My, how things have changed – quickly! If you’re still investing, I’d love to hear how you’re adjusting and what you see for the future. I’ll start with some of the Covid changes we’ve already made.

NOTE: Much of what I share is what we’re already experiencing and changing in our own business. Much is based on our 2008-2010 real estate investing experience.

1. Don’t stop. Historically, real estate always works, you simply need to adapt to market changes. Therefore:
   • stay flexible
   • learn about and secure funding
   • stay involved in online networking groups – both local and national – to stay abreast of changes you need to be aware of as they happen.
2. We’ve increased our marketing. Why?
   • People are going to need money which means selling their personal or family members’ properties. We want to be available when a need arises to offer what help we can.
   • There are fewer investors buying already because of fear of the future and lack of funding, so there hasn’t been a better time to be in the market in years!
3. Get educated. What we’ve seen recently is exactly what we experienced in 2006-2007; everyone was getting into real estate investing because it was so easy. As the business becomes more difficult now, those who are prepared, informed, and educated have incredible opportunity.
4. Buy for less. We all know the future holds uncertainty. Price values may drop greatly in the coming months/years. Sellers know that, too, which is why many will want to sell sooner rather than later. They also realize that you’re taking on their risk when you buy, so they understand when you offer less than they hope for. And, it’s true, you are taking on risk. Make sure when you make an offer that it’s a price you can live with if the value drops over the next 3-6 months.
5. Properties are still selling well, so buy properties you can turn quickly – this is not a time to buy large rehabs!
6. Buy and sell virtually. This is the perfect time to learn how to transition your business to virtual. We are currently doing due diligence online, asking permission to walk around the property and take photos, then asking the seller to either send us interior photos themselves or to leave the property while we enter and take photos. Sellers appreciate our concern for their well being. We are requiring that they allow a property walk-through before closing to insure their own photos do not omit something we should know about.
7. Prepare for longer days on market when selling. Watch your local property days-on-market to have an idea of what to expect. As lenders begin to dry up and/or increase their borrowing requirements, there will be fewer qualified buyers and both selling and closings will take longer.
8. Expect lenders to tighten borrowing requirements.
   • We’ve already seen private lenders stop lending due to fear of future risk and a need to keep their funds secure for themselves.
   • Many hard money lenders have stopped lending all together because they were bundling loans and selling them. Those loans are no longer being purchased, so those lenders are no longer lending.
   • Banks have stopped offering jumbo loans, which means they’re already concerned and responding.
   • Pretty much anyone still lending has begun requiring that the borrower has more funds on hand, higher credit score, and is a stronger applicant all the way around. Plus, they’re increasing points and interest rates.
9. Higher priced properties will be the first to slow, so focus on the properties that are below your area’s median price point (and know what that price point is!).
10. Expect this “event” to last for a while – possibly years. In 2008, the common response was that the worst was over and things were going to start getting better. “Things”, however, continued to get worse.

Remember, we’re very early in the “new reality” and what’s coming is hard to predict. Stay aware, stay flexible, stay informed, stay in touch with other investors. There’s always money to be made in real estate.

Do you agree/disagree with what I’ve shared?

What changes have you made or do you plan to make going forward?

What’s next for real estate?

For most people, real estate remains a critical part of personal net worth. Despite the stock market’s recovery, the average net worth of an American family is down about 25% because of tumbles in real estate values and investment assets.

Overview of Market Trends – Focus on Boston

While still suffering because of continued turmoil in the anchor employment areas of Financial Services, Insurance, Real Estate (FIRE), there have been signs of stability in and near major metropolitan areas like Boston. Although the employment picture remains bleak, the Boston metropolitan statistical area (MSA) showed the strongest gains in property values during 2009 according to a recently released report by Zillow Real Estate Market Reports.

Even with the strong gains helped along by the federal government’s first time home buyer credit and continued low mortgage interest rates, there remain nearly 25% of homes that are “upside down” on their outstanding mortgages.

High unemployment persists as companies continue to announce layoffs or delay hiring. And given the expected wave of creative mortgage products like Alt-A loans, interest-only loans and “pick-a-payment” adjustable rate mortgages resetting to higher rates putting pressure on homeowners who are unable to refinance because of lack of jobs or lack of value, there will likely be an increase in the number of foreclosures.

According to research reported by HousingPredictor.com, the major metropolitan areas in the US will likely not see a boom in real estate until after 2020. With more than 7 million people unemployed and another 20 million listed as underemployed, it may be 2017 or 2020 when these workers are absorbed. And real estate sales depend on those who have jobs.

Real estate booms have typically run in seven to 10 year cycles with some outside trigger precipitating a crisis that popped the bubble. The current situation is unlikely to be different.

Implications for Investors

Apartment vacancy rates are expected to rise through 2010 to about 7% to 10%. The continued collapse in confidence about jobs hampers household formation as individuals may delay marriage or move back in with parents or relatives or double up with friends.

As foreclosures rise, there will likely be greater demand for replacement housing so vacancy rates may fall. And as workers try to keep their options open to accommodate moving for job opportunities, demand for rentals will likely increase as well. The caveat is that there will also likely be a range of supply options that will put pressure on rents. And as a result of continued poor economic conditions, landlords can expect that credit quality of tenants will erode.

Apartments will have to compete with an increasing supply of single-family homes. Currently, the single-family homes available for rent has ballooned to nearly 10% compared to the long-term average of 4.5%. And a change of policy by mortgage servicer Fannie Mae will allow renters living in homes or apartments where the landlords have been foreclosed on to no longer be evicted. This will likely mean that largest landlord of single-family rentals in the US will be a quasi-governmental entity.

The volume of sales in the multi-family market is way off and likely to continue. Potential buyers continue to wait for prices to stabilize. There will continue to be an upward shift in cap rates by 1% to 2% approaching the cap rates of 2002 (8.2%) which will directly contribute to downward pressure on prices in the range of another 10% to 20%.

And given the more stringent underwriting criteria like higher down payment requirements, the number of investors capable of acquiring a property will likely be limited. But there will be opportunities for those investors with the capital and credit to buy when prices stabilize.

Are you operating your own rental portfolio? Are you tired of investigating your tenants and checking them out fully to make sure you are getting solid income streams?

Are you trying to find properties where numbers work? Do you think it will be wiser to work out a deal with a professional property manager to limit the liabilities your real estate business is creating?

Are you managing forward-looking assumptions regarding bad debt, delinquencies, concessions, vacancy, rent growth, etc. all impact returns and yields?

Are you embracing technology and don’t know how to start working on your online presence?

Property investing may not be rocket science but you can be bogged down with the various challenges of the day-to-day transactions.

Real estate may be a multifaceted and dynamic industry that evolves quickly and there will always be a handful of problems in such an erratic sector you have to navigate, but dealing with these challenges is not at the top of your list of priorities.

Don’t fret.

You can delegate. You can have your peace of mind.

So you can focus on the most important stuff in your real estate business and free your time working on what you love and what you’re good at, you can delegate two important roles:

1. Lease Administration
2. Dedicated Staffing

Yeah, this the smartest way to run your property investing business nowadays.

OUTSOURCE.

Why should you outsource your real estate investing needs?

• To simplify your property investment

You can demystify your property investing if you’ve developed a system with a dedicated team to cater to specific tasks. Let property managers do what they’re good at doing. Let the auditing team do the numbers. Let the social media staff work on your online presence. Delegate specific tasks to the right people to get the best outcome possible.

• To allow you more time to focus on what you do best

Since you already have a system and a dedicated team working in the background at the jobs that they’re good at, you now have more time to focus on what you do best. You can’t be a one-man band to do everything. You have your own special skills and talents that are needed in your property investing and it will serve you well to do that.

• To give you the freedom to have a work-life balance

You don’t necessarily have to work hard on your property investing. You only need to work smart. With a sound system in place and dedicated staff, you can also enjoy and get a life.

You deserve to have a work-life balance and you need it to thrive in your business. A sound mind, body and spirit working harmoniously together is the secret to your success. You can’t work smart and not live life. You can have it both… work and live.

Be a success story in your property investing. Work smart, delegate and outsource.