What did I just do! Full-time investor during the Coronavirus!

122 Replies

Did I pick the best time or the worst time to jump in full time as a real estate investor? 

December 2019 - I very confidently left my full-time job as an active USMC officer making over 100k a year.

January 2020 - With ambitions of combining the 2 strategies of Househacking and BRRR I spend ALL of my investment money to buy and rehab a 280k 4-plex. I simultaneously began my career as a real estate agent with Keller Williams.

February 2020 - With an empty investment account, 1 unit rented and 2 nearing completion I first hear of Coronavirus concerns.

March 2020 - Corona is in full swing, lockdowns happening nationwide, wife's employer (a gym) is shut down and no one's buying houses. But with a decent savings account buffer, I remain nervously excited for the future.

I did not see this coming. Fully expected have at least a few houses under contract and my wife expected to be working full time. The blessing is that we live well below our means and thanks to the house hack we have very low housing-related expenses. Despite all of this I started a campaign to buy off-market distressed duplexes and 4-plexes as I continue to attempt to grow my portfolio and goal of financial independence through long term buy and hold multifamily. 

Any other optimist out there convinced that this tragic event can provide huge opportunities?

I am with you Greg.  My wife and I are suppose to close on our first rental property tomorrow.  It is move in ready, yet will anyone be looking for a rental in these next few weeks?  

I am also a Realtor with Keller Williams.  My wife works in the healthcare industry with data, not front line.  We have two young kids.  Sooo do we sign papers on our first rental on Monday??

@Keith Hill we just went got the "shelter in place order". I'm about to write the next BiggerPockets book, "How to fill a rental property during a pandemic".

If you did find renters, then they wouldn't have to pay you - or at least, you wouldn't be able to enforce an eviction.

The whole freaking universe has just gone into meltdown - its nuts.  In 2008-2009 the banks stopped working.  In 2020 the banks keep working, barely, but nothing else is.

@Gregory Schwartz I'll read the book!  I do plan on using a property manager.  We are not on "shelter in place" yet, hope it doesn't come.  Looks like I can save some money on repairs since my dad and I will be doing them.  Good luck!!

Wow. Here is where big risks sometimes get you into trouble. Did you keep at least 6 months living expenses in cash before quitting your job? Did you pay off all your other debts before quitting your job? Its all well and good to drink the RE cool aid and jump both feet in do or die the American way. But we are in the middle of a once in a lifetime storm where unless you have 3 levels of back up plans you will be in deep doo doo. The good news is that this will pass. 6 months, 12 months, 18 months or 24 months, who knows? The deeper your reserves, the better your chances of surviving and taking advantage of opportunities that will undoubtedly arise. 

@Mark Sewell in an ideal world my tenant is still working but yes we're preparing for the reality that they dont have to pay us. 

@Anish Tolia great points. I am a big fan of risk mitigation and prepared for just about everything shy of a pandemic. My investment fund is dry but my emergency and general savings accounts should last me 5-8 months. I am prepared to start working as a Uber Eats or Favor driver to keep food on the table. 

@Gregory Schwartz to be frank..its the worst time ..on the flip side ... it will make you push things to another level. Suggest you give your self 12 months and make real estate work... this is the best time to build your operation and once you make it you will ride the upside better then anyone else.. Hang on tight my friend it will a VERY bumpy ride for next 6 months 

My thoughts (in very broad terms given Stock is a great place to place money now then it has been in past 4 years) 

  1. 1) Now /Phase 1: Market will swing from sell side to buy side. Sellers will resist to lower price and buyers will hold off to buy aka inventory buildup 
  2. 2) In Short Term/Phase 2: Q3 or Q4 /2019 : Ok/Bad deals done in past 2 years will bubble up and seller will try to exit and some buyer will go into effect 
  3. 3) Longer Term/Phase 3:  Q1/2021: Foreclosure will happen and buyers would be warm BUT lender requirement will go up tremendously 

My wife and I often joke that our (apparent) investment strategy is to make less expensive mistakes with each new investment.  I closed on my first rental in January of 2008, a 4000 square foot behemoth McMansion that was almost unrentable.  Today I have 15 properties, all cash flowing.  But there were le$$on$ along the way.  My story is very non-unique here in these forums.

Yes you (inadvertently) picked a challenging time to get into the business.  Just like my 2008 entry.  But every investment has its own unique challenges.  But there IS a way to make it work.

I like to use my "5 year rule".  When confronted with a difficult decision I like to ask myself "If I take action X, what will that look like 5 years from now?"  So ask yourself, if dump your new investments (probably at a loss) how will feel about that in 5 years?  Missed opportunity?  If you find a way to make it work and hold on to the property, how will you feel in 5 years?  Happy that you have a cash-flowing investment in your portfolio?

@George Pauley , I love that mentality. The 5-year numbers on this house are amazing. I'll eat roman noodles and hotdogs today so that I can lay by my pool in the future. 

@Gregory Schwartz to answer your question of “is your timing awful?”. Yes it’s very bad and I don’t see this ending well.

The most likely situation is your savings dry up before the recession bounces back. Most realtors make zero money long term. I am assuming this will be the case for you.

Your one property will probably have vacancy issues in the near term. I’m not sure why you thought this was a good idea, based on the limited information you provided.

Keep renovating the property. Most likely by the time you get it done, things will have stopped escalating, the stores will be filled with toilet paper and the sun will be peeking out of the clouds.

You have some reserves (many don't) and you apparently have the ability to live frugally. (a relatively rare skill)

You'll be fine, carry on.

@John Teachout I separated at the end of my contract but continue to serve in the USMC reserves. Continuing to serve in the reserves was another risk mitigation.  

A possible option if the future turns out less rosy than planned is to go back full time. I don't know if you can do this but I've heard of it.

When did Caleb become the wise old man(not age wise).  I recall @ one time you were big on Turnkey.

Agreed times like this will Sprout big fortunes.  The ? is is the fortune going to be yours.  

@Gregory Schwartz

Very uncertain times indeed, most important thing to do is to keep a positive outlook. Hang in there! Keep chasing your goals and stay living below your means.

On a side note how did you manage to make 100k as an officer in the USMC?!

@Gregory Schwartz - we just got a contract accepted on an off-market SFH property. I don't share the same reservations others do presently, because reasonable deals in Huntsville/Madison have become unicorns. Absolutely plan to complete the transaction without any hesitation, as supply is non-existent here, and frankly getting worse with people now waiting to list their properties.

@Julian Michon I make 69k as an E5. Most officers around me make 100k easy. Any high BAH location with COLA will push the pay over 100k, as an officer of course. Couple that with house hacking, I'm doing that now, and you've got a recipe for success.

Good luck @Gregory Schwartz ! Times will be tough for sure but if you have that typical DD attitude, you'll weather the storm. You can disregard some of Caleb's rhetoric. Hes always spouting negative/fully pessimistic answers. Some are warranted and with good info, some are just negative for the hell of it.

Hopefully you have reserves. My wife and I could have expanded our real estate business drastically but wanted to make sure when any situation should arise we could cover lost rent. Never did we or anyone expect this situation...We currently are purchasing an investment property, closing April 14, 2020. I'm purchasing from the seller off market and they will rent from us....just an exchange of ownership. I'm still nervous and already have guaranteed renters in place...Take it slow and be thoughtful of every transaction.

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