Setting up reserve accounts
We're setting up reserve accounts for each individual property we own. While we have a good chunk of cash on-hand to carry each property, this crisis has inspired me to fortify our reserves. I want to have enough cash in the bank to carry the mortgage, taxes, insurance and utilities for every property for 1-year in case of a worst case scenario.
Luckily, all of our tenants have thus far not raised any concerns about making rent. But, not knowing how long or how deep this crisis will go, fortifying reserves could serve us well later this year or in whenever the next calamity strikes.
Freezing new purchases
We have not finitely decided whether or not to freeze all future purchases in the short-term, however I have heard that large real estate firms who invest in multi-million-dollar commercial and industrial projects have put a full stop on acquisitions. It's hard to say what the right offer is for a single-family home right now, when you have no idea what you could sell it for in 4-6 months.
Which brings me to my next point, that is multi-family is much easier to stomach right now.
This sector is still the best place to invest
Class-B multi-family properties are probably the absolute best place to be right now. Lord knows, real estate as a whole is a better place to be than the stock market currently. (And always, in my opinion.) But some sectors of real estate are getting hit harder than others. Hotels, restaurants, bars and other entertainment retail (especially in tourist-driven areas) are feeling the blow, followed by high-end housing. Luxury house-flipping is not advised amid a public health emergency. People who lost their jobs and who may even lose their homes will still need a place to live and an affordable but decent rental is where they will likely end up.
I saw another interesting idea today - a prediction that affordable single-family house rentals will take off. As some transition away from homeownership and back to the rental pool, they may still want space for their family and home office in the age of working from home.
Real estate transactions hitting historic lows
We live and invest in the New York metro area, in the suburbs of northern New Jersey. We are in the 'hot zone' so perhaps our impact is intensified, but new numbers out tonight show the Manhattan real estate market has taken a nosedive with only 90 contracts signed last week. Compare that to 2020's busiest week, which was from Feb. 3 to Feb. 9, when 334 contracts were signed. That's more than a 70% decrease.
This listing tool is helping homes sell faster right now
I saw another interesting article today about how Zillow's 3-D home tours have seen a 326% spike. With open houses off-limits, it seems the strategy of virtual showings is on fire. All you need to do this is the company's app. Even after the crisis ends, this is sounds like a great idea. Zillow's data shows users who deploy this tool sell homes 10% faster, on average.
Construction material shipping slows
I've seen reports that the pandemic has slowed the shipping of building materials and builders are expecting delays. However, locally here in the 'hot zone' lumber and other basic building materials seem to be fully stocked on store shelves. For the small-scale investor, I currently don't see a major impact but that could change.
That being said, I will tell you I tried to order a bilco door for our current duplex remodel and shipping turnaround time was definitely a little longer than what I've experienced in the past. Worst case scenario, we'll have to buy whatever is in stock rather than placing a special order.
Building offices are closed
This is spotty but it is happening. Before you close or move forward on any project, make sure the local building office is still operating. I've called around to several building departments where we have projects pending to ask if we are still able to get permits. One of them essentially said "we'll try". Boston closed all construction sites on Monday and San Francisco has ordered all work stopped besides housing developments. If a town building department is closed due to coronavirus, so is your job site.