All Forum Posts by: Brad Gibson

@Colleen F.

Hopefully, the 12 month moratorium on evictions is a non-starter, but as people are out & about with businesses opening, the virus is starting to ravage those who are having lots of social interactions. That also appears to mean a pause or reversal on openings.

I’d like to see a stimulus package that continues to assist those whose jobs are impacted by the disease, but continues to allow landlords the opportunity to manage their properties fairly & with autonomy.

With the end of the federal supplemental unemployment benefits ($600 per week) in July, will we see huge increases in missed rent payments in Sept?

While many here have anecdotally reported that they are collecting rents at above 90-95% since April, I wonder if there is a potential problem on the horizon.  There has been no move to extend those benefits to people who have remained unemployed or have just lost their jobs.  In addition, the PPP will be exhausted either at the end of June or in July for most businesses which could mean another round of layoffs.

I'm pretty concerned that with no federal assistance, things might get more ugly.  Any word on an extension?

@Monica Pogue If you can get better living quarters at $700, then make a change & move. There's no need to stay in an overpriced home with fewer amenities. I have several SFR in Midland, but none that would be $700.

Rents will fall in the short term in Midland. Get the best deal you can and lock in the terms, because the oil is still in the rocks and the world still runs on the stuff. It’ll take about 8-12 months, but as soon as demand returns then so will the activity & housing prices.

I’m still looking to buy properties in Midland/Odessa. While I’m not in a spot to grab 15. I’m looking to keep at my goal of 3-4 more before the calendar rolls over. 

My guess is around $2,300-$2,500 for that area with four bedrooms. Rents are falling and I would get it locked up and see what happens in the next year. 

Try $2,400 and see what kind of interest it garners. Drop it if no interest in a couple of weeks. Screen well & hope for a tenant who isn’t in the oil business (not that many out there). 

You won’t get $3,200 in income on this property.  It is listed for rent at $1,050 right now. 

That should put your sale price at around 100,000 to cash flow comfortably. 

You’ll need 10% management & I would up the vacancy since the oil market has imploded over the last three months. 

This is a property I would stay very far away from. There are better deals to be had in midland & there could be some screaming deals in about six months if you keep your powder dry. 

I just received notification that my EIDL loan has been approved, but I'm pretty spooked about taking the funds for a variety of different reasons.  The facebook video referenced above was super helpful, but I still have some questions and wonder how onerous the SBA will be with the terms of the loan.

I'm considering taking the funds and holding them in reserve in the event that things go really bad.  Those monies would serve as a big cash reserve in the event that loads of tenants are unable to pay their rent and I'm funding mortgages out of reserves and then personal savings.

Here are the major concerns:

1) If the loan exceeds $25,000 then they take a security interest in the all of the business's assets and the borrower pays the UCC filing fee.  

2) Borrower cannot sell or dispose of the collateral without the permission of the SBA.

3) Must keep itemized receipts for all expenses paid for with EIDL funds & the funds cannot be double dipped with other government assistance programs.  Must hang onto all receipts for 3 years.

4) Must buy hazard insurance on all collateral within the business.  This isn't such a big deal since all rental properties and business equipment should be insured.

5) Must keep 5 years of rolling records for 3 years after the final repayment of the loan.  

6) SBA reserves the right to inspect the business financial statements and require an audit of the statements by a CPA at the borrowers expense.

7) Provide the business's financial statements within 3 years after the close of the fiscal year.

It sounds like a great deal of record keeping, but if I simply hold the money in a separate checking account as a backstop and ideally not spend any of the dough, I could pay the loan back in a lump sum this time next year when times would hopefully be better.  I would owe 3.75% on the loan as interest, but it would certainly be some peace of mind to know there's a really big back stop and no foreclosures rental properties if times get brutal bad.

@Daniel Dietz Thank you for the input as well Daniel. It would seem that portfolio loans are about as varied as the banks that offer them. 

I wonder if it is also regional. Meaning that a horrible deal in upstate NY is a fair or better deal in the oil patch of West Texas. 

The fact that there is so little transparency is a disadvantage to the borrower. 

@Jonathan R McLaughlin Thank you. The feedback is super helpful. You are right about “working out” anything with a bank. If it isn’t in writing, then it isn’t so.

It is $300 per month cash flow, since there are two doors. 

I might complete the deal and shop for a refinance opportunity this time next year and ideally get better terms. 

@Koob Moua WSJ Prime plus 1%.

WSJ prime right now is 3.25%

Total interest is 4.25%.