Finding tenants during covid-19
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Abel CurielBusiness Member
Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votesOriginally posted by @Shai Flax:
Hi everybody!
It's my first post here in BiggerPockets. My name is Shai and I'm an out of state investor in Pittsburgh.
I was looking for a while for a rental property and just found one in a great area with great numbers.
I would really appreciate if you could help me with a few questions - Is it a good time to buy a rental property? Are there any people who are looking to live in rentals or people are not really moving anywhere? Does anyone has experience in this situation from the last few weeks?
Thank you in advance and stay safe!
Hello Shai and welcome to BP!
This is a tricky time to purchase but there are some benefits - i.e. low interest rates, properties sitting on the market due to COVID, and anticipated high rental demand since FHA has tightened up lending requirements.
We haven't seen much of a decline in rental inquiries for the apartments we are listing. I highly recommend utilizing virtual tours for the time being.
Due to many people losing their jobs and NY's already tenant-friendly laws, we have been recommending our clients consider filling their vacancies with Section 8 tenants. I mainly recommend this strategy to prospective new investors who are concerned with rental income during economically uncertain times like this.
Of course, there are other ways to insure you get a quality tenant.
Best of luck to you moving forward!
Abel
REbuild Team - eXp Realty5234 Reviews
15 Replies
- 6yAbel CurielBusiness MemberReal Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
Originally posted by @Shai Flax:
Hi everybody!
It's my first post here in BiggerPockets. My name is Shai and I'm an out of state investor in Pittsburgh.
I was looking for a while for a rental property and just found one in a great area with great numbers.
I would really appreciate if you could help me with a few questions - Is it a good time to buy a rental property? Are there any people who are looking to live in rentals or people are not really moving anywhere? Does anyone has experience in this situation from the last few weeks?
Thank you in advance and stay safe!
Hello Shai and welcome to BP!
This is a tricky time to purchase but there are some benefits - i.e. low interest rates, properties sitting on the market due to COVID, and anticipated high rental demand since FHA has tightened up lending requirements.
We haven't seen much of a decline in rental inquiries for the apartments we are listing. I highly recommend utilizing virtual tours for the time being.
Due to many people losing their jobs and NY's already tenant-friendly laws, we have been recommending our clients consider filling their vacancies with Section 8 tenants. I mainly recommend this strategy to prospective new investors who are concerned with rental income during economically uncertain times like this.
Of course, there are other ways to insure you get a quality tenant.
Best of luck to you moving forward!
Abel
REbuild Team - eXp Realty5234 Reviews - 6yJason H.Pro MemberRental Property Investor · Pittsburgh | Chicago · Member since 2016 · 115 posts · 54 votes
Hi Shai:
I have to agree with Abel on the pro’s and con’s of the timing of a purchase now. I believe there is a moratorium in PA on property showings at the moment. Buyer’s agents can’t even go inside to visit a listing by themselves, even if the property is vacant and seller’s agent is not present. If you have the capital to keep your property afloat after your close, assuming the outbreak hasn’t gotten any better, then that needs to be your backup strategy if you really want the property. There are still people looking for properties now, but at a much reduced demand than under normal conditions, considering it’s spring.
However, I do not recommend going the Section 8 route whatsoever, from a short or long term perspective. I know there are is a handful of investors who swear by it, but they are probably in a different market. In PGH, it’s not worth your time. There are so many hoops you need to jump through and so many inspections you need to pass in order to get paid by the program. You need to spend a lot of money to get your property in compliance with what the program deems as safe and habitable conditions (which is beyond what any normal investor would think is reasonable). There are annual inspections and if tenants damage your property and cause you to fail the inspection, they will immediately stop your rent payments until YOU fix them to a satisfactory level. And even upon re-inspection, there is nothing preventing them from nitpicking and giving you a new list of issues you need to fix, thus putting you in a never ending cycle of repairing the property and chasing your rent payments that you will likely never get. If your property is not in compliance, the tenant also has the right not to pay their portion of the rent to you as well. So they end up living there for free. It’s not worth the headache. Just put your property up on the open market and find yourself a great PM.
- 6yJason H.Pro MemberRental Property Investor · Pittsburgh | Chicago · Member since 2016 · 115 posts · 54 votes
What area are you looking at BTW? @Shai Flax
- Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes6y
@Shai Flax we have been fortunate so far and have been filling vacancies via virtual tours of the property. Great time to buy property but we still need to be careful when investing due to the unknown of how long this Covid virus will impact the economy.
- Member since 2019 · 14 posts · 2 votes6y
Originally posted by @Jason H.:
What area are you looking at BTW? @Shai Flax
Hi Jason,
Thanks so much for your valuable information. I really appreciate spending your time explaining all of this to me.
I would definitely do some more checks on Section 8 and now I won't jump to this adventure so quick.
I am not really focusing on a specific area which might be my weak spot... I'm avoiding the really pricy areas like Shadyside, Lawrenceville etc and trying to stay close to Pittsburgh itself and not really spread. I'm trying to avoid the places that I won't feel good sending my PM to aswell.
Any suggestions for a better search? I think I'm in the analysis paralysis stage where I've read so many books and listened to so many BP podcast and I think I'm getting confused...
- Member since 2019 · 14 posts · 2 votes6y
Originally posted by @Alex Deacon:
@Shai Flax we have been fortunate so far and have been filling vacancies via virtual tours of the property. Great time to buy property but we still need to be careful when investing due to the unknown of how long this Covid virus will impact the economy.
Alex, that is so good to hear that despite the bad situation you are still able to make deals and find tenants!
Since it's my first deal I'm really afraid to put so much money in this uncertainty.
- 6yJeremy TaggartBusiness MemberReal Estate Agent · Pittsburgh, PA · Member since 2014 · 850 posts · 646 votes
@Shai Flax I'm still buying as long as I can find something that hits my desired numbers. I wouldn't be buying anything banking on appreciation now that there's been some turmoil but if the property cash flows and it's a long term buy and hold why not? Trying to time the market you may end up waiting months to buy and miss out on potential deals that may present themselves during this time. We aren't really a boom and bust market here either like some of the coastal states. Typically more steady. Might want to stay away from A class though as the demand for those may drop with people cutting back, but B-C areas all day.
A lot of buyers are moving to the sidelines right now though so that may open up opportunities to buy something that might have gotten swarmed with offers before. Also might see more sellers "panic selling" if they need cash, which could also present opportunities.
Currently can't do showings right here now though so everything is kind of at a standstill unless you make an offer contingent upon walkthru/inspection after the shutdown is over. If the property is vacant might be able to get in it.
As for rentals stil getting plenty of applications. Have just been doing video walkthrus of the properties and most renters don't seem to mind not being able to see it in person. They drive by and check out the street/outside and use the video to see the inside.
DHRE- The Jeremy Taggart Team590 Reviews - Realtor · San Diego, CA · Member since 2020 · 13 posts · 7 votes6y
Hey Shai and welcome to BP! There has already been some great information posted here. It will come down to what your risk tolerance and comfort level is. You'll find people that love or hate nearly every niche out there. There is a lot of fear, panic, and uncertainty right now. Focusing on solid wedge deals and solid tenants are going to be your most important factors to consider in your searches right now. There's a chance you may end up with a vacancy or tenant that can't/won't pay rent for some time because of the crazy state of the world. Being able to float the mortgage for the foreseeable future is a factor to be mindful of when budgeting.
All that said, I think there are and will be unprecedented investment opportunities in the near future. It's just unfortunate how they came about :( Now more than ever, virtual tours are a great asset for finding your investment. But more importantly for finding tenants and documenting the condition of your property before and after leasing it.
Best of luck to you and stay safe!
- 6yJason H.Pro MemberRental Property Investor · Pittsburgh | Chicago · Member since 2016 · 115 posts · 54 votes
@Shai Flax. From one investor to another, there are a few other things you need to watch out for that others fail or don’t bother to mention:
(1) Section 8 has limits on rent that they can pay for certain property types in certain areas. You will have to research and check the maximum they will pay for a 1BR, 2BR, etc. These maximums may not work for your numbers. They’ve been changing every so often and the limits are only getting lower, not higher.
(2) Watch out for those pesky taxes in PGH...they’re high but make sure you budget for it in your numbers. Don’t be surprised to see anywhere from $200-300/month per door for all three taxes (county, muni, school) depending on property type.
(3) Always check how much the current assessed value is on a property that you’re wanting to buy. If there is a huge spread between current assessed value and your purchase price, beware that you might trigger a reassessment in taxes...and the numbers you used didn’t take this into consideration. Typical scenarios like this might happen when you have a seller who has owned a property for generations and the last assessed value and hasn’t caught up to the current market selling prices. Allegheny County has a website that shows this information but it won’t show you the total three taxes paid...only the county taxes, which are low in comparison. School board tax in certain areas is a killer, but if you account for these numbers and can still make your numbers work, you should be fine.
- Member since 2019 · 14 posts · 2 votes6y
Thanks Jeremy!
It helps a lot to know that rentals are still a need and that there are people looking for ones.
I think I got a little scared buying at the moment since I'm out of state. I do have my team there buy it's making it even harder to "pull the trigger"...
- Member since 2019 · 14 posts · 2 votes6y
Originally posted by @Account Closed:
Hey Shai and welcome to BP! There has already been some great information posted here. It will come down to what your risk tolerance and comfort level is. You'll find people that love or hate nearly every niche out there. There is a lot of fear, panic, and uncertainty right now. Focusing on solid wedge deals and solid tenants are going to be your most important factors to consider in your searches right now. There's a chance you may end up with a vacancy or tenant that can't/won't pay rent for some time because of the crazy state of the world. Being able to float the mortgage for the foreseeable future is a factor to be mindful of when budgeting.
All that said, I think there are and will be unprecedented investment opportunities in the near future. It's just unfortunate how they came about :( Now more than ever, virtual tours are a great asset for finding your investment. But more importantly for finding tenants and documenting the condition of your property before and after leasing it.
Best of luck to you and stay safe!
Thanks Joshua!
- Member since 2019 · 14 posts · 2 votes6y
Originally posted by @Jason H.:
@Shai Flax. From one investor to another, there are a few other things you need to watch out for that others fail or don’t bother to mention:
(1) Section 8 has limits on rent that they can pay for certain property types in certain areas. You will have to research and check the maximum they will pay for a 1BR, 2BR, etc. These maximums may not work for your numbers. They’ve been changing every so often and the limits are only getting lower, not higher.
(2) Watch out for those pesky taxes in PGH...they’re high but make sure you budget for it in your numbers. Don’t be surprised to see anywhere from $200-300/month per door for all three taxes (county, muni, school) depending on property type.
(3) Always check how much the current assessed value is on a property that you’re wanting to buy. If there is a huge spread between current assessed value and your purchase price, beware that you might trigger a reassessment in taxes...and the numbers you used didn’t take this into consideration. Typical scenarios like this might happen when you have a seller who has owned a property for generations and the last assessed value and hasn’t caught up to the current market selling prices. Allegheny County has a website that shows this information but it won’t show you the total three taxes paid...only the county taxes, which are low in comparison. School board tax in certain areas is a killer, but if you account for these numbers and can still make your numbers work, you should be fine.
Thank you so much Jason! That is a really valueable information!
I'm really greatfull that there are such a nice people here!
- Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes6y
Originally posted by @Shai Flax:
Hi everybody!
It's my first post here in BiggerPockets. My name is Shai and I'm an out of state investor in Pittsburgh.
I was looking for a while for a rental property and just found one in a great area with great numbers.
I would really appreciate if you could help me with a few questions - Is it a good time to buy a rental property? Are there any people who are looking to live in rentals or people are not really moving anywhere? Does anyone has experience in this situation from the last few weeks?
Thank you in advance and stay safe!
We are planning on using Matterport to put together virtual tours as soon as possible to weed out people who wouldn't like the space. That should help keep things moving.
Now is still a good time to buy IMO because if you find a good deal there's not a ton of competition, which is a rare situation over the past couple years.
We have videos of our apartments and have been renting them from those. Only able to do that on places I own personally though or through my PM company that has a waiver. If you don't have a waiver you can't lease places.
There are still plenty of tenants looking for housing though.
- Member since 2019 · 14 posts · 2 votes6y
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