Every week I'll record a new podcast and send out an email with the latest updated. Listen to the episode "#147 - Coronavirus Denver Market update - March 30th, 2020" on the podcast.
Listener Question: Should I sell a breakeven rental property in Denver?
Answer: I would not. The market will recover at some point. However, it really depends:
- What is your financial situation? Do you have reserves set aside? If so, ride it out.
- What are your goals? If you're a long term buy and hold investor, then no. See above - you need to make sure you can hold onto the properties.
- If you sold it, how much would you walk away with? Remember real estate is not cheap to transact in. How much equity do you have? If purchased within the last year, you may owe money at closing.
My recommendation is to sit tight through April since the tenant renews in July. April is going to a rough month. Get through it and reevaluate based on the market, government bailouts, your situation, etc.
If you have questions, email me at Chris@DenverinvestmentRealEstate.com. If you're client, give me a call so we can hop on a call to discuss everything.
Vacant Property Updates - Renters Are Still Moving
Last week I had two vacant units. Now it's only one. Based on talking with property managers and activity on my places, renters are moving, but it's a slower pace. My condo leased up for $1850 (my original estimate) to a tenant with a section 8 voucher. It crisis times, I like the certainty of government rental checks. I put my fourplex vacant on GoSection8.com
Your Castle Webinar Notes
Here are notes from the Your Castle webinar for their agents. If you want the recording, email me.
Showings for Denver Real Estate:
- Technically we are allowed to do showings and list houses
- Can we = Yes
- Should we = Probably Not. COULD be a violation of "stay-in-place" order if deemed non-critical and could result in fines for all involved (agents & clients).
- Can't let the need to put food on the table outweigh an executive order and put others at risk
- Educate clients and over communicate!
- per Eric - 19 families so far have been directly affected by COVID-19 leading back to showings/seeing properties as source in Colorado.
- Everyone is more exposed (buyers/sellers/agents). Know the risks
- If more confirmed cases of COVID-19 are sourced from showings/listings, good chance RE will shut down as non-essential biz to stop spread
- Buyers need to wash hands before & after each showing
- Keep hands in pockets at showing
- Sellers need to disinfect after each showing
- Vacant homes - buyers and agents still at risk. When was it last disinfected?
- Curbside Closings
- Responsibility of agent to explain process of closing and help buyer/seller feel comfortable to close on their own
- Agent does not NEED to be there and most companies will ask that they are not
- Agents can call into closing. Receive docs in advance.
- Trying to have least amt of ppl at table as possible.
Lending (Joe Massey)
Not everyone will qualify for suspended mortgages
- Landlords & VA qualify??? = probably, call servicer!
- If owner has already stoped making payments and date has already been set for auction/foreclosure?? = probably, call servicer!
- No Late payments on credit report does NOT mean that no negative items
No FREE 3 months - comes at a cost
- Should only be used as LAST Resort
- Forbearance = Deferment of payments and result in modified loan
- Credit will take negative hit
- Forbearance is negative hit to credit
- Modified loan is negative hit to credit
- Harder to get new loan
- To qualify for new loan after forbearance, need to show 12 on time payments from date which loan was modified (date started making payments again)
- Applies to ANY loan - even REFI
- If huge increase of owners need to take forbearance, servicer of loan is still responsible to pay end investor. Servicer "fronts" money for owner which eats into servicer's capital. Takes money to make new loans. Now, servicer has less money to give NEW loans to NEW buyers because they are using that money to pay owner's loans to end user. Government helping servicer's by giving them money but there is an unintended consequence of increased interest rates.
- Best things to do = IF YOU HAVE THE MONEY TO PAY YOUR MORTGAGE, PAY IT! Only use these programs as last resort. Always pay your bills if you can.
Market Trends (Lon Welsh)
- Overall expect market to go down short term 15-20%
- Showings will go down
- New listings will slow but may stay flat
- Slight increase in inventory at beginning of April
- Have buyers ready for when "stay-in-place" order is removed
- Slight increase in negotiation power from seller to buyer when order removed as hopefully more inventory
- Trade up buyers are a little more stable ($500k-$900k)
Congress and House have signed. President to sign later today
- SAB Express - For businesses
- will probably need receipts/documents to prove payroll & Expenses
- SBA Disaster Relief Fund - For individuals
- May be good alternative to Forbearance
- More flexible with what you can spend it on
- Can coach tenants to apply if they need help
- Both processes seem to be streamlined but with so many ppl applying, expect longer waits
- If you think you will need it, apply NOW. If you don't need it, pay back immediately
- Try to get proof of unemployment , reduced pay, or reduced hours from their employer first
- Stay consistent. Handle each tenant that same so there is no discrimination and keep good records of correspondence
- Adding amendment to leases to defer payments as long as they have applied for SBA loan
- Not suggested to lower rent. Could be seen as favoritism or discrimination if you have multiple tenants
- PM seeing ppl being OK for April rent but worried about May rent