Be Careful If You Are Overleveraged

[Russell Brazil]

Many of us experienced folks on the forums the last couple years have been expressing concern about people being overleveraged and for strategies like the BRRRR method. Myself, @Jay Hinrichs, @Alexander Felice, @Joe Splitrock @J Scott (Who Ive never been able to tag in almost a decade on here) I know have all talked about leverage, risk and caution.  Im not saying this to say hay, Im right, and everyone else is wrong, whch is true btw lol, but to say that if you have the ability to raise cash, do so now before your tenants stop paying their rent.  Its going to be at the very least, a bumpy few months here.  I dont see some great economic collapse, Im not a doomsdayer or anything of the sorts. But the recession is here, and we are not easing into it.....we are hitting a brick wall at 100 miles per hour. 

If you have marginal tenants in c/d class properties, expect that some will not be paying their rent with a moratorium on evictions in many places.   

[Jay Hinrichs]

Proper capitalization and reserves is the corner stone of real estate investing.

the refi till you die while a good strategy to scale needs to be tempered with fiscal realities if you do hit a bump in the road or like Russ is talking about a brick wall at 100 mph.. this is not about those that will get the Virus this is about those that work in industries  that are being shut down.. some will get paid regardless others will get help from various sources but others will have no choice but to either buy food and medicine or pay rent. 

Or they may just move in with relatives and leave properties vacant and in C/D areas vacant properties are sometimes worse than having non paying tenants who at least are keeping an eye on the house.

Tough times don't last but tough people do.. be tough be smart and be caring of others IE your tenants. 

And for sure having owned hundreds of C/D class rentals myself I know once the word gets out in that tenant base there are going to be lots of them playing games with you..  But hopefully you know the good ones from the characters that are just out to take every advantage they can get as its their way of life