Inverters in Rhode Island

[Jerrel Almeida]

I'm a wholesaler out of Providence, RI and I'm looking for local investors and RE professionals to connect with. I'm interested to see how everyone else is holding up during this epidemic

[Anthony Thompson]

@Jerrel Almeida still alive and kicking, just being a little more cautious these days.

I know some private/hard money lenders who have stopped lending completely, at least until this all settles down and we get back to "normal", while others are still lending but discounting their ARVs by 20-30%.

If you're a wholesaler, I think you'll need to start discounting your ARVs - and thus your offers - by a good amount to account for your buyers' lenders being more cautious.

You might want to add at least 20% to your rehab estimates too, because it can be harder to get people to the site, harder to coordinate and things will generally take longer - e.g., it might not be possible to have more than one person working on the site at a time.

I've heard from other wholesalers and agents that activity is definitely down, there are fewer buyers out there and the ones that are, are more cautious.

I'm talking about investor-buyers, not retail buyers. I'm not as in touch with the latter, but obviously we're heading for record unemployment and people without jobs won't be buying houses to live in, so I have to think that's going to fall off a cliff too (like so much else).

On the other side, I'm also hearing that a lot of homeowners haven't gotten the memo yet and are still asking sky-high prices. I think that, just like in 2007, there may be a very brief period where some sellers are still able to get such prices, but it will come with much longer times on market. And of course some of them will need to sell in a certain timeframe and have to lower their price to do so, which is what will start to lead to prices declining.

I could be wrong about all this, and I sincerely hope I am, but it certainly feels a lot like 2007 - the market turning point - to me. If I'm right and we start to head down again, cash will be king so do your best to build some up. There will be deals everywhere, but the challenge will be finding the funding for them.

As far as holding up in the short and long term, the best advice I can give is that real estate moves in cycles. Markets go up, and markets go down. And eventually, they go up again. You can either point to history or (more my favorite) human psychology. But just know that there are cycles and try to keep that in mind as you plan your moves for the near future and longer future.