Denver Coronavirus updates and Q&A

[Chris Lopez]

Over the last week (man how fast the world can change!) I've had clients and fellow investors and agents reach out to ask questions on the market. I share what I know and often learn tidbits from them.

It's been a great way to share knowledge, but it's over one-on-one phone calls. Add in the fact that news and the market are changing by the hour = inefficient ways of sharing knowledge and staying up to date. Frankly, I'm having trouble keeping up with everyone.

I started thinking of better ways to share ideas and information... then it hit me to start a BP thread! The forum is easy for sharing ideas and collaborating.

There are quite a few smart people around town that can share their knowledge and what their hearing from their network. It should be a great way for all of us to learn and help get through this.

At this point, it's us versus the damn virus.

Tagging people that I know around town who are frequent posters to BP with great info. Add anyone that I don't know or forgot

@James Carlson

@Erin Spradlin (just saw a google hangouts you're hosting. Hopefully you'll share notes!)

@Matt M.

@Craig Curelop

@Dan Mackin

@Scott Trenchfor north Colorado @James Orr

Hopefully, they and others join. if not, I'll keep posting updates. I'm pretty isolated at home, so being isolated on BP will just add salt to the wound. :)

Be safe and stay healthy!

[Chris Lopez]

One more post... more time than usual to write!

One of the big lessons I learned is the importance of having a plan. The plan helps take the emotion out of the moment and stay focused on the big picture.

A few years ago, as I was getting into real estate, I create a plan. I'm sharing mine to get holes poked in it and get other people to share and discuss theirs. I have very similar views to @Scott Trench

I'm a buy and hold rental investor with a goal of buying 1 to 2 properties a year until I get to $20,000/mo in gross rents.

My financial plan is simple and I divide it into different categories:

• 6 months of personal living expenses as cash in the bank. With an additional six months invested as 60/40 stock/ bond allocation.
• 6 months of my realtor business expenses as cash in the bank. This includes my salary and estimated monthly tax payments. I keep reserves as current expenses, so there is room to shave expenses to extend the cash reserves. Cash in the bank = time to pivot in business (Another 2008 lesson learned.)
• 6 months of PITI and HOA (if applicable) or a minimum of $10,000 in a dedicated checking account for each rental property. Plus I keep a general ~$15,000 extra reserve fund.
• I only buy rental properties when I have enough for the downpayment + all closing / acquisition costs and can fund the operating account at 10,000 or 6 months of PITI.
• Every year I fund retirement and HSA accounts to buy stocks (low cost index funds and ETF's) and bonds at a 90/10 ratio. This is based on Warren Buffet's advice.

If my income, my wife's income, and all tenants stop paying rent, everything can survive a minimum of 6 months. I spent an hour two nights ago reviewing all my finances and am happy to see that everything is funded correctly. I slept well that night. I am starting to tighten up our business and personal finances.

About two weeks ago, before our world went to crazy town, I went under contract on a house with an ADU. I didn't stretch my finances and can buy and fund the property as outlined above. I have faith in the Denver market and sticking with my plan. So I'm sticking to the plan and moving forward.

As the stock market started tanking, I funded my retirement accounts for 2019 and started buying VTSAX (Vanguard's Total Stock Market low cost Index Fund) as the market was dropping. I've deployed about 80% so far. I didn't expect the market to drop so much so fast... oh well. I'll deploy the rest soon and then look at my account in 6 months.

A couple rental units were coming vacant in March and April, which I was originally happy with since it's a great time to get renters. Within the last week, two units went live and have seen higher than expected interested. I have opened up all my units section 8. I'll be happy to take guaranteed government money for the next 12 months. I've also instructed my property managers to focus on communication with current tenants in case they can't pay. I'm not a cut throat investor and do empathize with everyone going through tough times now. I have a "get through it together" attitude.

What holes are in my plan?

Who's moving forward or not moving forward on properties?

What's your plan? Have you looked at recently?

My plan is to stick to the plan!