All Forum Posts by: Nik Moushon

I only have one rental and they paid yesterday. Just waiting for it to clear Cozy. I've already sent them the covid19 email and they said they would be fine. We'll see what next couple months is like though.

You might want to reread mine as well where I said: "Though it sounds like you were already planning your exit (for different reasons) before this all happened.". I had noticed your reason for selling. The only reason I dont do STR is because it is truly a full time business, especially for people starting out in it, and I already have a full time job that I'm not giving up (nor want to..I love being an architect). So i totally understand and get where you are coming from.

But your reason for selling doesnt change any of the risk factors. The risk stay exactly the same whether you are still doing good business or not right now because you cant predict that it will stay the same. Nothing wrong with that. Nothing wrong with STR business model at all. As long you are prepared for the riskier business model. But with risk comes rewards. Thats why so many people do it. The people who are not over leveraged and have put the proper amount of money aside should weather this storm all right. Those that took advantage of the extra income and didnt properly put money aside are the ones that are going to hurt the most. That can also be said for pretty much any business model too. So dont think Im try to bash STR here, I'm not.

But praising DR for this way has nothing to do with how STR's would've been effected by this. If you had (or anyone) followed completely DR advice and bought this all cash, the odds are, you would be dependent on this STR as your monthly income (as do a lot of people). Why have a full time job when one STR, thats completely paid off, can bring in several thousand dollars a month in income. Then all of a sudden your income is completely, or nearly so, dried up because of this virus. You have zero income even though you have zero debt. So you are having to survive off of anything you put in savings. Now if you (or anyone) had done the same thing, except they had a mortgage, they would be in the EXACT same position. Because they were suppose to save 6 months of emergency fund. That EF would have accounted for the mortgage payments. So they would be out no less money than someone who has no mortgage. So really the only part of DR style of investing is that it really harks on the fact that people need to have emergency funds in place to cover ALL expenses. NOT that having no debt is the best way to invest. Now yes, I realize that after the EF is drained those without debt are better off...but 6 months with zero income is very rare. Even in a down turn. Also at that point it would be obvious that there are going to be the need for drastic measures in place. 

@Marcus Johnson

DR isnt any smarter today than he was 6 months ago. He teaching principles are very sound advice to get out of debt and to make sure your current lively hood stay in tact for the rest of your life. He also strongly suggests to invest in 401k/IRA instead of RE or traditional stocks. I havent looked at my 401k (and dont plan to) and I'm sure its value has been cut in half this last month. People sure arent pour their cash into their 401k right now. Even if they have zero debt. Dave's focus is getting people out of bad debt and staying out of bad debt (he also refuses to see any debt as good debt when in reality there is a difference). He is not an investor type person. The type of investing he supports in long term investing to secure your retirement...NOT to improve your current wealth. Its pretty easy for him to say to pay cash for everything when he rakes in millions each year. The vast majority of us dont have that kind of money...and never would, unless we took it upon ourselves to take our cash and make it work for us at a much higher return than any long term investment could.

This is scary times for sure. But you picked an investment type that had high up front return but low stability and high volatility when the markets are down. You took on that extra risk (along with many others) on a higher return instead of a steady stream of income from a more traditional rental. Many STR are priced at a point that they do not work as LTR. Many people agreed to take that extra risk. Many people, like yourself, are finding out that that risk came a lot sooner than they would've thought. Though it sounds like you were already planning your exit (for different reasons) before this all happened.

I'm not saying all STRs are going to be doomed from this. The economy will return back to a normal state at some point. It just will be much harder for STR to stick through this rough patch than LTR. It will all come down to who had bigger margins in their numbers...those will be the ones that survive this. 

You wont be able to kick them out if they refuse to leave. So I wouldnt try to push them out. It would just start a lot a trouble. Instead offer them month-to-month lease extensions or full year if they want that. Thats really your only option at this point. It really crazy times right now. There arent many options for anyone right now.

I would look to put at least 10-20% of that into stocks. Stocks are cheaper right now. Even if you play the long game with stocks you are going to be set up for a nice retirement fund later on. You could play the short game with stocks but thats MUCH riskier. You could make millions or you could loose it all. But with that kind of money I would look at professionals to handle it and not do it myself.

After that I would just keep the cash for the next couple months and see how this virus plays out. There is no way to predict how everything will unfold. Then after things settle now and normal start to appear again then I would start to look into real estate again. This isnt going to be as big of a down turn on real estate prices as '08 had...or as much quantities...but you will still see a lot of foreclosures because of this. Especially in the commercial world. Currently most of the mortgage relief funds are for primary residences and not secondary/investment/commercial loans. That could change (and I hope it does) but currently its going to hurt those markets the worse. Playing your cash hand wisely could really set yourself (or your friend) up nicely for the future. Just remember you dont have pay full cash for everything but you dont want to over leverage yourself either. 

Already a discussion on it here:



https://www.biggerpockets.com/forums/52/topics/819794-this-proposed-ny-senate-bill-scares-me?page=1#p4814560

I've never understood how people in government think that all landlords just have piles of cash stored under our mattresses. 

They have no problem seeing that other businesses have debt and need help but somehow landlords not count as a business and that everything we own is debt free. If they can be willy nilly about pushing off rents (be that delayed payments or completely forgiven) why cant they do that for our mortgages? Are they really not able to connect the dots that if us landords go into foreclosure the tenants still loose the home they are renting....

And when us small landlords have to foreclose in mass, flooding the market with rentals, that it will usher in a market similar to '08? So that the bigger company landlords just get to come in and buy even more properties...just like in '08. 

Now I don't think it will get to that. BUT if laws like this do get passed, especially in mass, then yes, things will get very bad very quickly. 

To all you more experience stock people....wheres a good place to start? I don't have a lot of cash to spare but do want to take advantage of the dip as much as I can. 

@Matt Hendrickson Soory forgot to tag you in the above post

This is still up in the air for a lot of professions. Not just for rentals. As an architect this is going to come up when a lot of contractors cant meet their contracted due dates. Its really yet to be seen how the country is going to handle this. So there currently is really no YES or NO answer here.....yet. 

They have a valid argument since no one could've prevented this or seen it coming but so do you. The gov is about to send out checks to people AND there is already no rent due at this time. So theres the argument that he cant use that clause because there is no way he is violating his contract and you cant kick him out either. Its a bit of a catch 22 at the moment. 

Its really going to come down to how long this lasts and how quickly things recover. It could be over in two weeks and most contractors could still meet their deadlines with just a bit of help of a couple extra days. Same with schools. If they havent closed for the whole year already they could still be required to finish the semester so where is he going to stay? BUT if this lasts for months before we recover then you will start seeing a lot of companies and individuals using this clause to either get out of contracts or get contract extensions. i.e. If college has already canceled all classes, period, for the rest of the year then  he was have a valid argument to not continue in the contract. 

It really is going to be a rough go in the near future to see how the clause is going to get interpreted and to what extent is it going to be allowed to used for just cause. Because there is still construction going on for essential buildings (i.e. hospitals) so they wont get to use this clause flat out for everything but if their supply chain gets disrupted then they would. See...this is going to get VERY messy in the near future. 

For you though, right now, you need to weigh your losses and how much you want to press them on the contract. Because even if he gets a stimulus payment that doesnt mean he is going to pay you rent because right now you cant evict him. Sorry you are in a tough situation. I would consult a lawyer if you plan on fighting it though.