All Forum Posts by: Stephanie Simmons

In Central FL - we have seen a drop in number of transactions - but believe it is due to shortage of supply (people don't want people in their homes).  Prices have held and days on market are unchanged so far....  Retail seems OK, but I would expect issues soon if you are selling into the lower price points - the target market might work in hospitality, entertainment, or other sectors hit hard & recent job losses I think will hit the lower end market first.

Investors are holding off - I am seeing wholesalers dropping prices and hounding me when I couldn't get one to return an email the first week of March.

I think prices in real estate will drop over the next 3-6 months (maybe longer as foreclosures will be delayed).  With that said - I am interested in a multi-family purchases.  I think demand for those will rise - but on the other hand that market tends to be the hardest hit right now with vast parts of the economy that tends to employ these people have been shut off.

I have a flip I am working hard to get complete and on the market quickly with hopes it can sell at current value.  If not - I will convert to a rental.  Thankfully I didn't borrow on that property so I am in a good place.

Also I am increasing my cash reserves to 8-10 months of expenses.

Money can be made in good and bad markets.  You always make or lose money when you purchase the investment.  So I may target ~60-65% of current value instead of my usual ~70% of value.

I have been mulling this over for weeks.

Differences - evictions are being postponed.  Courts aren't open to rule on judgments.  So far there is still liquidity in the lending market (that may change).  

Retail real estate demand is still here (in Florida anyway and a lot of other agents I have spoken to across many major markets - except NYC).  Retail supply is a problem - so I think this is what is maintaining current pricing levels in Central FL anyway.

Locally - investors are pulling back from new purchases.  I can tell because I am getting hounded by wholesalers and they are dropping prices within 5 days of first putting them out there.

So far - residential contractors are still very busy; however large commercial construction companies are laying off middle management and cutting pay of higher level employees.  

If we keep cutting off large sectors of the economy (elective medical procedures - all food service workers, hair dressers, schools, event/promotion industries) for another 4 weeks - you will see a super cascade effect in the economy that could be where we have 30%+ unemployment.  If that happens it will be way worse than 2008. 

Hopefully we can have some common sense re-opening and allow businesses to figure out a way that they can operate in a safer way.  We go into a grocery store with a bunch of people but my hairdresser cannot cut my hair in the parking lot of her salon that she owns  It's silly.

Interesting question - following

I'd tell her to come and re-apply once she can move in within 14 days.  I'd give her the deposit back.  If she comes back to you later I would check her employment and re-verify income and credit & also prior landlord is getting paid - so another application fee.  

If it works out great - if not then you get a different tenant.

Personally - right now I'd look at the stability of your work.  We don't know how many sectors are going to be hit hard (hospitals are laying healthcare workers off) and if you are relying on another job's income to cover your issues (like when the place doesn't have a tenant, when you underestimate costs, when someone trashes your place, you have a large dollar repair that is needed, you have to hire an attorney for an eviction or a lawsuit) instead of a healthy amount of cash or liquid assets; that could really rock your finances when a lay-off happens at the same time an expected one-time hit comes (those things above happen - and never at a good time).

I wouldn't take on debt for additional real estate investment unless you had at least 6 months of your monthly expenses (all those debt payments) in the bank and don't touch it.  If you have that and a good down payment (investment is ~30-35% to get a good rate on a traditional mortgage) and have your debt to income ratio low enough that you can get approved for the additional debt - I would say go for it.

With that said - I either put a 35% down payment or buy cash if the property won't finance (major repairs needed).  I use cash for renovations.  I spend probably 30% of my income in monthly expenses from my "job"and invest/save the rest.  This has been good for me as we just had 40% pay-cuts announced at work.  I have enough cash to finish my investment property and if were laid off today - could also support myself for 8-10 months.  That is definitely a better position than most.

I also have very low monthly expenses - no car loans, no credit card balances, no student loans, and a mortgage that I could pay by mowing lawns if I had to...

Good luck!


 

Also - Jay Scott has a book on estimating rehab costs that you might want to check out - it has a very detailed review of the home condition.  

My major ones are:

- Foundation & overall structure (termites, sink holes, evidence of water damage/mold)

- Roof needs to be replaced every ~12-15 years so if it hasn't then that will need to be done

- AC - 50/50 shot if over 10 years old.

- Look at plumbing - copper might need replacing & polybutylene pipes need to be replaced

- Had an insurance company refuse to insure a property with a water heater over 10 years old...

- If houses really old you want to make sure that the Electrical Panel has been updated or you will have to in order to get traditional mortgage financing or sell.

Also check on sex offenders and school ratings if the target market for the area is people that have kids (I check before I make an offer).  Heard stories of neighbors with really loud barking dogs that have killed their ability to re-sell (flip)

I relied on the title company to do all the lien searches, etc. The home was an REO that the bank had owned for about 4 months in a planned subdivision and was only 20 years old; and there were not any outstanding liens. I might have gotten lucky - maybe some others can provide feedback on that method....

But if you are buying vacant land or at auction or there are tenants - all those things present specialty issues

If you pull a permit and convert the garage into "heated" sq footage (increasing square footage) - it doesn't hurt the value of the home.  However, you are losing the garage & if in the area most of the homes have a garage (like ones built after the 1950's); many retail buyers will expect a garage; so you may limit the pool of buyers that would consider the home.

As an investor looking for a rental property - I would only buy homes with converted garages in neighborhoods where the majority of the homes have car ports or no garage at all.  And I typically buy at ~70% of retail value.

@Benjamin Pagan Welcome to the area!  I live in Lakeland and am an investor; but have held off on purchasing this last month based on the "no evictions" and I need to sell a property in Orlando first.  With that said I'd be happy to share contacts on contractors and you might want to join the PCREIA - they are doing virtual sessions and there are a lot of contacts in that group that can help you.

@Juan Orozco

Talk to your advisor about an S-Corp. That might be a Better company structure.