Who is doubling down, who is backing off?

Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes

What's up everyone!?

I'm an investor and wholesaler out of Huntsville, Alabama. I'm writing this to check in on what everyone is doing through these uncertain times. Ultimately I want to learn as much as I can through this situation. I've been involved in Real estate investing for over 5 years, but have never truly lived or invested through a pullback/recession/depression, so input from heavily experienced investors is appreciated. I will answer my own questions for you all as well.

1. Are you still investing in real estate through the Covid-19 crisis?

2. Why or why not?

3. What niches are you most focused on and why?

4. Is that the same focus you had before Covid-19 or not?

I'll post my answers in the comments!

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Joseph CacciapagliaBusiness Member

Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes

1. I'll be making offers through this entire time. Whether or not I buy will depend on what sellers have to think about those offers.

2. I don't believe San Antonio will have large price declines, if any at all. Sales and rent collections are still pretty strong, and we only have 3+- months of inventory at the moment. Even if we do see some dip, I think I'll negotiate better deals during this time of uncertainty than I would be able to otherwise.

3. I'm buying vacant lots for future infill development. As a non-cash producing asset, it's often one of the first things people look to get rid of. So, I expect to find some real value. It also allows me to change strategies as the pandemic progresses, because I can always wait to develop later, bring in a partner, or change the product I'm building.

4. No. I used to buy and hold SFR and small multis, but my personal investing was on hold the last couple of years. This was primarily due to personal issues, so I got lucky with the timing. I'm sure there is still plenty of money to be made buying and holding existing units, but I've had a long range goal of getting into affordable housing development, and this seems like the perfect time to get started.

[email protected]979-218-2286

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Vincent B.
Member since 2020 · 11 posts · 15 votes
6y
I'm new to real estate investing, and was actually drawn to it due to the incoming recession. I figure what better time to jump in than when the market is entering a pullback.
Obviously, the people who already have money invested will have a different calculus in mind, but I'm hoping to find a good deal or two over the coming months.
6 Reply
Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
1. I'll be making offers through this entire time. Whether or not I buy will depend on what sellers have to think about those offers.
2. I don't believe San Antonio will have large price declines, if any at all. Sales and rent collections are still pretty strong, and we only have 3+- months of inventory at the moment. Even if we do see some dip, I think I'll negotiate better deals during this time of uncertainty than I would be able to otherwise.
3. I'm buying vacant lots for future infill development. As a non-cash producing asset, it's often one of the first things people look to get rid of. So, I expect to find some real value. It also allows me to change strategies as the pandemic progresses, because I can always wait to develop later, bring in a partner, or change the product I'm building.
4. No. I used to buy and hold SFR and small multis, but my personal investing was on hold the last couple of years. This was primarily due to personal issues, so I got lucky with the timing. I'm sure there is still plenty of money to be made buying and holding existing units, but I've had a long range goal of getting into affordable housing development, and this seems like the perfect time to get started.
[email protected]979-218-2286
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Aaron Burns
Member since 2020 · 16 posts · 13 votes
6y
1- I have must less interest right now than I did before due to the unknown about how landlord will be treated and how they are being regarding in the media due to the virus et al
2- oops answered in # 1 but another reason is that the current prices aren't representative of what I believe the increased risk is at this point.
3- I've got one property coming open at the beginning of the month and am moving it to S8 property for the guaranteed income.
4- I only have one other S8 property and it has been awesome for me so far. Love getting 90% of my money wired to my account on the first. My S8 tenant is awesome. Maybe I've just been lucky.
1 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
1. I am still investing in real estate through this.
2. The main reason is because I'm full time at this, so this is just what I do. This is how I pay the bills and also build wealth.
3. Main focuses right now for me are: Wholesaling, light flips, private money relationships, marketing. Why wholesaling? Simple, for the cash buyers who are still buying, wholesaling is quick capital for me which means more marketing dollars, which leads to more business. Light flips are the lowest risk in my market because they have multiple exit strategies in my market of Huntsville, Alabama. We can sell in what is still a very hot retail market due to low supply, or we can rent if that becomes necessary (or even potentially sell it as a turn key). So it's the least risky way for me to build larger chunks of capital. Private money relationships are a no brainer right now. About 50% of the hard money lenders I keep up with aren't lending at all right now, but with how crazy the stock market has been, private money has been easier to acquire. 90% of the deals I've done in single family have involved private money anyway so it's more about maintaining the relationships and letting them know we are still in it to win it. Hard money has always been the last option, but it doesn't hurt to be working on those relationships as well. Marketing is something that I'm investing heavily in through this. I've never spent as much in marketing as this month and I will continue to put time and money into this stream because so many people are backing off because they see it as an expense. I'm seeing it as an investment that has an opportunity to return greater than normal as more people lay off the gas.
4. While I did all of these things before, there is definitely more emphasis on the ones mentioned above than before. Some things I've stopped doing or reduced is private lending of my own funds, as I believe my money is better put in reserves, marketing investment, and backup financing for closing active deals (vs invested passively). I'm not investing in new passive deals like syndications right now either, though syndications I've already invested in are performing this quarter. May will be the real test for those I believe. I'm not looking for new multifamily deals actively. The simple, 3/2 SFR's are what is most attractive right now to me.
Thanks in advance for your answers and input everyone!
4 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Aaron Burns makes perfect sense. I've got some S8 tenants as well, it's a mix of good and bad, but the guaranteed income has been an overall positive through this. Thanks for the input!
2 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Joseph Cacciapaglia I'm actually invested in San Antonio so I can agree with what you're saying. The properties I'm in down there have done great so far, of course we've only had 1 payment throughout this event so May 1st I'll be keeping a close eye on it. Love the lot strategy you mentioned, that could potentially work in my core market as well.
1 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Vincent B. awesome, welcome to the world of real estate. What kind of investments will you be looking for, and where? I'm currently investing in/wholesaling in Huntsville, Alabama, Birmingham, AL, and occasionally Chattanooga, Tennessee.
0 Reply
Alex G.
Eastern Mass & Central Maine · Member since 2009 · 252 posts · 135 votes
6y
I am not touching this market with a 10-foot pole. It's too late to sell and way too early to buy. Watch out for an exodus from densely-populated cities to suburbs.
10 Reply
Vincent B.
Member since 2020 · 11 posts · 15 votes
6y
@Caleb Bryant - thanks! Looking at Quads in Metro Detroit area for now. I've got a lot to learn so I think that's a good place to start.

1 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Vincent Burr dm me, I know some guys up your way and they have a networking group on Facebook (and in person once all this is over haha)
0 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Alex G. Currently looking to pick up a place out of the city myself haha, that’s understandable!
0 Reply
Gorden Lopes
Rental Property Investor · Fremont, CA · Member since 2016 · 298 posts · 222 votes
6y
Hey @Caleb Bryant!
Nice post!
1. Are you still investing in real estate through the Covid-19 crisis?
* I am still looking at deals and and have put offers without being accepted. But I am definitely much more cautious. The more I read the more I feel to wait for a month and see what happens! Huntsville has not seen any price decrease so there is that reason as well to just be on the sidelines and wait till there is some sort of correction!

2. Why or why not?
* This is an unprecedented situation and even the experts cannot accurately predict what might happen to our economy in the short term and long term. Real estate also takes some time to feel the heat so it might be couple of months before we really start seeing the impact.

3. What niches are you most focused on and why?
Class B Single family houses, with a belief that this asset class will have a lower impact as compared to say multifamily.

4. Is that the same focus you had before Covid-19 or not?
Yes.
2 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
Every market is different and I imagine this whole thing is effecting them differently. In Kansas City and Indianapolis which are the markets that we're active in, COVID 19 hasn't had any effect on real estate sales or prices through March. Median sales prices are up significantly year on year, pending sales are up, days on market have not gone up and percent of asking price is strong. On the rental side, our Kansas City property manager has reported that very few tenants have said that they can't pay their rent this month and there is only been a small uptick on the percent of people who have paid late. All in all, we're not seeing any reason to back off at all, especially with interest rates so low. Personally, I think it's better to take advantage of historic low interest rates that will benefit you for the life of the property than to avoid any potential short term problems you might have. Just to give a little perspective, a half point increase in interest on a $100,000 property over a 30 year loan will cost $10,000 and you'll pay $18,000 more in interest at a 1% higher rate.
5 Reply
Jeshua Patrick
Rental Property Investor · Charlotte, NC · Member since 2017 · 298 posts · 232 votes
6y
We stepped back because we are more on the cash poor side and waiting to see how long they drag this shutdown out or if there is a second wave. We are starting a new business on a PT basis though and hoping to position ourselves to hit the ground running hard FT by next spring. If all goes well this will significantly boost our cash position and allow us to take advantage of the next wave of opportunities.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
I would say we're being cautious now, but recessions and crises lead to opportunities, so we will likely "double down" shortly once we've got a better idea how all the pieces have landed (or are landing).
Podcast Guest on Show #121
8 Reply
Pete M.
Financial Advisor · Issaquah, WA · Member since 2017 · 241 posts · 141 votes
6y
I imagine it will depend a lot on your specific financial situation. We have cash available, and a few lenders to work with, so we're buying. Closed on a duplex in Kansas City, and under contract for another single-family. And looking for more. Some better deals have come to market already, but I expect even more will over the next few months (especially on the commercial multifamily side). While nobody will cheer for the interruption to life, deaths from COVID19, and financial straits many will be in, I'm looking forward to the opportunity to buy discounted properties and greatly expand our portfolio.
Biggest change is underwriting more conservatively than before, negotiating harder with sellers, and keeping more reserves than before. We've always seeded our reserve accounts from the start, so even with some non-payment on rents (though not many), we're at no risk of defaulting on any mortgages.
5 Reply
Peter Frautschy
Member since 2019 · 3 posts · 3 votes
6y
1. Yes, I'm in escrow on a single-family residence right now.
2. There are good deals in every market. I'm a buy and hold long term investor so I don't try to time the market. Waiting for all of the stars to line up perfectly may have an opportunity cost to it. You could lose out on good but not perfect deals. A lot of people may be waiting for something that does not happen.
3. I focus on single-family residences but I'm also looking into duplexes. I like the flexibility of owning several small properties.
4. Covid-19 has not changed my investing focus.
3 Reply
Caleb Bryant
OP
Rental Property Investor · Huntsville, AL · Member since 2015 · 401 posts · 309 votes
6y
@Pete Mathias huge +1 on the additional reserves. I should have put that in my answers to the changes I’ve done as well.
0 Reply
Ramon Flores
Rental Property Investor · Los Angeles, CA · Member since 2016 · 172 posts · 122 votes
6y
1. Are you still investing in real estate through the Covid-19 crisis? Absolutely!

2. Why or why not? I invest in C class SFH and people will always want a clean, affordable house to live in.

3. What niches are you most focused on and why? I invest in C class properties because the cashflow is good and because there are more people that can afford these kinds of rentals.

4. Is that the same focus you had before Covid-19 or not? It is the same focus and it will continue to be the same focus. I believe there will be an INCREASE in the number of tenants that want to rent. I believe a lot of people are not going to want to buy homes in the future, similar to what happened in 2008.

4 Reply
Keith C.
Lender · Central Florida Markets · Member since 2017 · 137 posts · 135 votes
6y
@Caleb Bryant First , Regarding the market as it stands today’. It’s always about buying right - you make your money on the buy ,, anyone can sell a property at some price ,, the challenge has always been buying it at the right price .. so when you sell it your assured at making money —Think about that for a second .. It’s the Buy - Not The Sale where wealth is determined ..
Whatever markets you liked & knew yesterday it’s the same today ,, of course its getting a beat down yesterday , today and Maybe another few months ,, Things will normalize and markets will stabilize . For now Money is super tight , loans are very difficult — so if your buying make sure your getting a deal , Lay an embarrassing offer out there - if the seller or broker is insulted— oh well look for the guy next door who’s probably selling as well- Make low offers that you can afford and if one or perhaps a few stick - you just created wealth for yourself .. Make the embarrassing offers - it will be worth it. , stay safe -
6 Reply
Victor Vella
Flipper/Rehabber · Cleveland, OH · Member since 2014 · 173 posts · 121 votes
6y
@Caleb Bryant
Doubling down on reserves and backing off average deals. Slowing my cash burn.
Im a flipper that will slowly start to convert to a rental investor.
Are you still investing in real estate through the Covid-19 crisis?
2. Why or why not? Yes. Hard money loans and credit dries up, credit dries up competion for distressed deals disappears you may just have to wait for reflation of a cyclical. The guys that did this last time made some big money.
3. What niches are you most focused on and why? The return of cash is king.
4. Is that the same focus you had before Covid-19 or not? I’ve gone from 80% aggressive to 20% defensive to 80% defensive.
I’ve increased my cash and doubled my lines of credit. I’m looking to quadruple my Lines of credit accessibility.
2 Reply
Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
6y
Can't hold me down! :)
1 Reply
Robert SchulmeistersPro Member
Member since 2019 · 35 posts · 29 votes
6y
@Caleb Bryant
I have a friend who lives Huntsville neck of the woods. He has been in REI part time for many a year. He just sold his multi-family in February for an obscene amount. Dumb luck.
But he is building with the $, because of the multiple large businesses coming to area and shortage housing.
I believe he said, Toyota, google and another all setting up shop in the neighborhood.
Housing demand will be at a shortage.
He admits to his dumb luck on selling when he did, but is doubling down. He already is closing on land and building new multi-family from scratch, with modern amenities for the influx of engineers.
High speed internet, green building etc.
He is a smart guy.
I suggest you research for yourself.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Mike D'Arrigo:
Every market is different and I imagine this whole thing is effecting them differently. In Kansas City and Indianapolis which are the markets that we're active in, COVID 19 hasn't had any effect on real estate sales or prices through March. Median sales prices are up significantly year on year, pending sales are up, days on market have not gone up and percent of asking price is strong. On the rental side, our Kansas City property manager has reported that very few tenants have said that they can't pay their rent this month and there is only been a small uptick on the percent of people who have paid late. All in all, we're not seeing any reason to back off at all, especially with interest rates so low. Personally, I think it's better to take advantage of historic low interest rates that will benefit you for the life of the property than to avoid any potential short term problems you might have. Just to give a little perspective, a half point increase in interest on a $100,000 property over a 30 year loan will cost $10,000 and you'll pay $18,000 more in interest at a 1% higher rate.
I just finished a rehabber in fountain square area of Indy.. got full price offer day one.. 270k. I have two new builds in the same neighborhood that go on the market next week lets see if we have the same success.. I think having vacant homes is a big advantage they can be shown anytime .. trying to show occupied homes is tougher.. and many have just taken their props off the market as they dont want anyone in there.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Victor Vella:
@Caleb Bryant
Doubling down on reserves and backing off average deals. Slowing my cash burn.
Im a flipper that will slowly start to convert to a rental investor.
Are you still investing in real estate through the Covid-19 crisis?
2. Why or why not? Yes. Hard money loans and credit dries up, credit dries up competion for distressed deals disappears you may just have to wait for reflation of a cyclical. The guys that did this last time made some big money.
3. What niches are you most focused on and why? The return of cash is king.
4. Is that the same focus you had before Covid-19 or not? I’ve gone from 80% aggressive to 20% defensive to 80% defensive.
I’ve increased my cash and doubled my lines of credit. I’m looking to quadruple my Lines of credit accessibility.
I think we have to be realistic here.. 07 to 2011 it took years for prices to crash.. there was no rescue from the fed like now.. there was not instant mortgage forbearance and moratoriums on evictions. this could all be over before it really gets started.. you dont see distressed assets from failed mortgages for years after the fact.. Now burnt out landlords or neighborhoods that are changing to renters and owners are moving out as fast as they can ( which happens in the mid west rust belt) that is an on going event never stops. So will see.. but it wont be next week or next month.

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