COVID-19, Riots, and Real Estate
Updated: Jun 8
A LOT has happened since my last blog post. I think most people reading can agree that 2020 has been a wild ride of a year. From a global pandemic, to the stock market tanking and rebounding, to nationwide curfews and rioting, 2020 has been nothing short of a roller coaster ride. My original intent when I started this blog was NOT to have 6 months in between posts but to post on a more regular basis. I apologize as writing is just one of those things like the gym...once you're in and you start it's much easier...but getting yourself to door is the hardest part. Here's to my mid year's resolution to updating this blog more often!
From a real estate perspective, you would have thought that things would've slowed down given the economic uncertainty these past few months. And I'll admit that I was a little nervous with everything going on. Would I still be doing deals at the same pace as before? Were banks going to lend like before? How do I get this PPP loan? Were my tenants going to pay rent?! So many questions and unknowns like many of my fellow real estate investors out there. I'll start with an update.
Deals - Honestly we haven't slowed down one bit. Before COVID-19 I had a bunch of things cooking in the fire. I actually posted a forum post on bigger pockets which led to a bunch of investors in state and out of state looking to meetup with me to learn more about how I started in real estate. Free lunches are always nice, so I decided to meet multiple times and two of them immediately were interested in investing with me. I won't go into the specifics of those deals until a later post, but in 2020 I've picked up in combination with partners a total of 4 properties and 10 total units. 1 single family home, 1 single family home with a guest home, 1 condo, and 1 apartment six plex.
Banks - Luckily most of my deals were right before COVID-19 hit and my loans were locked in place with banks. I work mainly through a local credit union that used to have a 10% down investment program with no PMI(Private Mortgage Insurance). I can tell you now that all banks and credit unions have become much tighter on lending. 20-25% down is the only thing you can find for investment properties given the uncertainty of the real estate market. Honestly, I don't blame the banks since 7-8% of all mortgages are currently under forbearance...meaning people are not paying their mortgages and working with the banks to either pay these in a lump sum or get these added to the end of their loan for a few months. Think 30 year mortgage becomes 30 years and 3 months while we weather the storm
PPP - There was a big frenzy to get the PPP loan. I technically don't have any employees. I pay myself? But I really wasn't sure if that counted. I did get $1,000 for applying for the EIDL loan for two of my LLC's. Apparently that doesn't have to get paid back? I'm still confused like everyone else.
Tenants paying rent - I got LUCKY. I'm going to keep knocking on wood. With a grand total of 49 tenants, I only had 2 tenants contact me to work with me on rent. I ended up applying their last months rent which I require at move in and the next month there were no more issues. I attribute this to a couple of things. Arizona hasn't really been as serious about COVID-19 as the rest of the states so maybe our economy has been more open than others. Since I mainly rent homes by room, my tenants split the cost and pay around $435-$615 a month which is easier to stomach then footing $1500-$2000 a month as the primary breadwinner.
Stay tuned for my next set of posts as I go through specific properties of mine and how to analyze a deal. My intent for this next set of posts is to help those who are new to real estate understand what to look for when looking for their first rental property.