All Forum Posts by: John Kunick

Originally posted by @Kevin Hubbs:

Investment Info:

Single-family residence buy & hold investment in Broken Arrow.

Purchase price: $117,500
Cash invested: $40,000

FIRST RENTAL PROPERTY, PUT 10K INTO REHAB. ARV 150 GOING TO REFI IN A FEW MONTHS TO A 30 YEAR, FIRST 10 INTEREST ONLY TO KEEP PAYMENTS LOW FOR HIGHER CASH FLOW

What made you interested in investing in this type of deal?

WANTED SINGLE FAMILY THAT SEEMED LIKE A SAFE INVESTMENT FOR FIRST PROPERTY

How did you find this deal and how did you negotiate it?

WHOLESALE DEAL

How did you finance this deal?

LENDING HOME, WAS SUPPOSE TO ONLY PUT 10% DOWN THINGS GOT SCREWED UP AND HAD TO PUT 30% DOWN DAY BEFORE CLOSING

How did you add value to the deal?

BASIC LIPSTICK REHAB, PAINT, NEW LVP FLOORING AND NEW LIGHT FIXTURES

What was the outcome?

HOUSE LOOKS GREAT RENTED FOR 1350

Lessons learned? Challenges?

I HAVE FOUND BETTER LENDER TO USE, STILL NOT THE BEST SO GOING TO CONTINUE TO LOOK FOR GOOD LENDING OPTIONS

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

KEY RENTER PROPERTY MANAGEMENT HAS BEEN GREAT

Kevin, congrats and thanks for the details! Like you, I'm in Tulsa area and have built a nice portfolio of SFH and now have transitioned into MFH. One good thing with putting 30% down is you will be significantly cash flow positive.. Sent you a Colleague Request. Would be happy to buy you lunch and see what your plans are and tell you both the good and the bad that I encountered while building my portfolio..

Originally posted by @Nathan Gesner:

For anyone paying attention, the media has dramatically exaggerated anything to do with COVID-19 and the eviction moratorium. The big numbers tend to center around large cities and low-income rentals. The majority of the country is doing fine and won't see anything significant. And the (illegal) moratorium was just extended 60 days for those areas so the only thing we'll see an increase of is the number of mom-and-pop Landlords selling off their rental to escape the nonsense.

Unfortunately, I think the Mom and Pop selling off is by design.  I agree with you that the EM is illegal and I'd say unconstitutional.

Originally posted by @Michael S.:

@BJ Ralphs

I got the PM ban lifted off your account. You can now send messages.

Please make sure to not copy/paste your messages and you should be good. 

Michael, I just got banned for "Spamming" which I'm not even quite sure what that means.  I sent a few "connection" requests out this morning, but did not do any copy/paste nor did I link to any websites..  Can you help me out here?  Thanks.

Venmo...  I love it and have never had a single issue.  I started using it three years ago (was collecting rent before then).  Most of my tenants couldn't believe how easy (and free) it is and they also love it.  I do have one tenant that requested to use Apple Pay so I set up an account and it is very similar to Venmo..

@Grant Maxey and @Brian Holt, sorry to correct, but SFH is indeed Single Family Homes, but MFH is Multi-family homes (apartment complexes primarily)

@Kristin Cooper, first, best of luck with your decisions as they can be life-changing..  Getting into real estate was one of the best decisions my wife and I ever made and has enabled us to retire in our mid-50's.

Second, we are heavily invested in SFH in Tulsa area and MFH in Dallas so I can only speak to those markets.

Generally, though, I don't see similarities yet between the housing crisis of ~ 10 years ago and now (when we picked up a lot of SFH from distressed mortgage situations). As someone else stated, the forbearance rate doesn't mean anything at this point. We won't know if it means anything for a few months.

RE: Tulsa... So far, we have not seen any negative impact as our collections are actually better than ever. If anything, it's been a positive as tenants seem to be putting more focus on financial discipline that perhaps they didn't have a few months ago. Will see if that continues. BTW, Tulsa continues to be a fairly stable housing market that is attractive to buy and hold investors. While we don't see big appreciation, we also don't see big depreciation. Keep in mind, I only have SFH in Tulsa and they are all upper blue-collar/lower white collar neighborhoods (specifically in the 3/2 category in suburbs with good school districts).

RE: Dallas..  We only have MFH and they are all B properties.  Again, we are pleasantly surprised with rent collections.  We are glad we chose B properties as we do see some "Step down" effect of people in A properties wanting to save some $ and moving down to B properties as they still have similar amenities.  We don't see people moving from B to C, but who knows if that will happen should this continue too much longer.

My advice for long-term investors:

1. Know your goals - do you want to buy and hold and build cash flow or are you looking to buy and sell?  These are two very different goals which require very different strategies.

2. Buy the right categories - if this COVID has taught up anything, it is to be in the right categories that are as recession proof as possible.  Unless you have government guaranteed rents, C's would not be a good category to be in right now.

3. Capital is King! - If there are any forbearance issues, it will most likely be with investors who were not well capitalized and couldn't therefore weather storms.  This was critical to the housing crisis both for those that lost houses as well as those  who had a lot of capital on the side and able to pick up houses at discounts.  Now is the right time to build capital if you don't already have it.

4. Constantly evaluate your strategies - Are your strategies helping you achieve your goals?  If not, readjust.  If so, stick to your knitting!

Again, best of luck!

@Rhett Tullis, thanks for this thread.  Full disclosure: I own several residential rentals in Tulsa and multi-family in Dallas.  I DO NOT own any commercial even though I've had many opportunities to buy them.  I've always subscribed to "they will always need a place to live no matter what happens to the economy" theory and therefore just never could pull the trigger on commercial.

Having said that, several of my friends and I have been talking about what life will be like in six months after the COVID panic is over.  By far, the #1 trend we see is "work from home" will become much more normal.  This has serious implications for certain segments of commercial.

The other key aspect that this pandemic has brought to light is the over-leveraging of assets.  Hopefully, many will learn that you must have a manageable debt to equity ratio and also have adequate cash reserves to weather storms..

Originally posted by @Mark Whittlesey:

Originally posted by @Danny Grey:

I think the general public has a perception that rental property owners are largely a bunch of wealthy fat cats flush with cash who can weather any economic storm, and if landlords still demand rent at times like these it's only because they're greedy. 

They average person probably doesn't understand just how much rental property is leveraged, much of it highly so, and if rent isn't paid, debt on those properties isn't paid, and we simply a see a line of debt dominoes falling into the abyss. This isn't news to any of you, but talk to some renters and you'll see this is a fairly common sentiment.

Whatever the "solution" for all this is, it needs to involve help for all parties from tenants, to property owners, to the owners of debt on those properties.

As for what this does for the overall market, it doesn't seem like much yet. I've seen a FLOOD of new homes hit the market this past week, but not at reduced prices. It just looks like folks trying to sell before the inevitable dip. The dip will come though, eventually.

 I agree with this.. but it's also more complicated than that. You can be under-leveraged but still be at risk. Equity is NOT spendable. And the monthly payment is based on the original loan regardless of how much you have paid or how much the property has appreciated. I am talking about being equity rich and cash poor.

@Mark Whittlesey Yes, that is exactly what I was referencing in my post above about re-evaluating your cash position.  As you say, you can be equity rich and cash poor.  That is why I plan to start increasing my cash reserves and making sure my business line of credit is in good standing.

Wow, just spent several hours reading through all 22 pages of this thread because, hey, what else do I have to do these days of quarantine?

As an owner and manager of a fairly large portfolio of SFH in Tulsa area, let me say that I am closely monitoring the situation with my tenants.  While I have yet to send out a blanket email to all, I have been in communication with those that I consider to be at risk.  Also, I have had one tenant let me know they will be one day late paying in April (her part-time job as a waitress was eliminated).  I thanked her for proactively communicating and asked her to stay in touch as the situation develops.  I also had one tenant, who had just renewed her lease, let me know she now needs to break the lease due to COVID.  I let her know that I would immediately start looking for a replacement tenant and will only hold her responsible for the lease for the lesser of 30-days or until a replacement tenant can be found.

All the other tenants that I've communicated with are so far not impacted enough to suggest rent payments will be effected.  But, the message to them is "stay in touch, let's communicate and work together and we will all get through this together".  As a Christian, I want to deal with tenants with compassion while also letting them know that how I earn a living is by them paying rent.  Without them paying rent, I can not keep the properties going - which means we will all be out of business.  Will some take advantage of this?  Maybe, but hopefully not - as I've done my best to screen the tenants up front.  I've been doing this for 10+ years and have learned the hard way that some will take advantage and you must weed them out as quickly as possible.  But, the vast majority will respond positively to a landlord that treats them with respect and compassion.

The other lesson that many have mentioned is "take this as an opportunity to learn from mistakes and get your "house" in order".  Are you over-leveraged thinking money is cheap and therefore the risks are small?  Well, guess again.  For myself, I have very low debt to equity ratio so I can weather the storm longer than many.  But, this situation has made me think about having greater cash reserves (I do have a business line of credit which is about as good as cash reserves).

God Bless you all and thanks for all of your input on this thread!

@Moritz Bode, I'm not sure that is more efficient as most tenants don't want to live in a house while renovations are taking place.  And, assuming the house was in top shape when they moved in, the only exception I could see is if they have been in the house for a long time and the condition of the house has changed over that period of time.  It has happened a few times over the many years that I've been buying/holding, but it's the exception.