COVID-19 impact on NW Washington Market

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COVID-19 impact on NW Washington Market

Grace P.
Investor · Rapid City, SD · Member since 2018 · 47 posts · 5 votes

We are in contract on a SFR in Anacortes, WA. Original plan is to rehab and sell. It will need about $30-40k in rehab. Purchase price is $300k. ARV is $450-500k. We are getting concerned about how the Corona Virus will impact the market and if values will plummet. Do you think we should pull out and lose $3000 earnest money or ride it out and see what happens? We could rent it out if it doesn't sell. We are using HELOC tied to other rentals and primary to purchase it. Interest will be about $1500/Mo. We can swing it if it doesn't sell but it will be tight.

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Ruth Bayang
Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes
6y

Hi @Grace P.

My friend @Nghi Le posted this in another forum (I encourage you to join WA Real Estate Investing on Facebook)

"For those still buying value-add deals (either flips or BRRRRs), I implore you to begin with the end in mind, more so now than ever. If your strategy depends on future values and future rents (or even current values and current rents), or if it depends on you being able to get another loan to refinance, you need to have an alternate exit strategy. Nobody knows what an ARV looks like in 3-6 months, and with conventional loans tightening and unemployment rising, your buyer pool is going to shrink.

Just be careful out there. Opportunities will be coming, but you have to weather the storm first. Keep your reserves high. I want to make sure my real estate friends are still my real estate friends in a year."

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  • Ruth Bayang
    Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes
    6y

    Hi @Grace P.

    My friend @Nghi Le posted this in another forum (I encourage you to join WA Real Estate Investing on Facebook)

    "For those still buying value-add deals (either flips or BRRRRs), I implore you to begin with the end in mind, more so now than ever. If your strategy depends on future values and future rents (or even current values and current rents), or if it depends on you being able to get another loan to refinance, you need to have an alternate exit strategy. Nobody knows what an ARV looks like in 3-6 months, and with conventional loans tightening and unemployment rising, your buyer pool is going to shrink.

    Just be careful out there. Opportunities will be coming, but you have to weather the storm first. Keep your reserves high. I want to make sure my real estate friends are still my real estate friends in a year."

    4Reply
  • Grace P.
    OP
    Investor · Rapid City, SD · Member since 2018 · 47 posts · 5 votes
    6y

    Thanks Ruth! I just joined the FB group.  I am somewhat inclined to stay in the deal because Anacortes is a desirable area.  During our prior recessions we didn't take a very big hit and made a big comeback. We do have a lot of folks moving up north from Seattle and Cali.  But it seems to early to tell and we don't know how bad COVID-19 will be. 

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  • Julie MarquezPro Member
    Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
    6y

    @Grace P. I guess I'd just just shoot for the lower end of the ARV or even shave off your rehab budget if you can. People still need places to live and the Navy is considered essential and probably not closing down. We have a flip ready to sell in a week and we are just going day by day to see how the market goes.

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  • Brock FreemanBusiness Member
    Lender · Coeur d'Alene, ID · Member since 2018 · 78 posts · 25 votes
    6y

    Be careful as fix-n-flip hard money lenders are pausing lending. Veristone in Seattle sent out an announcement over the weekend.

    Kirkland Capital Group
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  • Justin Frank
    Rental Property Investor · Tacoma, WA · Member since 2018 · 244 posts · 140 votes
    6y

    @Grace P.

    This is a hard position to be in and a very hard question to answer. So difficult to tell what will happen to the RE market. I personally feel that we are going to suffer a fairly big decline. Especially because our market is so hyper inflated. So much of our economy engine is shut down so it is hard to believe that RE will not feel the effects. The big question I have is how long it will last. I am hoping to find some great deals in the near future but I plan on holding out a bit to see what happens. People will always need a place to live (rates are crazy volatile right now though I think they will stabilize and remain low), but If you sit back and look at the big picture do you think people will be buying half million dollar homes now and/or in the near future? I would be scared. 

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  • Edward Seid
    Real Estate Agent · Seattle, WA · Member since 2014 · 87 posts · 39 votes
    6y

    Rents were fairly stable in the last economic recession here in the pnw. If you're willing to rent after rehab for the long term, that could be a safe bet. 

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