All Forum Posts by: Jon Muldoon

I'm about to sign an agreement on a 3 family. The current owner was renovating the project and the contractor skipped town. I'm concerned about permitting and curious if anyone has had a similar situation and/or any recommendations. Thanks in advance. 

@Jon McCarron - sorry for the delay. We were on the Cape for a bit. I'd like to own in the surrounding towns, but the numbers haven't been right for me. It seems like everything is getting squeezed down past the 1% guideline.

I own a 4 small multi-families along rt 2 (Leominster, gardner area) - can still get good cashflow and appreciate hasn't quite reached there like some other markets. I'm also trying to get a few multi's in the Worcester there. I bought a small single family there a month ago. I love the cities long term potential. 

What about you? 

Lots of great suggestions and strategies. I haven't looked Beverly or Salem, I'll have to check it out. @Emily Lowe

@Emily Lowe, with the exception of D class areas and rural areas where it may be hard to rent, I wouldn't focus too much location. For your first deal, cash flow is king. It'll help cover and mistakes you may make along the way. Focus on the 1% rule and you should do ok. The first one won't make you rich, but it'll get the ball rolling. Congrats on starting out!  

Like everyone else, I've thought a good bit about this. The severity and impact of the virus is unknown, I'm hoping for the best but preparing for the worst. 

I'm fortunate that all of my units cash flow and are fundamentally sound, so my short-term goal is to cover my expenses. If a tenant can't make rent, I'll ask them to pay what they can. If they can't pay anything, I have a healthy cash reserve, a HELOC and two week ago I borrowed 50k from my 401k to buy a dip and show compassion to my tenants who have the same worries and concerns as everyone else.

For what it's worth, I also have a flip finishing in three weeks. It seems possible that things in Massachusetts will be very, very slow. This week I talked to my commercial lender to see if they'd extend a commercial line of credit against the property if I rented it out. The commercial line would be interest only, so it wouldn't take much for the property to cash flow. I wouldn't make a profit, but I'd be able to pull all of my money out and sell it 2 years tax free. 

That’s an interesting point Pat. But it actually speaks to how effective those countries have been at stopping the spread. Every expert recommends social distancing to stop the spread of the virus. That’s very hard to achieve when you are packed in like sardines, yet they did it! So there’s hope. 

The big difference is South Korea test 10,000 people a day. The US has tested 8,000 total despite having a substantially bigger population; which is less than ideal. But hopefully we’ll turn it around. 

@Brian Bradley The comparison to the swine flu well optimistic, is not accurate. Swine flu had an R0 (essential calculation for how easily the disease spreads) 1.4 and 1.6. The coronavirus is about 2.2. For comparison, the Spanish flu was estimated between 1.8 and 2.6. Meaning, the coronavirus is more contagious the the Swine flu. 

Some other math:

Swine Flu hospitalization rate: 300,000/60,000,000=.5%

Coronavirus hospitalization rate: 15% with 5% in ICU (https://www.statnews.com/2020/03/10/simple-math-alarming-answers-covid-19/) Because the hospitalization rate is so high, hospitals will likely become overwhelmed leading to a higher death rate. Speaking of...

Swine Flu Death Rate: 18,000/60,000,000= .03% (the flu is about to be .1%)

Coronavirus death rate: 3.4% with the gigantic caveat that many cases are asymptomatic. There are estimates the actual death rate will settle around 1%.  

This is not my opinion. It is the math. However, these numbers can change with effective management (which the US has not had). If you were looking for something optimistic, we should follow South Korea and Singapore's example which can be read here: https://www.cnn.com/2020/03/09/asia/south-korea-coronavirus-intl-hnk/index.html and https://www.mprnews.org/story/2020/03/12/npr-singapore-wins-praise-for-its-covid-19-strategy-the-u-s-does-not