Business as Usual During Coronavirus

There is a lot of uncertainty in the market right now. We have our own guesses as to how long this shutdown will last, how the market will respond when the shutdown ends, and the long-term impacts. Will this change consumer behavior? It has certainly changed mine. If the shutdown ended today, I would avoid the restaurants and I would be mindful when visiting my parents (my dad is a sixty-five year old diebetic--highly compromised). I prefer to watch the experiments happening in ATL and Las Vegas before venturing out. We are doing our part to support Main Street and the local businesses, but social distancing will likely be woven into the public fabric for the foreseeable future.

Despite social and economic uncertainty, I’m bullish with my business. I can not get Warren Buffet out of my head: “Be fearful when others are greedy, and greedy when others are fearful.” My team has been, on average, making an offer per day since the government issued the shutdown order, which is over 1,000 combined multi units. We just put two properties under contract, 248 units total, and are in negotiations on a few others.

At the same time, I’m asking myself the same question investors in 2008 were asking themselves: “will this time be different.” I don’t know. I do believe that properly managed multifamilies are the most insulated asset in the marketplace. Properly managed being the key term, you can't be overleveraged and you should have six months worth of operating expenses in your bank account. 

Business as usual does not mean that we are stagnant--it means that we are evolving and continuing to build risk mitigation techniques into our purchase and sale agreements, getting more time for due diligence and financing due to the pandemic. Things take longer, and we adjusted our standards to account for that just like we would otherwise. This is the new standard for now. Our underwriting criteria is more aggressive. We’re buying low, knowing that the future is uncertain, but confident that we will endure and thrive.