What a crazy time to be alive.. right?! As many of you know, COVID-19 has affected many people and businesses. In March 2020 when the United States went into lockdown, many people were horrified. Nobody knew what was going to happen. Businesses were closing their doors and no one wanted to leave their house. At this time for investors in the middle of flipping a house the question came.. What do you do when your business is based around Real Estate Investing?! You can’t just stop!
Challenges we faced in Q1 & Q2
Challenges we are facing now (Q3 & Q4)
- Active Projects During COVID-19
We were in the middle of a few projects. A couple of which contractors refused to continue work. Talk about stress! In this line of work, TIME IS OF THE ESSENCE. The faster your projects get completed, the better. So what do you do now? Stop? This is hard considering the bills don’t just stop. Well this happened, even if it was to prioritize everyone’s safety, it was still a challenge. With that, came more stress because we had no clue what to expect.
- Selling During COVID-19
We had houses listed at this time, and yes, they sat on the market longer than expected. Showings were difficult, if they happened at all. People were skeptical about going to look at houses for fear of contracting the virus. Not only that but, who would want to move in the middle of a pandemic?
- Market Change After COVID-19
As stated above, we were in the middle of multiple flips and didn’t know how much the market would change by the time they were completed and ready to sell. All we could do was continue with our plan and prepare to the best of our ability for all possible outcomes.
- Private/Hard Money Lending during COVID-19
At the beginning of all this, most of the lenders we worked with put everything on pause. We had in process deals and the lenders were dropping off the face of the planet, we had to move quickly and find lenders who were still lending. Most were no longer lending on properties and some increased their rates. It was hard to find Lenders whose rates weren’t through the roof or lending at all.
- Increase in Material prices
What we are seeing now is the prices for material rise due to companies not being able to keep large quantities of things in store. We’ve ran into a lot of products on “Back Order”. Vendors are less likely to carry costs. IE: Pre-COVID19, we had suppliers that would carry costs for 60-90 days. Now they are set at 45 days or less. We’ve had to adjust and order ahead and in bulk if possible so we don’t have to wait for materials.
- Increase in Housing prices
Yes, you read that right… Housing prices are through the roof right now in some markets! Whether you are buying or renting expect to see an increase in these numbers. Good thing for buyers is rates are in a good place right now so if you are looking to buy, get on it!
- Market Changes
You can google “What will the housing market be like in 2021” and get many different answers, but nobody can project the future. Now we have to look at what to expect the market will be like in the future when the project is done. Depending on the size of the project this can vary from weeks to months down the road. As you know so much can change between now and tomorrow so we do our best to account for the unexpected.
Lenders are still adjusting their criteria. We continue to follow up with them to see what changes they are making. Most of our lenders opened up again but have become more strict to whom and what they lend on. Especially commercial properties and what types of businesses are in those properties can make or break a deal, or make it more complicated to find funding. IE: Finding a lender who is willing to lend on a restaurant or a movie theater right now, would be tough.
Although things are starting to get better, there are still many things that are being affected and will continue to for quite some time. Investing in Real Estate during COVID-19 has been tough. What can you do, change with the changes! Be flexible and ready to adapt. Did your business face any other struggles during this time?
-Legacy Frontline Team