The Coronavirus and Real Estate
Discipline is required to do anything on a consistent basis. There will be a new podcast every week. If you do not see a new episode, email [email protected]. This year, we're continuing to buy real estate, add cashflow properties to our portfolio, helping other investors to get into real estate, and helping property owners in the Dallas and Mississippi markets who may need help with property management.
Right now, the world is suffering from the COVID-19 novel coronavirus pandemic. Hurricane Katrina devastated Louisiana years ago. The BP oil spill. September 11th. This crisis is different from all those because this is worldwide. Whole economies have completely shut down because people need to stay away from the virus.
[05:00] Wash your hands, use social distancing, avoid going out unless necessary. This event has no timeline and we are not even at the peak. There is panic and uncertainty. The United States only has 1 million hospital beds and only 300,000 hospital beds are available. At the height of this crisis, there may be millions of cases.
[08:00] Many businesses are changing their model, for example, drive-thru or telecommuting. Online instructions from teachers. Companies and businesses are seeing revenue increases because they have the infrastructure to handle their surge in “virtual” customers. Sunday observed the highest online church attendance in history. The internet is a utility.
[09:45] Right now, we don't exactly know how this will affect real estate sales or rentals. Real estate succeeds when there is money in the marketplace: saving, renting, moving.
[11:00] We should expect a recession. There will be less money in the marketplace and less demand. Many municipalities have halted evictions and utility cutoffs. GrabTheMap has eliminated late fees for tenants, and let them know to inform management if they miss a due date. There will be an increase in delinquency and non-pays, but we don't know how far this will go. There will be an effect on rentals and landlords.
[12:45] Some real estate investors are concerned about ruining bank relationships, rent not coming in, concerned about employees and contractors not being able to provide for their families. Some lenders are waiting to see what will happen. They are talking about how to extend payment deadlines, defer payments and issue forbearances.
[14:30] It will be more difficult to get financing. Lenders will have stricter guidelines. The credit market will tighten.
[15:30] We've witnessed the stock market lose 30% value in 4 weeks. Recessions happen! We should have been expecting this all along. Avoid the panic, worry, or regret mindset. Shift into expectation. “When I expect something to happen, I prepare. Have more cash on hand than normal. Have great relationships with our lending partners, municipalities, and residents.”
[18:00] We can still pay the bills because we have been preparing for a recession. We have been responsible. We are investors, on the lookout for opportunities: owners that want to get out, people that need quick cash, homeowners who can't afford their mortgages. We're still working our relationships and getting requests at [email protected].
[20:10] Look at what you're doing, your business, and the opportunities that will present themselves. Decide how you will Grab the Map when that happens.