Rental Property Investor · San Diego, CA · Member since 2016 · 6 posts · 8 votes
BP Nation:
In this time of uncertainly, many real estate investors are putting deals on hold waiting for any sign of stability. Personally, I have increasing concern surrounding my existing properties. I am an out of state investor that focuses on C class properties and most of my tenants are plumbers, restaurant workers, hair stylist, and other blue collar workers. The reality is, most of them also live paycheck to paycheck. What happens when all restaurants and other places of work close due to COVID-19 and they can no longer make their monthly rent payments?
From my perspective, ensuring you have adequate cash reserves and evaluating refi options at this time can help prepare for this unknown but I am anxious to hear from others.
@Jay Dertzbaugh, we are all in unchartered water now, and for the foreseeable future we all will be affected by the lockdown.
However, considering the scope of the steps that have been taken so quickly and so far, I'll bet a donut that our president will negotiate something with mortgage lenders. Perhaps tack on missed payments to the tail of the loan? No late payment fees? Put a hold on foreclosures perhaps?
This may be wishful thinking on my part, but as I keep on hearing 'we're all in this together' coming from the top, I gotta wish for something. Why not something good?
Let's see which way it ends up.
BTW, Boston Creme--chocolate dipped, if you please.
@Jay Dertzbaugh I understand where you are coming from, and this scenario is the exact reason people steer clear of the C and lower assets. Obviously, not helpful now that we are in it, but I think when things are going well the risks of C and D properties are played down. Lower income tenants are going to be hit disproportionately hard, which is the case for any economic downturn. And if your business caters to that demographic, your business will suffer disproportionately too. (Note: I am not against affordable housing at all, simply an observation)
Like you mentioned reserves are needed. Low leverage is always helpful, and in general just riding this wave out as best as possible is all any of us can do.