How will Coronavirus change your investing plans?

[Dave Meyer]

Hey everyone -- we're trying to get a sense of what the BP community plans to do in the coming months, given the impact of coronavirus and the related economic ramifications. Could you please take 2 minutes to fill out this survey? We want to make sure we're meeting the needs of real estate investors in this changing environment, and hearing from you will help us a ton. 

https://www.surveymonkey.com/r...

Thanks! 

[Jorge Pulido]

@Dave Meyer

Done ! Thanks

[Collin Corrington]

Done

[John Prucha]

Done!

[Matt Hans]

@Dave Meyer

Done...should be interesting results.

[David Dietzel]

@Dave Meyer

Done - thank you. Interested in seeing the results.

[Mila R.]

Completed @Dave Meyer!  Thanks for sharing.  Does BP plan to produce any podcasts explaining the opportunities this type of market opens the door to?  We hear enough negative on the news, but I think most people on this site are looking for what kind of opportunities to be on the watch for in the coming months to assist us in growing our portfolio.  I know we are!  We would love to see a podcast explaining all the opportunities this situation might create!  We are long term investors in it for life!

[Dave Meyer]

Thank you to everyone who participated in the survey. You can check out the results here! (the pw for the survey is 'bpsurvey'). Remember questions 3/4 were only presented to respondents who have at least one property, and question 5 was only for respondents with no properties. 

For me the big take aways are:

1. Overwhelmingly, it seems BP users are going to continue to try expand their portfolios, even in a recession. 

2. Thankfully, not many of our users are currently worried about being foreclosed on. 

3. You all want market data! Good thing our Beta of BPInsights is launching today for Pro and Premium members (check your emails in a few hours). 

[Chris Koerner]

Trying to be greedy now that others are fearful, as the oracle of Omaha says. We are throwing out lowball offers left and right.

[Mike Schomaker]

I have a rehab in progress that will be complete in 30 days. I had intended on renting as it will be a great cash flower, however I might sell take a profit and then double/triple my money in the stock market. I don’t know—-confusing times!!!

[Bob Prisco]

@Dave Meyer buying both more , RE and a lot of stocks ,,,,,, good luck to all, be safe 

[Joe Cassandra]

Originally posted by @Chris Koerner:

Trying to be greedy now that others are fearful, as the oracle of Omaha says. We are throwing out lowball offers left and right.

 Hey Chris, are you offering even lower than normal...or you mean increasing the quantity of low ball offers you're making? (what % are you offering at)

[Stephanie Chiramberro]

@Dave Meyer done and following.

[Whitney Hutten]

Done!

[Debbie Bone]

@Dave Meyer

Done

[Tom Harkins]

Completed. I plan to buy

[Jed Haslam-Walker]

@Johnny McKeon Hi Johnny,

You are in a similar space as a lot of my buyers right now so I feel your pain!

Your point about the potential for downward price pressure that would prevent you getting your refi is a real concern and this is how I would see it. 

• The Real Estate cycle, lags significantly behind the wider economic market normally as in when there is not a war or a natural disaster. When there is a war or a natural disaster it obviously skews the normal cycle by extending the recession phase and sometimes deepening it.
• Ordinarily before the whole Corona virus issue hit the general Real Estate market was probably in the transition between the Expansion and the Hypersupply phase ( different markets will be at slightly different points on the curve but as a general rule that's where we were) this is when the market is responding to extended periods of excess demand/ low supply and developers have begun to develop because the metrics are feasible. This provision of supply continues to come online during the Hypersupply phase until occupancy rates begin to dip below average rates and at that point - when occupancy rates fall BELOW average occupancy levels we call it the beginning of the Recession phase in the Real Estate cycle. The Hypersupply phase can last anything from 2-4 years before a recession hits.
• With the onset of this disrupter - the response to the Corona virus -the Fed has pre-empted the actions normally taken during the Recession to try to stimulate the economy but the drivers for this recession are not economically based and so this again skews the normal cycles.
• The best lens to to try to assess risk is to stay focused on the dynamics of the normal market - prices for multi-family properties are driven by the demand from investors - the competition for the properties is driven by both the desire for the business ( availability of investors) and the cashflow the property can produce in the future - the cashflow is determined by the space market - ie the market for rental space- the rental space market is driven by the employment market largely. As long as you have renters who will want the space and investors who want to buy them you will support the property prices.
• Depending on what class of property you are buying ie Class A, B, C or D will probably determine whether your property holds it's value if those two demand drivers remain stable.. Class B and C multi-familys do not normally see a significant downward pressure on rents even during a Recession because the foreclosure market empties into the Class B and C market for space.
• However - just take a look at the survey results Dave just did and you see that this situation is wrong-footing investors desire to proceed.
• The other thorn in the side of this prediction scenario is the labor market  and the lending market- we are going from a historically low unemployment figures at the end of 2019 to a sharp hike in this quarter due to Corona virus layoffs - areas where tourism is big may well be hit by this and you may  see it in the RE market .
• I do think there is  significant uncertainty about this scenario until a vaccine is found. Once we have a vaccine everything will begin to stabilise but we have no way of predicting when that will be. As long as the virus is out in the general populus and we remain at risk we will see continued scepticism and widespread protective measures and that impacts the lending environment, the labor market and economic growth in general and accelerates us downward toward a recession - this will impact the residential market first, especially for SFRs.
• With no way to predict the timeframe I think you would be wise to plot out your worst case scenario in full and then compare that against your FOMO feeling and see where that leaves you. If you were not dependent on a refi within a year I would say you would be fine to proceed because values will bounce back and your rental rates should stay stable unless you're buying in a tourism hotspot but there is definitely some uncertainty about the pricing of small multis due to investor jitters, layoffs and the lending environment - if there's no competition for small multi- familys you won't sustain the price you need for the refi.
• This might be where your overall goal of increasing your wealth trumps your annual goal of a 4plex this year - equally it is only March so there's time yet...
• Hope this helps.

[Caleb Heimsoth]

@Dave Meyer less real estate and more investments that are liquid and not leveraged. This is going to be a very bad recession and a lot of people are going to lose a lot of money

[Tony SanFilippo]

done,  How to you notify us of the results?  There was another BP forum that was going to update us and I never was notified.  Thanks

[Angelo Mart]

Originally posted by @Keith N.:

@Angelo Mart

Can you elaborate on why lenders doing this, and what this means for us?

I spoke to the owner of a mortgage broker company and he stated that many of the NON QM (rental loans) are backed by private money hedge funds that are now seeing liquidity problems and Volatile market changes. Therefore, they have suspended lending operations to landlords. I have a 755 FICO and just got denied from multiple lenders which seized operations. This is NOT GOOD

[Adam York]

Done Thank you, Look forward to the results

[Mark Hughes]

@Dan Bryskin

Agreed. One of the questions I would have preferred to say that I might sell a portion of my portfolio AND strategically increase my portfolio as I’ve invested in 3 different markets (so for me I’m kind of always monitoring when i should sell and buy different assets. :)

[Kenneth Chen]

done ;-) many many thanks everyone.