Ready to Start Investing, then COVID19

[Keith W.]

I started preparing for diving into real estate investing since last September. Learning as much as I can and figuring a strategy to get start-up funds. I decided to cashout refinance my home in order to have funds to cover the following:

The downpayment required by the hard money lender

The money to start construction before the first draw

Carrying cost including interest payments to the hard money lender during the rehab process

Reserves in case anything goes wrong

The exit plan is the BRRR Strategy

I was in the middle of the refinance process when this COVID19 shutdown started. I should be getting a closing date any day now. 

Now I'm concerned that I'll have this new, larger mortgage payment and no investment activity. 

Are contractors working?

How do you get permits?

Who's buying?

This might be a good time for me to buy, but the BRRR strategy is a short term process to be recycled over and over. I don't think I should buy a property and let it sit for months because of COVID 19.

What are other investors out there doing? Particularly new ones, who might not be able to spread their expenses over their entire portfolio.  

[Nathan Gesner]

Short-term rentals, wholesaling, flipping, BRRRR, and other strategies may be a mistake right now because everything is uncertain. But there are still opportunities and you shouldn't give up.

Think through the process. What would happen if you bought a rental and the economy takes a dive? Property values are cut in half? Rent is reduced 20% or more?

If you think of the worst-case and then buy something that works even in the worst-case scenario, you'll be fine. It's a long game and you'll do fine as long as you go into it with the understanding that there are ups and downs. 

Personally, I think we're going to see a strong recovery in the short-term but the real damage will be farther down the road. Government will hand money out like candy, everytone will get back to spending like drunken sailors with no thought given to saving for the future, and then the real crash will hit and wipe a lot of people out.