How will Covid-19 affect the market?

[Jonathan Scialpi]

I am an investor who focuses on multi-family residential properties in Grand Rapids, MI. I am considering to move forward with another investment in Detroit, Grand Rapids, or even North Carolina (open to suggestions within NC). My partners however are concerned with Covid-19's affects on:

Supply/Inventory- Are more people selling because they are facing economic hardships? As a result have you noticed a down trend since January in price or do you expect a down trend in price later on in the year due to an increase in supply?

Unemployment- Although a good amount of unemployment is associated with furlough from Covid-19, it still a remains a concern for rental property investors like myself that a lot have also completely lost their jobs. If people can't pay rent, how can you make money/afford a loan assuming you don't pay cash? How do you cope with this concern?

Demand- This is a topic that I always considered to become more relevant in the long term but Covid-19 has proved to many companies that expensive office buildings on the East/West coasts are not as necessary as they once were and are moving more to full-time working from home. This enables employees to move to more affordable places while maintaining their current job. As a result we might see more demand on in-land properties and therefore driving property value up.

Therefore, the goal of this post is to get a pulse on the market or at least that of my fellow real estate enthusiasts on BiggerPockets.com. General outlooks on the real estate market would be interesting of course, but I'd also like to hear something more focused on Michigan/North Carolina. Also if you are an agent that can help me better understand the NC market or have some inventory that you think I might be interesting in, feel free to message me and we can setup some time to discuss.

Thanks in advance.

[Drew Sygit]

We just sent this to all our clients as the 4th update since Michigan was put under government lockdown March 10. All 4 updates have been well received and we've received a lot of positive feedback on them.

We thought we'd share our latest update with all Detroit area rental owners, so they could benefit.

Hello and good day,

As we continue to experience unprecedented historical events related to the COVID-19 virus, we are doing our best to update you as new developments occur. We appreciate your patience and understanding with what we can and cannot do.

We also hope you appreciate our proactive communication efforts to keep you updated.

At the bottom of this message is a list of Executive Orders issued by Michigan Governor Whitmer that have affect our ability to conduct business as usual.

On May 15, Executive Order 2020-85 was issued extending the suspension of evictions until June 12. We cannot remove a tenant from a home, but tenants are still responsible for paying rent.

We are still contacting tenants with past due balances, encouraging them to pay what they can and trying to work out payment plans. We can also offer cash-for-keys to recover possession of a home.

For those tenants that claim they can’t pay rent due to a job loss, we are asking them to support their claim by providing the following:

• A layoff notice or similar
• Their unemployment claim status
• Any unemployment benefit award(s)
• Current bank statement to prove no employment-related deposits or unemployment benefit payments

We’ve updated our rent collection numbers through May 15, with the results compared to April 15 below:

At this time, that is about all we can do. We are not legally allowed to visit homes and knock on doors at this time as it has been deemed a nonessential service by the Governor.

Maintenance and City & Section 8 Inspections

Currently, all city and Section 8 inspections have been suspended through May 28. It’s important to note that this timeline is separate from the eviction timeline of June 12.

Regarding tenant requests for maintenance, we are addressing emergency, health & safety issues to avoid causing you potential liability issues and protect your asset. Requests for issues other than these are evaluated on a case-by-case basis, but most are declined as a nonessential service in compliance with the Executive Orders.

We are allowed to work on vacant homes to get them RentReady, although these projects are taking longer than normal due to long COVID-required lines at suppliers and workers on sick leave.

Property Showings

We are not allowed to show occupied rental homes per the executive orders.

Vacant homes are being shown as we’ve adapted and moved to secured self-showings.

Our overall application numbers are up significantly compared to last year. Our investigation into this resulted in feedback that we are one of the few property managers actually showing homes during the lockdown.

We will do our best to keep you updated on additional news as we receive & review it.

We are open to all suggestions from you that are legal and realistic. Please also let us know if you are not satisfied with the information and amount of communication we are providing.

Timeline of Executive Orders issued by Michigan Governor Whitmer

March 10, 2020 Executive Order 2020-04: no end date.
Declared a state of emergency across the state of Michigan until the COVID-19 threat resolved.

March 10, 2020 Executive Order 2020-19 end date of April 17, 2020.
Temporary suspension of all court ordered hearings & evictions for nonpayment of rent.

March 23, 2020 Executive Order 2020-21 end date of April 13, 2020.
Temporary suspension of all activities not necessary to sustain or protect life (includes real estate related).

April 7, 2020 Executive Order 2020-42 end date of April 30, 2020.
Extension of temporary suspension of all activities not necessary to sustain or protect life (includes real estate related).

April 24, 2020 Executive Order 2020-59 end date of May 15, 2020.
Extension of temporary suspension of all activities not necessary to sustain or protect life (includes real estate related).

May 1, 2020 Executive Order 2020-67 end date May 28, 2020.
Declared a state of emergency across the state of Michigan until the COVID-19 threat resolved.

May 1, 2020 Executive Order 2020-70 end date May 15, 2020.
Clarifies temporary suspension of all activities not necessary to sustain or protect life (includes real estate related).

May 15, 2020 Executive Order 2020-85 end date June 11, 2020.
Clarifies temporary suspension of all activities not necessary to sustain or protect life (includes real estate related).

Click here for a list of all Executive Orders issued by Michigan Governor Whitmer