All Forum Posts by: Shahriar Khan

@Cody L. funny that you ask... i was looking for it as well . It all started in reddit and looks like the post was removed by moderators.. i tried BP as well and didnt see it .. Not sure what happened .. following this thread :) 

https://www.reddit.com/r/houston/comments/fpbpah/32_unit_building_rent_strike/

@Vijaianand Thirunageswaram like it or not its here  based on defn used by Feds (eg. negative growth for 2 quarters)  See attached. Question is, how long will it last for Texas and other Oil driven states in addition to how depp the growth will be given the social distancing will last till any vaccine arrives which is approximately around 12 months out . 

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@Christopher G. welcome to the party . Yes its absolutely possible. And it must not be something that you do yet. You are new and you dont have team yet plus market is very fluid. Rehab cost gets out of hand very quickly. Suggest you create a rehab checklist and use that for every house you walk for next 10-15 houses and then use that to create a rehab budget by calling general contractor. Some will ask you to go away (for right reasons) and some will help you . Those are the ones you want to stick with (for now) . Once you have a feel for it and doe one or two rehabs and then you can reply on others. Knowing what to do requires certain amount of doing .. Happy hunting 

@Jessica Chidi Greater Houston Business Partnership funded by IOCs and forecast scenarios for economics for local market and O&G sector . It was heavy report out by their economists meeting after 1 hr .. Trying tap into your Group Planning /Strategy team and you should be something similar .. Upstream US is shot .. Downstream manufacturing is about to get shot in a month or as demand collapsed due to COIVD stay home.

Attended another session with Freddie and Fannie lenders as well. And seems like thats the timeline from them as well. 

Its not panic or anything like that , rather we have been there and done that and every downturn has similar characteristics and just need to execute the play book. But again , we shall see so please take with a grain of salt :) 

@Jessica Chidi welcome to the party ... Houston will be very rough till Q2 2021 . On the flip side , we are expecting Q3 of this year both seller and buyers to calibrate for new pricing etc. Great time to get in. 

@Gregory Schwartz to be frank..its the worst time ..on the flip side ... it will make you push things to another level. Suggest you give your self 12 months and make real estate work... this is the best time to build your operation and once you make it you will ride the upside better then anyone else.. Hang on tight my friend it will a VERY bumpy ride for next 6 months 

My thoughts (in very broad terms given Stock is a great place to place money now then it has been in past 4 years) 

1. 1) Now /Phase 1: Market will swing from sell side to buy side. Sellers will resist to lower price and buyers will hold off to buy aka inventory buildup 
2. 2) In Short Term/Phase 2: Q3 or Q4 /2019 : Ok/Bad deals done in past 2 years will bubble up and seller will try to exit and some buyer will go into effect 
3. 3) Longer Term/Phase 3:  Q1/2021: Foreclosure will happen and buyers would be warm BUT lender requirement will go up tremendously 

@Spencer Gray great thread ...Given we are in Texas ,we are adding 2 months for option on top of typical time frame for due diligence and closing . No more hard money and quick due diligence options. Happy to work with asking price but we took a position to understand COVID 19 impact .. 

For us on refi we have found the following in addition to what you already have 

1. HUD is off the table for assets less than 4 mln given the legal fee + other fee . Beyond agency , i have found 30 yrs AM + 10 yrs term with Local credit union on refi. (4.5% , 10 yrs term , 30 yrs AM and 1 pts, cash out refi , 80% LTV, 85% of higher occupancy, 45 days to close) ..

2. HUD is off table on new constructions (4 mls or less) since loan takes 9-12 months to get approved. Another local Credit Unions is working aggressively on terms for new construction. (4.5% , 10 yrs term , 25 yrs AM , 1 pt and close in 60 days) ..

@Vinney Chopra below is what we are using as framework for both crisis (operationally and financially) mitigation...Based on our market data (public and semi public) , we position is that we will go through a version of that Italy/France going though (e.g. key is congestion aka NY vs Texas) as well as Oil and Gas price impact into Texas economy ... 

We are nor panicking instead trying to think though some scenarios and communicate/plan on paper . 

1.Ownership:

1.Create a “Medial Power of Attorney” to take over decision control if any/all owners get sick

2.Communicate ownership delegation with property manager

2.Property Manager/Other Employees:

1.Communicate CDC requirements

2.Outline and agree upon rent collection work process if city were to shut down

3.Outline and communicate a call tree identifying repair personnel

3.Safety:

1.For employees: Release funds to buy protective gear while working within premise

2.For tenants: Communicate 2 times a week with CDC requirement as COVID19 is a REPDI development

3.For Owner: Identify all elderly tenants and communicate with them to call CDC if they would show any sign

4.For Owner: Identify companies who does preventive medical grade clearing if any cases to be identified within premise.

4.Insurance :

1.Confirm with current insurance to avoid and potential liability from owner to tenant negligence perspective

5.Operations:

1.Review plan for marketing to get tenants if people were to leave during outbreak

2.Review plan for eviction during shutdown (if any)

3.Review cash position: 10 months cash supply covering 10 month of debt payment . Prepare for capital call.

@Jeremy Rhodes first off congratulation to have this nice problem. Try framing this problem as follows given you have W2 (high earner) + investment returns 

1) Investment Return Optimization : You can set up LLC /your name etc to manage expenses so that you demonstrate appropriate amount of expense adjusted return/cash flow. Front end : Less Revenue thus less tax payment , Back end: Stronger Balance sheet by converting debt into equity. Most of CPAs are well versed with this part . This is very simple.

2) Total Earning (W2) Tax Optimization : This is a structural problem. Folks with high earning who are not professional real estate investors CANNOT take yearly benefit from lower/negative return from investments . So you keep saving those losses for the time exit happens from selling investment asset from above . 

Back to you question, your problem is understood by many  and you will see all the benefits when you would sell the property . Hope this helps. 

@Ryan Johnson i have been going to TDECU. Sent you DM .. Feel free to call Meagan . She was been great for us. We had 4.55/25 yrs amm/5 yrs baloon/1 yr IO (for rehab) ..