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Hey Jackie,
It seems like this might cause a problem that will affect everyone. There has been a lot of housing built with the thought that there is unlimited demand. I think if this lasts for more than a few months there will be over supply in my market. This will be a buying opportunity!
The last economic slowdown put our rents down over 20% for 5 years. Buying with seller financing and masterleaseing will work well. This would be a great topic for a conference call. I will let you know when I see any change in my local market(Colorado).I’m doing a special conference call on Tuesday, March 24th at 7pm to discuss the potential impact of the Covid19 situation.
Will send out call in details later today.
Even in Panama, things are starting to get crazy. They have cancelled all visa applications, banned flights from Europe, and the little town that I live in is banning any tourists after Monday. All good things to prevent the spread. I had to cancel my Panama Relocation Tours through the end of April and perhaps longer.
This is a great idea Jackie-I’ve missed the conference calls.
I am holding off on Doorknocking for now. I don’t want to put people at risk and I don’t want to put myself at risk. It’s really unfortunate. I think I will have to switch over to cold calls to FSBOs and such. Rates are at an all time low, so I think there is lots of opportunity now.
As for “the panic” it’s everywhere, and I’ve learned never to underestimate the power of a large group of stupid people.
I’m looking forward to the call. thanks for the reminder about Jack’s class.
The impacts will be huge.
Already, here in Maryland, title companies are warning of trouble with clearing title due to courthouses being closed, home inspectors are asking that buyers and realtors not to attend inspections, people are avoiding attending (and holding) open houses, sellers are concerned about having strangers walk through their houses.
Military moves have been delayed for 60 days.
People will have trouble making house payments as the economy shuts down.
New York City just issued a temporary moratorium on evictions.
https://www1.nyc.gov/office-of-the-mayor/news/143-20/mayor-de-blasio-provides-on-new-york-city-s-covid-19-responseJack Miller’s “Financial Strategies for Uncertain Times” ebook seems pretty dead-on in another quick scan of it today.
My powder is dry, but all this QE is going to make it worth less and less. I think Jack’s advice is to transition into leveraged real estate with rock-bottom fixed-rater mortgages. Notes will lose value to inflation, so less good. You just hope that the rental controls won’t go crazy and prevent the former from being viable.
Do I have that right, Jackie?
Bill, you’re exactly right. Sadly, the Covid 19 virus will really hurt the global economy in ways we cannot even imagine now.
Simon Black, from sovergnman.com predicts this:
Banks are about to drown in an ocean of defaults. I’ll talk about this a lot more in the coming days, but briefly:
There’s $250 TRILLION in global debt right now– mortgages, credit card debt, business loans, government debt, etc.
And banks own a large portion of that debt.This virus crisis is going to trigger a wave of defaults from consumers, businesses, and even governments.
Think about it: tourism alone makes up 10% of global GDP. Revenue in that entire sector– hotels, airlines, cruise ships, etc. has collapsed, and many of those companies aren’t going to survive.
The crash in oil prices is going to wipe out countless oil companies.
Many large retail chains, which were already struggling in the age of e-commerce, will likely declare bankruptcy.
Countless businesses around the world have ‘temporarily’ closed due to public health policies, and many of them will go out of business entirely.
MOST of these businesses owe lots of money to the banks, whether it’s a small business working line, or the $34 billion in debt that American Airlines owes. So the defaults are going to be massive.On top of that, millions of people are going to lose their jobs and be unable to make payments on their credit card debt, auto loans, and even mortgages.
Again, there’s $250 trillion in global debt right now. Total bank capital worldwide is less than $10 trillion.
So if the coming defaults trigger a mere 4% loss in total debt, it will exceed the entirety of global bank capital.
And this doesn’t even take into consideration the impact of the $1 QUADRILLION derivatives exposure.
This looming wave of loan defaults over the next few months could spark a crisis in the global financial system that completely dwarfs what happened back in 2008.
But it also presents opportunity for those who know what to do. I hope everyone can be on the Conference Call!
Here’s a good video by Brandon Green on dealing with tenants who can’t pay: https://www.youtube.com/watch?v=1CLa0UJCn3w
Also I’m sure you all have seen that Freddie, Fannie, and BOA are making it easier to defer mortgage payments.
I’m sure David Tilney will have really good ideas for us too!
Mortgage applications plummet 24%
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