1/ How can you, a SFR and/or small MF investor, leverage the extended eviction moratorium as a hedge?
Let's assume your ability to collect rent is limited & it will be for a while.
What can you do to turn the situation on its head and grow your portfolio in the next 6 months?
Let's assume your ability to collect rent is limited & it will be for a while.
What can you do to turn the situation on its head and grow your portfolio in the next 6 months?
2/ Of course there's rental assistance, but as a deal maker you understand that a challenging situation is also an opportunity & if you're getting hit by the effects of the moratorium you want something to fight back with - to capitalize on.
You also know others are hit too.
You also know others are hit too.
3/ If you've ever bought existing rentals from other landlords you know that very often rental properties are mismanaged.
You can tell by the below-market rents, the physical state of the property, the lack of documents you ask for and so on.
You can tell by the below-market rents, the physical state of the property, the lack of documents you ask for and so on.
4/ Your mid-pandemic mid-moratorium hedge is to assume that poorly performing landlords not only didn't get better when C-19 hit the fan last year, they actually let things fall apart even more.
This is apparent, yet so many investors are not harping on it.
This is apparent, yet so many investors are not harping on it.
5/ The truth is it's really hard to be a good landlord and while many could sort-of-handle it in good (=easy) times, it's much harder now that the job requires dealing with a lot of issues, many really difficult and many unprecedented.
6/ Distressed real estate investors call these owners "tired landlords".
Up first are the older mom-and-pop landlords who don't necessarily want to deal with potentially another 12-18 months of difficulties.
It took these guys 6-8 year to bounce back after 2008. No more.
Up first are the older mom-and-pop landlords who don't necessarily want to deal with potentially another 12-18 months of difficulties.
It took these guys 6-8 year to bounce back after 2008. No more.
7/ Next, we'll most likely see newer, younger BRRRR investors look to sell properties bought more recently. We're not seeing this yet but the market is talking about folks who bought at higher prices, are highly leveraged and do not want to deal with this for another 6-18 months.
8/ So while you're taking losses on your current rental, if your investing with a long time horizon you recognize that you can buy more rentals from landlords who can't or don't want to hold on to their current properties.
Enter your hedge.
Enter your hedge.
9/ Of course your underwriting needs to reflect that you too won't be collecting rent or that you'll be doing cash-for-keys deals with tenants so these are deals with long-term horizons, but they can often be purchased for 30%-40% below ARV, including renovation allowances.
10/ So while your cash flow is hurt, you can grow the foundations of your business by accumulating properties from other landlords who are just no prepared or ready to face the next 6-18 months.
11/ Baron Rothschild said something something "buy when there's blood in the streets" and while it's always nerve racking, it's usually the best way to leapfrog your business.
12/ Tomorrow I'll do a thread on the specific methods you can use to build lists of these properties, check for distress, reach out to the owners and help the sellers walk away from a big problem drama-free.
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