Acquiring Property During COVID 19?
Hi everyone. 

I just received an accepted offer on a property I’ve been looking to acquire for over a year in the suburbs of NY. 

The price is very ideal, but in a healthy economy/environment. 

What are your thoughts on pursuing this deal or trying to drag it on?

My accountant and my attorney are telling me they think I should table it. 

However, I’m trying to get creative and try not to lose it. 

Perhaps a COVID clause? (Anyone have anything to share?)

Request longer DD?

I made my offer subject to the delivery of all tenants current and up to date in rent.
[{"id": "fmg22rl", "text": "Retrade. It\u2019s damn near impossible to get debt right now.", "replies": [{"id": "fmgg8ze", "text": "This guys right, without a commitment from your lender it\u2019s worthless and they can wake up at any point in underwriting, bail on you, and leave you to figure it out. It\u2019s a bad practice but it just happened to thousands of borrowers across the country. Unfortunately most of the time the rep you speak to is a front office loan officer who\u2019s just focused on production and is not getting the guidance from credit on how to underwrite deals in this environment because credit is trying to figure it out themselves. When this feedback does trickle down, the bank won\u2019t be the one holding the bag and losing money, they\u2019ll just walk or retrade.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmg2v5i", "text": "Colorado has a new legal COVID-19 Addendum for contracts and I assume many other states do as well.  If you continue pursuing the deal, it could be helpful to have in your back pocket if you need the extra time or to terminate.\n\nI just got 3.38% on a 5 year deal (multifamily, A-location) from a regional bank.  Deals are definitely still happening, just need to lean into your connections/network a little more.", "replies": [{"id": "fmg7mgp", "text": "I appreciate the through response. I hear ya. That\u2019s why the majority of my investments are apt houses. No matter what, everyone needs a place to live. \n\nWhat are your thoughts on pricing of property in general in the foreseeable future?", "replies": [{"id": "fmgcvn0", "text": "We have to wait and see what the real collection numbers look like for April and May.  Until we know how much rent is being collected, I think valuation is a crapshoot and anyone that wants to sell will have to be willing to accept a big haircut - my current guess is around 30% at current.  Tough to say with unemployment climbing by the day.", "replies": [], "depth": 3}, {"id": "fmgftur", "text": "No one knows but I look at as risk vs reward, or simply do I think the economic and supply vs demand metrics will improve in the next 12-24 months? I personally do not. Risk, do I see the underlying metrics declining in the next 12-24 months? Yes. \n\nThe million dollar question is how much? And no one knows because this is an unprecedented event that\u2019s causing abrupt economic shock (we can already see unemployment hitting records just in 2 weeks). So my risk vs reward analysis is pretty simple, nothing in the data makes me think we\u2019ll see even a 5% increase in value in the next 12 months and the risk side I don\u2019t know but I think it could be massive. \n\nIf you really want the property I\u2019d ask for a long DD period to see how the next few weeks shake out, the seller should understand this. I believe you\u2019ll see much less expensive deals 6-12 months from now relative to today because all of today\u2019s pricing are based on trailing data and everyone can agree that\u2019s radically changed in the last couple of weeks.", "replies": [], "depth": 3}, {"id": "fmggrmb", "text": "Regardless if the SBA or fed is handing out money for rent, it's not gonna be pretty out there.  Rev is gonna drop, values are going to drop.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fmgdh1e", "text": "California here. I\u2019m on the residential side, but we got \u2018em, too.", "replies": [], "depth": 2}, {"id": "fmggwa6", "text": "Mortgage broker here. That\u2019s a great rate try and commit that ASAP. Fannie / Freddie are in the low 4s. Is that loan non-recourse, 30 year am?", "replies": [{"id": "fmgibhu", "text": "Full recourse unfortunately, but 30 year am.  Freddie and Fannie are nuts right now - I don\u2019t know how anyone\u2019s going to get anything done with that new reserve requirement!", "replies": [{"id": "fmgipdj", "text": "Lol yeah my clients aren\u2019t happy but careful too much recourse could be an issue at high leverage points across your portfolio. In some instances it really inhibits the ability to scale acquisitions because lenders may consider that a liability when underwriting your REO. In other words, if you already PG 5 75% LTV loans, they may not want to be #6. Happy to help sometime in the future.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmgd0rw", "text": "I think it just depends on if you can afford to hold it for a few months if some of those tenants suddenly lose their jobs due to the pandemic.  This will suck for a lot of people and it's unknown how long, exactly, it will take for some people to get back on their feet.  It's possible the seller is trying to get rid of it because they're not sure if they can risk it.  If you can't, table it.  If you can, it could be a great deal in the long run.\n\nAnd...will the rents be sustainable if we're in a long term recession.  As you said in a comment, people always need a place to live, but cost is a factor.  \n\nI would think of the minimum rent you think you might be looking at for the area.  If you can afford that, then go for it.  It will only get better as things recover.  But if you need the highest rents for the area in a good economy, don't risk it.", "replies": [], "depth": 1}, {"id": "fmgd85t", "text": "I think in this environment you should extend as long as the seller will let you \u2014 sellers should be willing to extend for a long time...", "replies": [], "depth": 1}, {"id": "fmgg1pk", "text": "You won\u2019t get it financed right now. Full stop. If you can pay cash sure I guess but I don\u2019t know why you would, April and May are going to be a collections / default blood bath so value is going to be drastically different in a few months (hopefully not... praying not... but who knows 4 weeks ago we wouldn\u2019t even be having this conversation)", "replies": [], "depth": 1}, {"id": "fmggnit", "text": "As far as DD, maybe put financing contingencies and collection clauses in your contract. In other words, ask for the sellers bank statements to see if he\u2019s collecting the entire rent roll. As far as financing, add a contingency that allows you to back out or extend the contract if your lender retrades or pulls back (refer to my comment from a min ago on someone else\u2019s comment about financing).", "replies": [], "depth": 1}, {"id": "fmgj16v", "text": "If the price is right there is money to be made by all means. \n\nMy impression as a rental most people do not have the means to pay so you need to plan 3 month vacancy.  \n\nUnless it is in a desirable neighborhood I do not envision homes price will go up after Corona is over.  In fact I suspect home prices will be lower possibly through a mild recession. Trump hinted it was coming.", "replies": [], "depth": 1}, {"id": "fmgo3ws", "text": "I\u2019ve been seeing lots of DD extensions in offers. What was 60 or 90 days now turning into 180-220 days.", "replies": [], "depth": 1}, {"id": "fmgu33e", "text": "I work for a PE CRE company with a principal that has about ~$1 B net worth and a good portion of that in cash. We can\u2019t get any reasonable debt on long term, credit tenant, STNL deals even with recourse right now. \n\nUnless your debt is lined up don\u2019t put any money up hard.", "replies": [{"id": "fmhvz0c", "text": "Similar situation here Albeit larger AUM. We\u2019re still doing deals and getting NR debt. Though we\u2019re leaning heavy into the relationship banks. Try that out?", "replies": [], "depth": 2}, {"id": "fmjkgwb", "text": "Where are you guys seeing buy opportunities right now? Looking to scoop up some assets myself", "replies": [{"id": "fmjobe8", "text": "If you're looking for a good deal, there is not much to be had right now from our perspective. It will probably be 6 months before the great deals are to be found. \n\nWe are looking for assets in the $10 - $100 M range though so for smaller buyers there may be deals out there already.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmh0zck", "text": "Any deals I' currently doing or offering on .... I' making sure the closing has built in extensions and seller must put 2/3 months of rent into escrow, to cover any lose of rents due to Covid.\nOther than that ... I'm 100% looking for deals and going 100mph in doing so.", "replies": [], "depth": 1}, {"id": "fmhbygd", "text": "Do they still allow showings? I hear virtual tours are getting popular during this times.  I'm from Chicago so I only use ZUmbly", "replies": [{"id": "fmhn9fp", "text": "It's hard to go out and risky for you, the client, and the tenant (if there is one)", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmjz3cj", "text": "A few things I\u2019ve seen to keep deals moving forward with the crises have been:\n\n- COVID clauses\n- Seller guaranteeing rent for 60 days\n- DD extensions\n- Discounts for rent roll changes\n\nYour attorney\u2019s job is to protect you, so they are right to advise you table it, but with risk can come return so only you know the value of the deal to you and what risk you\u2019re willing to take to keep it. Tabling the deal means you may risk losing it.\n\nHope that helps!", "replies": [], "depth": 1}]