All Forum Posts by: Michael K Gallagher

@Michael Taylor I think you are feeling and experiencing a-lot of what everyone is facing at the moment....uncertainty.  I think it will boil down to the state and federal mandates that come down in the coming weeks surrounding that Corona Virus, I also know there are a-lot of Small business loans floating around.  A skin care company I consult with here in Columbus OH is currently applying for a substantial business loan to help them prepare to scale this next year.  It could be worth researching if there are any new, or alternative options for your financing because of the coronavirus because you may be able to qualify for a "relief" loan of sorts that could have better terms than what you're in right now.  

Regarding your tenants and advertising the property after your project is done, its not going to be constructive to sit here now and try to play the "what if" game for after the virus.  All you can do is plan based on the data you have regarding rents and vacancy rates for your area.  For all we know there will be a huge influx of people looking for housing when this is over so your rents might even end up increasing due to demand.  

Don't get caught up in the hype and worry.  Concentrate on the facts, and the data you have.  If you did your homework its a good deal, and it will still be a good deal after the virus is over.  We are in unprecedented times and their will be unprecedented measures from the government, stay flexible, stay calm, and stick to the data.  

@Account Closed it really depends on the loan and the terms I think. In my experience an Owner/occupied loan does have occupation requirements but they are only for a set time. For instance we financed our Duplex through an FHA owner occupied loan. That requirement was a year from closing we need to occupy it. If you want to move out and do it "by the book" before the year you can refinance into a conventional loan. There may be some small credit unions or community banks in the area you are looking to buy in that would do some kind of unconventional financing and work with you if the deal is a good deal. Also, if you find a property and can get the purchase price to be 70-80% of the value you may be able to get into that with a low down payment because of equity in the property, and not even need an owner occupied loan. Lastly, as I am currently house hacking I'd also say to take a strong look at that. I can't say enough good things about it, It has really opened up a lot of doors financially.

@Hai Loc here in Columbus it's still a very strong sellers market.  My Mother in-law is 1 of 5 bids on a house that went up earlier this week.  However, I anticipate seeing some flipping to a buyers market in certain pockets of the city. 

I follow the lines of @Jay Hinrichs in that while we have not had a conversation with our tenants yet, but we have already decided that our number one priority is doing what we can to help them stay. This probably means as was previously pointed out just dipping into our Capex/reserves, but that is worth it to us as they have been fantastic tenants and its worth it to us to work with them for the long term relationship.

@Alex Johnson what a horrific situation!  I guess a little silver lining is that you got one of the worst tenants you will ever get on your first attempt....probably nowhere to go but up from here. Don't let it sour your taste for RE, because after this you will probably be one of the more experienced people on BP and be ready for anything!  

@Jill F. We did not have a policy put in place for this type of situation, but have already had similar discussions.  We only have one property at the moment so it's a little easier to absorb losses and such at that level, but have already decided that if any governmental relief comes down to us as the owners, we would be passing that along to our tenants.

@Scott Goulet Huge fan of Columbus for investment and cashflow!  hence why I live there...I do find that anything from a duplex up to 4 plex is really a great sweet spot in the downtown/near downtown areas.  There are still some small pockets of town that are "up and coming" so you can not only cashflow a property for many years but then you'll be getting aggressive appreciation on top of that. I find most of the time when running numbers, at least with duplexes, that 1 unit's rent covers anywhere from 70% to 100% of the monthly expenses and the other unit is cashflow.  Franklin County (county that Columbus is in)  has a pretty solid Land Bank website and system.  There is a bit more bureaucratic nonsense to go through, but the prices are crazy good.

@Bobby English I would echo the theme of "ask a different bank"....I have not done any "non-conventional" financing as of yet, but have had several discussions with banks around town regarding some different ways to finance now that I am self employed and by far the best terms and most understanding of "the deal" has been my local Telhio credit union here in Columbus OH.  The key there was that they are going to service the loan themselves and to quote the gentlemen there "it all depend on the deal..." which was refreshing to hear.  

@Kevin Lefeuvre thats a very interesting question....I will for sure keep investing this year, I'm of the opinion that if you run the numbers and buy the property correctly it wont really matter what the virus situation is.  I don't think there are enough facts or statistical indicators at this point to start making decisions based on the virus.  Where I think it may effect real-estate is in the financing area.  If rates go up, or perhaps it just gets harder to find financing I can see that happening.  

@Eric Suszka I am weirded out by the net-30 thing as well, like sure when you are dealing with huge supply chains that makes sense in industry, but for a contractor that just sounds like the PM is a slow pay now pay type of situation.  But maybe thats just me.  I do manage my own property for now, and I do not have an electrician on speed dial but I assume a 5 minute local google maps search would reveal the best in the area to the PM. I would echo what others have said that there is no need to drop it like its hot, but for sure I'd be looking elsewhere. And it might be worth writing down in a simple SOP of how you expect or want the PM to react to situations like that.  That way it's very clear, it's written down, and perhaps even worth having them sign at the onset of the agreement.