All Forum Posts by: Scott S.

It's 100% related to this pandemic.  Banks don't want the risk and will not wait around and see how all this plays out.  Far too much uncertainty.  Stimulus plan will help some but certainly not all.  Hence the margin calls.

Yes, he said March renewals were good but is estimating of his 8,000 families renting about 15 - 20% won't be able to pay their rent for April.  

He stated he has $4.5M per month in mortgages.. $1 Billion in debt with around 3,200 investors.  

April will be bad but May and June is where we will see astronomical numbers across the board.  This is when the forum topics will shift from "How will Coronavirus impact RE" to "Can I do a loan forbearance or delay payments?"

Cheesecake Factory, Subway, other major retailers tell landlords they can’t pay April rent due to coronavirus.  

Additionally, commercial evictions have been banned in locations like New York, California, Seattle and Miami. And many landlords around the country have proactively told their tenants they will be flexible, as retail stores around the globe close to slow the spread of the novel coronavirus.

See story here with other restaurants not paying rent-

The commercial mortgage market is seeing significant margin calls and in serious trouble right now...

How much are the rents?  If they are around $500 - $1k/mo price point I can see some people being motivated by it.  If rents are in the $1500 - $2k/mo range probably won't make much of a difference. 

I noticed Grant Cardone just announced he had to lay off 42 of his staff (about 120 staff left) in addition to contract laborers, vendors, etc., due to the recent crash.  

https://www.youtube.com/watch?v=sYVXW8yvtoA

Going to be very interesting (or very ugly) over the next several weeks with all these newbie real estate syndication players who just started within the last few years.  

 @Mary Mitchell , China handled this FAR different than we have or will.  They shutdown EVERYTHING instantly.  They took extreme measures that we are not to contain the virus.  The U.S. is not consistent with it's handling of this situation across the nation.  

While China is slowly bringing back employees to work manufacturing, supply chain, etc., they are not out of the woods by any means.  It's FAR from normal and not back to pre COVID-19 levels.  There is still major disruptions and they are trying to keep a flare up of cases from happening.  

There will likely be at least 10% unemployment rate very soon.  The current stimulus packages I have seen are not enough.  The hotel industry wants $150 billion. The restaurant industry wants $145 billion. The National Association of Manufacturers wants $1.4 trillion. The International Council of Shopping Centers wants a guarantee of up to $1 trillion.  Some airlines will go under within months if help does not come soon.  They want $60 Billion.  It's across the board.  Every industry is impacted across the board.

Some will get bailouts but most will not.  Right now commercial RE is in a free fall.  Look at all the REITs right now.  All time lows.  Commercial mortgages are on the verge of catastrophic collapse.  Majority of real estate syndications will not be able to service their debit and be in serious trouble very soon.   

This is NOT going to turnaround in a few months...

Wow, I'm shocked at what I'm reading here by some people's rosy predictions.  In just 6 weeks everyone is back to work and everything is back to "normal" by July??   My child's school will be lucky if it's open in 6 weeks.  Some states have already shutdown schools for the rest of the year and many more will likely follow.  Olympics probably won't be happening this July.  Canada and Australia are already out.  

We haven't even seen this Thursdays jobless claims report.  During the financial crisis, the WORST month was 800,000 in March of 2009.  That number will be CRUSHED this week.  The claims will be in the millions.  

And the government can't even agree on the size of the stimulus package.  But even $1k checks aren't going to help most people at this point.   

Until there is a successful therapeutic drug or vaccine (which is 18 months out being optimistic) the economy for the most part will be in shutdown for many months.  We are not taking aggressive measures like China did to contain the virus.  Even Singapore and Hong Kong are seeing a second wave of infections.  

We are still in the 1st inning...   

Be careful out there.  This isn't the time to be jumping into just any deal.  States like Florida, Kansas have just announced cancelation of rest of school year.  More states will follow.. Honestly, I'm shocked how naive people are about this situation right now.  Thinking it will pass in a few months??  It will take at min a year after trials just to get a safe vaccine that the general population can take.

"Treasury Secretary Steven Mnuchin warned Republican senators Tuesday that the coronavirus pandemic could drive up US unemployment to 20%, a Republican Senate source told CNN.

Mnuchin's comments came as he urged Republican senators to act on economic stimulus measures totaling $1 trillion designed to avert that kind of worst case scenario.

In the same meeting, Mnuchin also said he is concerned the economic ramifications of the coronavirus pandemic could be worse than the 2008 financial crisis, the source said.

Mnuchin's comments, which were first reported by Bloomberg News, come amid a rising sense of urgency at the White House and on Capitol Hill to confront the increasingly serious threat of the coronavirus pandemic — on both the public health and economic fronts.

The sudden economic stop caused by coronavirus containment measures will cause a global recession this year and could see U.S. corporate default rates spike above 10% in the next 12 months, ratings agency S&P Global warned on Tuesday.

“The sudden economic stop caused by COVID-19 containment measures will lead to a global recession this year,” S&P said in a new report

A cash flow slump and much tighter financing conditions as well as the simultaneous oil price shock will hurt creditworthiness it added.

“These factors will likely result in a surge in defaults, with a default rate on nonfinancial corporates in the U.S that may rise above 10% and into the high single digits in Europe over the next 12 months.”

https://www.spglobal.com/ratings/en/research/articles/200317-economic-research-covid-19-macroeconomic-update-the-global-recession-is-here-and-now-11392265

@John Barrett  You and I are at ground zero.  The dominos are just starting to fall.  Restaurants are being forced to close in states  and cities like California, Illinois, Ohio, New York City.. yes, the ENTIRE state of California.  All those low-wage jobs that pay rent.. the list grows by the hour.  

https://fox2now.com/news/list-states-that-have-closed-restaurants-and-bars-to-dine-in-customers/