Real estate investors nationwide are definitely gearing up for a downward market. With today's equities drop, I am already hearing chatter of commercial real estate investors switching strategies from holding properties as rentals to offloading them as quickly as possible to end-users.
In Houston’s Chinatown, we are already seeing the impact of COVID-19. Restaurants and stores are half empty, and the neighborhood business owners are seeing a tremendous drop in international tourists.
How to pay rent and stay afloat during this crisis is already a topic of discussion. Hoping to avoid an increase in evictions, investors are looking to quickly cash out.
What are the chances that this could be the beginning of something bigger?
The drop in equities is definitely the beginning of something bigger. As the news of the virus begins to spread, the real estate market will take a tremendous hit.
I can see foreclosures skyrocketing. Without any customers, property owners will be closing up shop and trying to sell their building fast.
Is it temporary worry over the admittedly big economic impact of dealing with COVID-19?
I don’t believe the impact of COVID-19 on the real estate market is temporary. With new countries starting to lockdown cities in Italy, Iran, and South Korea, a large number of the economic sectors will be affected. Tourism and the disruption of the world’s supply chain are just the tip of the iceberg.
What You Can Do If Your Tenants Can't Make Payments Due to COVID-19?
Owning hundreds of rental homes and owner financed properties throughout the country, it was imperative that my investment partners and I come up with a plan to help our tenants and ourselves get through these troubling times.
The first thing we did was open up a line of communication with our tenants. I knew that communication with my tenants is going to be the key to all of us getting out of this in the best possible financial shape. We informed them that we are on alert and will be disseminating critical updates on the latest government assistance policies.
Our team took the next steps of gathering a current resource list of government assistance programs in every location we own properties. Besides rent assistance programs, the list included information on utility assistance, food assistance, mental health assistance, and much more.
There are a number of federal and local government assistance programs set up throughout the country. Some of the more well-known charities that distribute financial assistance and provide an array of services include the Red Cross, The Salvation Army, and the United Family Network.
My recommendation would be to call one of them now, and have them educate you on the process. With homes that were owner-financed by my company, we have set up a process to work with each individual buyer to decrease and or defer loan payments on a case by case basis.
If you haven’t yet spoken to your landlord or mortgage note holder, I highly recommend that you reach out to them while most of their offices are still opened. What you don’t want to do is wait until the last minute and find yourself unaware of your options.