About to pull all contingencies, hesitant bc of covid-19

[Tammy Skeath]

Hello BP fam, we are supposed to pull our contingencies tonight/tomorrow for a quad in Long Beach CA. Given the state of the country under Coronavirus, I am really nervous about what the economy is going to do. This quad is a good deal however it needs a lot of work about $100k and it will be completely vacant meaning I’ll need to fill all 4 units as soon as I’m done. Which will be in about 60 days. It’s hard to guess what our country much less our economy will be doing in 60 days but it’s Keeping me up at night. Would you freeze the entire thing and hold off and potentially lose the deal? Or would you push forward? I’ve got estimates in place for construction and all my numbers ironed out but finding tenants to paymarket rents in a recession is what worries me most. I know I’m asking you to look in a crystal ball but I figured some experts on here might have some sage advice. Anyone with experience in the Long Beach market is greatly appreciated! Thanks in advance!!!

[Jim K.]

@Tammy Skeath

I am not in California. But I'm looking at this and I'm wondering if I'm reading right here, given all the encouragement you're getting from capable people. This quad needs $100K in work and you plan on getting it all done in 60 days? And then you have to rent out the four units pronto? Looking at your profile, this is also your first major rehab, although last year you had a spec build done.

We know nothing about who you have working on this -- in the best-case scenario, it's the same people who did the spec build and you have significant experience working with them. Also in the best case, these people are really sure that $100K is going to do it for this place.What we do know, according to your initial post, is that "I’ve got estimates in place for construction and all my numbers ironed out..."

I suspect that the challenges of getting $100K of work done in 60 days during a time of pestilence in a place like California may be significantly more difficult than you're giving it credit for. If the circumstances were different and the quad was here in western Pennsylvania and needed that much work in the 60 upcoming days, I would be worried. Deeply worried. I think you're counting on an awful lot of things going well in the construction phase that might not necessarily do so.