Will the True Real Estate Operators Please Stand Up?

The fortitude of a business and its operators isn’t found when times are good. It is found when times are bad.

Today I was on multiple zoom calls with other real estate investors. Part of the conversation was about what to expect out of the real estate market the rest of the year.

Will prices drop? Will people be scared to buy? Along with other worrisome outcomes. However, there was a point I made about how we as real estate investors may be in better shape once this pandemic passes.

Will the True Real Estate Operators Please Stand Up?

Many people are over leveraged, don’t have reserves and are in no position to withstand even a couple of months of being “closed for business.”

I hate to see any of us struggle, but the reality is some real estate investors are going to get taken out of the business by this pandemic and the impact it has on the economy.

Less People Chasing Deals

The true operators – those who are not over levered, have reserves and manage their portfolio of properties properly during this time will be left standing when the dust settles.

When that happens, there may very well be less competition out there chasing the same deals you are.

Preparation Plus Proactive Management

It’s not just about being in a good financing position and having reserves though. We are in a period where many will not be able to pay rent. April was normal for the most part, however come May 1 things are gonna get hairy.

How you communicate and manage your tenants now will have a big impact on if you make it to the other side.

Payment plans, waiving credit card fees and verifying stimulus checks will help pay rent are all key items right now.

Along with contacting your lenders to ask for anything from a rate reduction to delayed payments or any other option you can think of that may be helpful.

Cream Rises to the Top

There is a reason we run the numbers and only acquire cash flowing properties. A reason we allocate for maintenance, capex and vacancy. A reason we don’t burden ourselves with high loan to value high loans with exorbitant interest rates.

It is so we can survive that inevitable bump in the road without it doing permanent damage to the business.

In the end, we will find out who the real deal operators are. The tide is going out and all the fair weather real estate investors are going to be washed away.

Make sure you don’t get caught in the riptide as there will be opportunity on the other side!