All Forum Posts by: Joshua Myers

I think this is something we all forget. It's easy to look back and think that after Lehman collapsed in mid- 2008 house prices were 30% lower by the end of the year of early 2009. If this recession hits as hard as some economists are predicting we probably won't be seeing bargain bin prices until the very end of the 2020 or mid 2021. Maybe later, and plenty of people bought in early 2009 because houses were finally in their pre-crisis price range.

Personally I think the prudent move for most investors is to wait until the virus has run its course and the economy has reopened. The fiscal stimulus and monetary stimulus are good measures economic triage, but consumer spending makes up 70% of the US economy. No-one really knows what happens to consumer confidence on the back end of this thing, but it was at of near record highs before. So best case scenario we get consumer confidence and spending back to where we were before this started, but with and additional $3-5 trillion of Federal and State debt and $7 trillion on the Fed balance sheet.

@Keith Hill did you go ahead with it?

@Gregory Schwartz from what I can tell your big worry short term liquidity and cash flow. Call your lender and get a 3 month forbearance. Doesn't hurt your credit at all. Your wife should get unemployment which will help. That should give you 3k-4k a month (maybe more depending on the new stimulus bill). Your wife will be back to work after all of this. If you're smart, and it seems like you are, this should be manageable.

As far as timing, one of the most honest things we can do as investors is to acknowledge that our decisions made sense to us at the time. I don't think it makes sense to look in the rearview mirror unless you're trying to learn from your mistakes. Maybe don't put all of your chips on the table next time, but if you stick with it now you'll be ok in 24-36 months.

@Peter Lohmann most of our tenants will qualify for funds from whatever version of the stimulus gets through congress. I'm guessing that applies to a solid chunk of tenants in Columbus too. Based on that I'm guessing some April/May rents will be late, but not $0. Personally I'm more worried about June/July/August.

https://www.wsj.com/articles/f...

Pretty much anybody can go into forbearance right with minor consequences at worst. It took a 15 minute phone call and one follow up email to get 3 loans into forbearance this morning. The banks are willing to work with landlords right now. Federal and State governments are looking out for both tenants and landlords as much as they can. Look out for your tenants in a reasonable way too.

100% right. A governor can remove shelter in place restrictions, but they don't have a switch to open up all of the closed restaurants. It can takes weeks for a smaller operation to get back up and running. The FED can't push a button and make consumer sentiment return to December and January levels. That can take years.

 The silver lining for you is that this happened before you got off the W2. You can stress test your worst case scenario right now, and set your FI goals up around that.

We're all going to have a better handle on the risks in our portfolios after when this is over. 

The risk right now is from deflation, not inflation. Velocity of money is the primary factor, and that might be coming to a hard stop.

I don't think I'm the smartest voice in this room, but my opinion is that you need to focus on your entire operation more than just your LTV ratios. 100% LTV with 12 months reserves is conservation while 50% LTV with 1 month reserves is a disaster waiting to happen.

All of my properties are leveraged 75-80% LTV. But I have enough non-RE income to cover my lifestyle (no vacations, but I they were all cancelled anyway) and enough cash on hand to cover 1 year+ of mortgage payments and standard maintenance. Even though my properties have a lot of leverage, I feel like my operation as a whole is fairly conservative.

Brian, the FED hasn't pumped $1.5 trillion+ into the economy. It is stepping in to fill the vital role in normal capital market operations of providing short term liquidity (primarily overnight liquidity) that has been vacated by due to the seizing up of credit markets. The headline number is the size of the backstop, not the amount accessed. The amount accessed is massively underbid, coming in at less than 20% of the backstop, and this temporary liquidity is always backed by investment grade credit. It's not new money given to banks.

It's ok to not understand how capital markets work, but if you don't have a real knowledge of the subject please don't spread misinformation.