days before the patient is showing symptoms, that patients can be ill and NOT have fever for at least the first six days of illness, and that the blood test for coronavirus may very well not detect it, although apparently nasal and oral swabs do detect it.  What this means is that the measures used thus far to detect infection in people returning from China were inaccurate, and that there is a high likelihood that we are going to have coronavirus sweep across the nation in the same way that the Spanish influenza did in 1918, probably with a similar death rate of 1-2%.  People who are salaried will probably continue to be paid, and continue to pay their rent.  Section 8 will continue to make its payments, and their residents' rent portions will be adjusted accordingly if they cannot work.  But working class people will not be paid when the businesses they work for shut down temporarily, and since these people live paycheck to paycheck, they're not gonna be able to pay their rent.  I have a feeling that judges (and a higher authority, too) would not look kindly on LLs evicting because a tenant couldn't pay rent during a pandemic.

I would not be surprised if we, as LLs renting Class C housing, wind up holding the bag on as much as 6 months of unpaid rent, if this winds up going the way that China is going.  So make sure you have cash reserves to keep up and running as we go through this.

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Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
6y

@Karen F., thanks for the projection of epidemic, and it's ALWAYS a good practice to have cash reserves.  However, I think we have to see how this plays out before we start to scream 'the sky is falling'.

NOTE:  Remember a few years ago the "Ebola pandemic" that threatened the entire known universe?  Let's hope this one goes the same way.

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  • Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    6y

    For whatever my opinion is worth, I'm going to go ahead and listen to the CDC, WHO, and Dr. Karen, over say, somebody that thinks we should go ahead and "think the herd". 

  • Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
    6y

    It's actually an interesting point.  It is felt that the tremendous death rate in Europe from the Black Plague in the 1300s led to the Rennaissance and the end of feudalism, because it cleaned out so many people, including the landowners.  Sort of like a social/population forest fire, that allows for new growth.

    If the coronavirus cannot be stopped by social distancing, then it could very well take most of the people in their 90s and 80s, and a big chunk of those in their 70s too, along with some younger ones.  Think of the effects on society.  There will be a transfer of wealth from the elderly to their children, plus a great decrease of draw on social security, Medicare, and Medicaid.  It's awful to say, but it would relieve a lot of the pressure on social security.

  • Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y
    Originally posted by @Karen F.:

    It's actually an interesting point.  It is felt that the tremendous death rate in Europe from the Black Plague in the 1300s led to the Rennaissance and the end of feudalism, because it cleaned out so many people, including the landowners.  Sort of like a social/population forest fire, that allows for new growth.

    If the coronavirus cannot be stopped by social distancing, then it could very well take most of the people in their 90s and 80s, and a big chunk of those in their 70s too, along with some younger ones.  Think of the effects on society.  There will be a transfer of wealth from the elderly to their children, plus a great decrease of draw on social security, Medicare, and Medicaid.  It's awful to say, but it would relieve a lot of the pressure on social security.

    There are a lot of republicans (and no, I don't have a political side they've both got too many flaws) who are kind of bluntly saying the the economy shouldn't come to a total crash to save those who are the biggest burden to the system (ie, those who can't contribute due to existing conditions, age, retirement, etc). It's a little ironic that I have parents in the 60+ range, both have conditions, who keep downplaying it and are eager to get out and about instead of "boring quarantine". You'll be made fun of for presenting a stark image of what's coming and shouting at them to stay indoors like kids. 

    You've also got the first wave in NY where half the infected are in the 18-49 age range, majority of whom thought they were invincible to this virus. 

    I myself am not feeling great after ordering take out from an upscale restaurant that went on about their hygiene procedures for COVID 19, but you never really know. It's likely paranoia because the soup was way too spicy etc. I've always understood nature has the upper hand and if we keep pushing it's buttons in perverted ways, it will give us the reality check we deserve. 

    This is a heavily economy focused government in power that has openly questioned whether it's worth going into a great depression to save the over 65's and immuno compromised, but it could get really ugly if by this cycle of the mutation it starts sending more and more 18-49's into ICU. 

  • Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y
    Originally posted by @Account Closed:

    @Karen F. Always good to have cash reserves from my understanding, I’m in the healthcare industry and I’m not buying the whole pandemic things. Bunch of overblown hogwash to jack up news ratings in my opinion. Same with Ebola, 11 people were treated for Ebola from 2014-2016. Not that an outbreak can’t occur, it’s just pretty unlikely here in the US as opposed to less industrialized countries.

    For what it’s worth here’s a snippet from an article of a confirmed coronavirus case in the US...

    “This may be concerning, but based on what we know now our assessment remains that the immediate risk to the American public is low,” said Robert Redfield with the CDC.

    Have you changed your opinion now?

  • Cory LucasPro Member
    Rental Property Investor · Brighton, IL · Member since 2019 · 431 posts · 139 votes
    6y

    @Anish Tolia yes!

    I was very uneducated on the matter and should have done more to educate myself better. I appreciate you calling me out and asking, cause yes it is most certainly a more dire situation than I realized initially. I had treated patients with Coronavirus prior to all of this, which was the reasoning for me not being as concerned as I am now. This virus has apparently mutated, it is still a strand of corona, but has now become much more infectious and can obviously as we all know now can cause some serious respiratory problems especially in people with co-morbidities.

    The big concern is how easily it’s spreading and then the burden it’s potentially going to place on our healthcare system if we get an influx of patients. So my apologies to anyone that my comments may have led astray or misinformed, I will look to do better in properly educating myself on a subject before commenting on it

  • Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y
    Originally posted by @Account Closed:

    Do you realize what an incredibly small percentage of the population has contracted this? We're talking about thousands of people out of over 300,000,000. You're probably more likely to get hit by a car on any given day. If one person in your county gets it the news has to make it sound like everybody died...but that's not what is really happening.

    Early stages, early stages.

    Don't rush to count your chickens before they hatch, particurilarily not in a once a century virus mutation.

    Not the time to be cocky.

    Sidenote: why is it racist to call it the China Virus? Because they keep originating there due to inhumane consumption of animals? Where was the outrage over MERS? 

    Shouldn't asian americans be more offended by the chinese government allowing the conditions for viruses to re-occur and stop doing business with them until they shut down all forms of wet markets forever? 

    But never offensive when it hurts the bottom line. 

  • Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y
    Originally posted by @Account Closed:

     Yeah, they said the same about all the other dirty chinese animal diseases. Bird flu, SARS, others. FREAK OUT FREAK OUT FREAK OUT...oh wait it's over.

    Since the virus started, more people have died in car accidents, from heart attacks, from smoking, from obesity, from being murdered by the chinese government, getting hit by a bus, getting hit by falling coconuts, and thousands of other things nobody ever worries about.

    I know you're trying to be controversial or some kind of reality star here, but you're just plain wrong.

    SARS killed 800 people total, maybe a handful in the US.

    COVID has already killed, not infected, over 15,000 people worldwide and the peak of cases has not even begun in the US, nor has the peak ended in Europe. 

    Falling coconuts, btw, kill 150 worldwide. 

    The Chinese started it but were able to build hospitals in days and isolate patients immediately to kill the curve, the US and Europe cannot do that. Likley to get real, real nasty and that's only assuming the sick and elderly are the main ones in critical, if the trend continues down then we'll have more of the 18-49 crowd going critical and it can really get bad. 

  • Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    Sidenote: why is it racist to call it the China Virus? Because they keep originating there due to inhumane consumption of animals? Where was the outrage over MERS? 

    I think it's labeled racist because Donald Trump uses the term. Any chance they get, they try to label him racist. Where was the outrage over the Spanish flu, the Hong Kong flu, et al? 

    And I note that PETA is absent when we mention the swine or bird flu. Why aren't they sticking up for our poor downtrodden feathered, furred or bacon covered friends?

  • Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes
    6y
    Originally posted by @Karen F.:

    It's actually an interesting point.  It is felt that the tremendous death rate in Europe from the Black Plague in the 1300s led to the Rennaissance and the end of feudalism, because it cleaned out so many people, including the landowners.  Sort of like a social/population forest fire, that allows for new growth.

    If the coronavirus cannot be stopped by social distancing, then it could very well take most of the people in their 90s and 80s, and a big chunk of those in their 70s too, along with some younger ones.  Think of the effects on society.  There will be a transfer of wealth from the elderly to their children, plus a great decrease of draw on social security, Medicare, and Medicaid.  It's awful to say, but it would relieve a lot of the pressure on social security.

     Hi Dr. Karen!

    First, I have to say that you had given us an incredible insight from 2 months ago!

    I'm glad you mentioned that we may in fact not be able to contain the Virus for political and other reasons.

    I wanted to get your opinion on something I have been thinking about for a while.

    I believe we have all seen the videos of the Gen Z partying during Spring Break, especially in Florida and Texas. Their attitude can be summed up when one of them was asked if they cared about getting the Coronavirus as "If I get Corona I get Corona... but at the end of the day it won't stop me from Partying."

    This is actually more political. Gen Z are voting for Bernie. Bernie believes that young folks are not doing better than their parents and their parents are not doing better than their parents.

    Gen Z has taken up the thoughts that the Boomer Generation is absolutely selfish and has already put into motion the destruction of the world with their denial of Climate issues, hence Greta Thunberg and the phrase "OK Boomer."

    Gen Z also, by being so young, has an attitude we all had when we were young.... invincible, even to a new Virus.

    Last week, we saw the closure of Florida beaches to stop the mostly Gen Z from partying.

    HOWEVER, after thinking about it more, if those that were partying for Spring Break passed the virus around and then you stopped their partying and told them to go home all across the US...........

    I think you get the point.... this only increased the spread of the Virus and probably exponentially.

    This might not sit well with Medical professionals, but if they would have just allowed the partying to go on for the next two weeks and kept everyone there, treating any who had gotten sick, they could have allowed the Virus to peeter out via the concept of Herd Immunity.

    Combined this with the fact that we lacked any kind of testing, both for a proper diagnosis AND to see if anyone had recovered developed immunity, as well as lack of protective equipment (N95 masks, gloves, gowns, etc.)... there was no way to prevent transmission and it made our Healthcare professional who are on the front line extremely vulnerable and demoralized.

    Unless I'm missing something, sending the kids home to every single State in all the corners of America right after they started partying and passing the virus around is one of the most illogical reaction that could have possibly has been done.

    To me.... it's already too late that a full lockdown is just going to make it far worse as more people will lose their jobs, over months and years, even when the Virus has finally be reduced to a normal flu like situation, the ones who could not recover economically will wind up either homeless or sick due to the stress they have encounter not only from the Virus but on the brink of financial disaster.

    We already know that reports show that the average American has only $400 left from their monthly pay check to survive on after their expenses. They are just one missing paycheck away from homelessness.

    It won't be surprising to me that a total lockdown will eventually cause all kinds of future unintended consequences such as the rise of homelessness and suicide to the level of the opiod epidemic.

    What is worse is that the class that will be hurt most will be the Middle Class. The rich are well off and have savings enough to go through a protracted lockdown. The Poor has Government Support. But the Middle Class? People like the readers of BiggerPockets? Well.... they will be devastated, just like one of my tenants who happened to open up her own restaurant only to be forced to close because she could not have customers come in. The Middle Class will pay a BIG price and many of them will swell the ranks of the lower classes below middle class. This payment won't happen right away, it will unfold over years. 

    Given that we are spending more than $1 Trillion to save America from the Virus... let's say there were 5 million Vulnerable people for whatever the reasons (over 60, respiratory complications, cancer, etc.), doing the math of $1 Trillion / 5 Million = $200k per Vulnerable person.

    If America supported the 5 Million potentially Vulnerable people to completely self-isolate for say a MONTH while the rest of the population goes through Herd Immunity, it almost seems to me that this is far use of the money.

    We also need to go back to the Gen Z. Their attitude, for the most part, will continue to spread the Virus. So the efforts towards social distancing has already been fruitless and will continue to do so with out ENORMOUS effort.

    ANYWAY... I can go on and on trying to look at the illogical way America has been trying to solve this problem when there seems to be much more logical ways to do it.

    If we face the truth that Gen Z really don't care about the Boomer Generation in general, I think, just maybe, the path we took would have been different than the one we have already chosen.

    Just my opinion! Sorry about the long posting!

  • Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y

    @Ryan R. At least @Cory Lucas is man enough to admit he was mistaken. Your mistake.is looking at cases today (still small) and dividing by the total population. You dont inderstand what exponential growth looks like even when the data from Italynis staring you in the face. And you dont compare to total.population you compare to hospital and ICU beds and you can see just how quiclkly things get out of control. Stop thinking America is some magical.blessed place where this cant happen. It is happening now.

  • Rental Property Investor · SF Bay Area, CA · Member since 2015 · 206 posts · 156 votes
    6y

    Wow @Karen F.... you were spot on! Impressive! 

  • Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y

    @Ryan R. Are you just blind or wilfully ignorant? Have you looked at the infection rate curve? 9000 cases just today. A week ago it was a few hundred. Is that not an exponential curve? Or do you only do Fox news math?

  • Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Account Closed:

    @Ryan R. Are you just blind or wilfully ignorant? Have you looked at the infection rate curve? 9000 cases just today. A week ago it was a few hundred. Is that not an exponential curve? Or do you only do Fox news math?

    So you're some kind of psychic then and you know exactly how all this is going to play out, and everybody else knows nothing? Again, the numbers we are talking about are currently EXPONENTIALLY LOW.

    Stop arguing about stupid pointless things...jesus.... 

    Everyone, this is a troll so do not take him seriously. But his intentional stupidity allows me to make a point. 

    The numbers that were 15,000 are now 19,000. 

    4% of those infected are serious or critical.  

    We have not even entered the first wave in America. Stay at home, do not touch things or people outside the home when you go for groceries, get bored and incubate for the next 3 weeks atleast. The number is going to hit 100,000 whether we like it or not, but through our actions as humans who care for ourselves and those around us, we can make sure it doesn't go into the millions. 

  • Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
    6y

    I have a unique combination of factors that make me able to do a lot of research.  I'm a retired primary care physician, a cancer patient, and a news-junkie, also a medical history junkie.  Also a very critical reader.  I was morbidly fascinated and horrified by what was happening in Wuhan, and knew that unless we shut our borders to incoming travelers (all travelers, not just non-citizens, not just people returning from China), that we'd be in the same boat, soon.  That ship is just now setting sail, and we do not have the same kind of society that will permit the extraordinarily strict shutdown that China used to stop it, so it's likely to sail to its final destination - it won't stop until 70 to 90 % are infected, and with a death rate of 2%, 6 million dead.

      We pulled all our money out of the stock market a little less than a year ago, because we felt that the bull market was unsustainable, although we did think that it might run as long as Trump was in office, because we felt that he would do anything to prop up the market.  I wanted to put it all back in two days ago, when the DJIA was at about 18500, because of the fact that even events like 9/11 didn't keep the market down for very long.  Other than the Great Depression, the nadir came very quickly after any event.  With the '29 crash, although the market recovery took a long time, the nadir came in '32.    I felt that with this being long term retirement money for my husband (I don't think I'll be around to enjoy it), we still wouldn't need that money for another decade, and it was better to jump back in on the way down, than try to catch the rapid rise on the way up.  But he was afraid, felt that the market's nadir will be when things are much worse (which they will be in a month or so), and he couldn't see that our government giving a blank check drawn on future generations to prop up the market now would probably mean that this would be the nadir.  I think that it will, however, have another dead cat bounce or two, will go down into the upper teens again, before this is all over.  I told him that I'd discuss it with him, but that my inclination was to catch the next time it's in the upper teens, knowing that we would likely miss the nadir by about 10%, but better to do that than miss it by 20-30% on the way up.

    As for staying alive.  If you do not want to catch the virus, don't do take-in food.  Coronaviruses are cold viruses.  How many times have you come down with a cold, and you have NO idea where you picked it up?  That was likely from fomites (viral particles on objects) or respiratory droplets, and not from someone who was sneezing or coughing, because you would have remembered that.  Take in food is just too high a risk.  The cook, the person who packed it, the person who delivered it are all possible for getting viral particles on the food, packaging, outer bag.  Of course, if you sign for anything, that's a total fomite bath.

      I would recommend stocking up the house, if you haven't already.  If you can, leave phone at home.  Wear all washable clothing, and a mask and gloves to shop.  If you don't have a mask, use a bandana.  It's really to keep you from touching your face.  Remove mask and gloves and throw in back seat of car when you arrive home.  They're no touch for two days.  In fact, so is the car, since you were possibly carrying viral particles on your hands when you drove home.  When you put the groceries in the car, separate the perishables from the non-perishables.  The non-perishables, leave in the car for two to three days.  Then they'll probably be safe.  If you want to be absolutely sure, three days.  The perishables - after you take off mask and gloves and throw them in the car, go inside (leaving trunk and car doors open so that you can get at groceries without touching handles) and wash your hands thoroughly at nearest sink.  Throw all your clothing into the washing machine.  You go straight to the shower.  After that, get bleach wipes, or rubbing alcohol and paper towels, wear clean disposable gloves if you have them.  Wipe down every perishable container with the wipes.  Take items to the sink, wash them well with soapy water if possible.  That will remove any viral particles, and now they'll be safe to go into the fridge.

    Then do not go anywhere nor does anyone in your household.  If you go outside, stay at least 15 feet from others.  Respiratory droplets can travel more than six feet.  Order non-perishable food online, or get someone to shop for you, and treat the delivered food as detailed above.

    I know it sounds crazy, but as an MD with absolutely no functioning immunity to viruses at the moment, I had to research the safest way to handle this.  I sent my healthy teen to live with my healthy young adult for the duration.  We are only three in the house, and two of us are immunosuppressed.  The third is of course observing these criteria in order to protect the two of us.  Fortunately, he has enough science background to understand how critical this is, if he wants me and our daughter to live through it.

    The reports of it being more serious in young adults than we had thought have me worrying that I made a mistake to send my teen to the older sib, who works in a critical job that has contact with the public (although now the bank has closed its lobby, and only does transactions drive-thru), and still has some social contact.

    As for the apartments, if something really needs immediate emergency attention, like the one toilet or a water leak, we have a young and wonderful workman we can call upon.  We tell the entire family to leave the apartment before he gets there, and have him wear a mask and gloves.  We only have one vacant unit right now, I screen the applicants carefully before potentially showing it, my husband opens it before they arrive, he stays 15 feet from them, they go in by themselves to see it, then he locks up wearing gloves and mask.  We really would only show to a perfect candidate - perfect record by our standards, and a job in a critical industry that won't shut down.  We can afford for it to sit vacant as long as necessary.

    Stay safe and healthy to all.

  • Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes
    6y

    There are also things you can do to naturally boost your immunity WHILE in quarantine. Maybe life principles, certainly not short term shields against infectious disease. 

    Eat organic, nutrition is by far the most important thing. Stay away from refined sugars of any kind and make fresh food you consume the day of making. 2 healthy meals a day is fine if you're not running a triathlon.

    Take long, slow breaths. Meditate, tai chi, yoga, it all does wonders over time but even in the short term, it will bring your body to a natural state of calm and balance. 

    Do not sit next to your phone or wifi connection all the time. 

  • Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
    6y

    These are all nice ideas, and help to give you a sense of control over something that you cannot control, which may be comforting to some.  But they won't do a damned thing to protect yourself from infection.  The only way that you can do that, is to avoid encountering the virus, and the only way you can do THAT, is to self-isolate totally in your home.  When forced to go out by necessary circumstances, take every possible infectious disease precaution.

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