Investor · FL · Member since 2020 · 41 posts · 21 votes
I'm making offers on SFR mostly in Fulton County and curious to see if everyone has been able to arrange inspections, appraisals etc easily amidst covid-19 shutdowns?
I am closing in 3 weeks on a $2M property, SFR in an "old money" area. I was thinking about backing out, but I've been watching this play out and houses are still selling in this area, and all over SoCal. A few have fallen out of escrow, but lots are selling at full price....high prices. At first I thought it was buyers who were locked in and had no way of getting out of the deal, but now that this has been going on for over 2 weeks I can see that this can't be the case, it's actually buyers who want to buy and don't care about the potential drop in prices, or just really like the house they are buying, etc. Friends of mine who are investors also are yelling GET OUT... IT'S GONNA CRASH!! But as I talk to them more I think they are wishing for a crash so they can buy cheap deals, and people believe what they want to believe. People with cash are HUNGRY for cheap deals and they are getting obsessed with the possibility of a crash. Truth is no one really knows. For some people it's a good time to back out and wait, for me it's a good time to stay the course and buy. I think it really depends on what's happening in your own little economy. If YOU INC is doing well that's the most important factor.
@Thomas M. Totally agree with you, no one knows! I'm in a similar position (not with a $2M property though mind you). I'm about to close on a duplex, I had been going back and forth on whether I should pull out or go through with it. I have allowed the uneducated opinion of some friends, who say I'd be crazy to close, influence me way too much. I was reminded by my wife to keep a long term perspective and the bottom line is that the numbers make sense long term.
@Thomas M. Totally agree with you, no one knows! I'm in a similar position (not with a $2M property though mind you). I'm about to close on a duplex, I had been going back and forth on whether I should pull out or go through with it. I have allowed the uneducated opinion of some friends, who say I'd be crazy to close, influence me way too much. I was reminded by my wife to keep a long term perspective and the bottom line is that the numbers make sense long term.
I agree with your wife, stick with the plan - the fear is irrational and exaturated:
- We know from 1980, 1981, 1991 and 2001 that real estate does very well in times of econmoic recession. 2008 was the only exception, but it was also a housing and mortgage bubble. We had oversupply then, now we have a shortage.
- Landlords were freaking out about not getting paid rent on April 1st. The term "rent strike" came up! - we know know, that for the most part rents got paid. Of course there are some issues and there will probably be a few more in May... that's normal.
- We had 144 accepted offers on single family homes last week in Milwaukee, that is less then it could have been, but still strong (last 8 weeks ranged from 124 to 204)
- Showing activity is down, but it's the casual buyers who have dropped out. I listed a property yesterday, showing homes today. Of course social distancing rules apply!
- Real estate does usually well, when paper assets crash.
- People think of real estate in terms of years, CoV in terms of weeks. We will probabaly see a slow down like we have every year between Thanksgiving and New Years, but action will spike right after.
Makes me wonder though, don’t prices have to level off, or correct at some point? I just saw a house the other day in SoCal that had appreciated 30% in a matter of 2 years. Seeing 20% in 2-3 years isn’t uncommon.
At this rate, we’ll see NYC housing prices in more and more markets. With 1300sqft 3bd townhomes coating over 500K in suburbs, I wonder if we are going to see a leveling off at some point or are these homes going to be closer to a million in a several years.
Thanks for your contributions, everyone. It seems for the most part, the consensus is that everything is open and running as normal with some modifications. This is helpful--I'm going to stay the course and keep trying to find a good investment that meets my specs. Thanks again!
When this all started I had 5 deals as an agent mid-transaction and 2 of them have already closed, and the rest are proceeding as planned on the way to close.
So from that perspective things are on track, but it was a challenge getting professionals (electricians, HVAC, plumbers, etc.) out there to complete inspection repair requests that buyer/seller agreed upon. It ended up getting done, just required more calls than usual to get someone out there.
As far as appraisers go, if they don't want the assignment they can just refuse it so the ones who accept are normally on point.
I have not had a complete home inspection done since this started and I can imagine that may be tricky especially for occupied multi family, but single families shouldn't be an issue with inspections I wouldn't think.
@Brett, in Minnesota the closings are happening in 2 separate rooms. Technically you can do virtually closings but the investors and wholesale lines of credit are not prepared for it. They are required by Fannie Mae to set up digital vaults, they just are not ready. Fannie is pushing them and it will happen but it's not a reality yet at scale.
Tim, I was wondering if you've seen any pull back from banks/financing institutions on new loans.
Hey David - depending on the type of loan, yes, I've personally seen pull back. A lot of my clients are OOS multi family investors who use commercial loans at 20% down versus the typical 25-30%. The lender I refer out said first hand they're pulling back and in order to be approved, the borrower must be an A-A+ type with a great deal of loose capital on hand. DSCR's have increased from 1.2 to 1.6 or they must have 12 month reserves if below the line. I haven't had any pull back on the conventional Fannie/Freddie loans though.
I bought 75 from one guy. We had been working on this for a few months but we meet the April 1 close date.
Congrats! Would love to hear more about this deal (if you're comfortable sharing)-- I'm assuming it's a housing estate/ something similar rather than 75 across one city?
@Jesse Kindra sorry for the late response, my property is located in Calumet City, which is pretty close to Hazel Crest. Basically all of the south suburbs have halted inspections, even move in inspections where landlords have tenants ready to move in. I have a friend with a property in the same town and she has a tenant ready to move in but the village won't do the move in inspection.
As it relates to the market in the South Suburbs I am fairly new to the game but I do watch those areas for rentals and the rentals do seem to move pretty fast, especially if you have a decent property. Hope that helps. I've sent you a connection, feel free to inbox me with any other questions. Good luck with your rental!
@Grace A. In Milwaukee WI, business as usual. Considering our deals are cash deals we only need to get the contractor and appraiser in. Couple weeks ago the appraisers were doing "drive bye" appraisals, but they are going back into properties now. Bought a 4-Unit a couple of weeks ago.