I have 2 houses under contract. Should I still close?

[Gary L Wallman]

I have 2 SFH's under contract in Ohio, paying all cash. A 1000 square foot home in a B area and a 1900 square foot home in an A area so the cash is significant. Ohio just shut down the state with a "stay at home order". I've purchased over a hundred homes and never failed to close on one due to my actions. Don't really want to start now. Part of me says these are decent deals and I signed a contract. Another part says who could see this mess coming? The first house is coming from a Bank that has already delayed the closing for weeks. The other is from an individual.

I own 120 + doors and am quite concerned that I might not see rents come in the way they normally do, or even at all. The good news is I only have 6 mortgages so I'm not very leveraged.  The bad news is my other business is shut down as well and may need some extra cash to survive.

Initially, I thought this mess would blow over.  Still not sure why (or if it's even legal) to shut down a state with 11 million residents when only 350 or so people are known positive and 83 are hospitalized. Maybe they know more then they're saying or maybe I'm just insensitive to the size and scope of the problem. Pretty sure Corona virus is going to kill more small businesses then people. Though, of course, people are most important.

So what do you guys think.  Keep the cash or buy the properties? If I buy the properties, will I be able to even rent them?  Your thoughts are appreciated.

[John Teachout]

I had a very similar dilemma and closed on two cash properties this past Monday. The prices were low so it wasn't a large outlay and the properties are occupied so hopefully they won't be a strain on our budget. However, to facilitate this closing, we borrowed money from our reserve funds (capex, maintenance, vacancy, etc) and essentially those are zeroed out right now. If we get rents, we'll be fine and start refilling those buckets. If we don't get rents, we have some options such as a HELOC and so forth to bridge us. If I had to do it over, I'd still close on them as they were a good buy. I fully expect this situation to be short lived (a few months) so we can make it for a while.