Over the weekend, we shot a video to talk about the COVID-19 pandemic and how real estate investors are adapting to it.  You can simply watch the video below, or read the transcription – whatever you choose.  However, it's important that you know the situation, so please don't overlook this content!

Florida Real Estate During the COVID-19 Pandemic

So how are real estate investors adapting to the current COVID 19 pandemic? Well, I started seeing that adaptation occur the moment that we had a stay at home order, you know, real estate since I've been in real estate for over 20 years has always been a people business. It's a face to face business. I meet with sellers at properties, um, homeowners if they're facing foreclosure, I sit down with them. I explain a short sale, you know, we take pictures of properties. If I'm wholesaling and flipping a property, then obviously I'm going to need to have my buyers or my contractors come to the property to be able to do showings. You know, when I, when I go to my title company, if I'm doing a closing, I can, you know, sit there with my closing agent and sign all the paperwork. You know, that is the day to day of real estate.

But the reality is is that we've not only had some changes in technology, but all of the sudden having a natural crisis like this sort of forces our hands of this adaption that we have to make to the current situation. And technology is a great part of that. The first changes that I've actually seen or in our title companies, I know that our title companies are now working on skeleton crews. Of course, we're always appreciative that they are still operating because we still need to do our transactions, but we're not having that face to face closing. You know, the, the documentation that we signed. We can use certain things like DocuSign. DocuSign's not just something that we can use to sign contracts. You know, if a seller lives in another country and uh, and you're buying their rental property that they have here, they're tired of being a landlord and obviously, you know, you're not going to have that face to face with them if they're in another country.

(We recently wrote about drive through real estate closings.  These are a thing now!)

So DocuSign is a way to legally sign a purchase agreement, um, across, you know, even oceans. But the reality is, is that we can use that DocuSign technology, not just for contracts, but also for assigning any denims, any changes, closing documents, there are going to still need to be some documentation that's gonna need to be verified. Um, you're going to need to have a notary, but, uh, we can adapt to these things. If there are certain portions of a closing that needs to be notarized with your signatures, then obviously you know, you signing it, giving your driver's license, they can walk that into another room so that you keep that separation and they can still notarize the same documentation. It might take a little bit longer, but that can still be achieved in that way. So that's one thing that I've seen change. That's one area of, of adaptation is within our title companies, but it's also about dealing with sellers of properties.

You know, buyers and sellers a lot of times do their transactions face to face. Now I know with technology we've moved into, you know, virtual real estate, virtual wholesaling, virtual, um, uh, purchasing even, you know, you have groups that are in California hedge fund that's buying up properties here at the auctions or wherever and that is sight unseen. They're not going to the property. I'm not in every situation. They're not going into the property and taking pictures. Well now we're in a situation where our hand is forced to do a little bit differently. So you know, adapting to this. A couple of things. If I'm working with a seller of a property, I can't come to the property. I can ask them questions about the age of the roof and the AC, the electrical plumbing, get an overall condition of the property and then ask the homeowner to take the pictures for me.

I can guide them, you know, into to what exact pictures that I need and have them send that to me, even video as well, if that's what's needed in order for me to still do my research. I mean the majority of our research when we're making an offer on a property is public record. I do that from sending, you know, behind my computer. I'm looking at comparable properties, what has sold in the area. I'm looking at, you know, online services to tell me what permits have been pulled for that property. So I know that this legitimately get a new roof three years ago. So we still can't adapt to not being face to face. The social distancing. We can still have sellers take pictures of properties and things for us, and then same way with our buyers. You know, I'm not sending buyers to a property right now, especially if it's a homeowner where their family living there, we're not going to be able to do that, but I can send the pictures and everything to my buyer for them to do the same research that they were going to do online.

Most of our buyers, even though they might go and look at the property, you know, they're really just looking at the condition just to get their eyes on it, but they're going to come back and they're going to crunch the data. They're going to take comparables in that area, the after repair value, and they're going to, they're going to put that into their software program, whatever they use to punch out that number of here's what your offer should be on that property now and adapting to this and and utilizing some of the philosophy of sight unseen real estate that's been around for many years. Like I said, when people buy properties at auctions, at foreclosure auctions, a lot of the times they don't see that property. They're buying that property site unseen. But what we do as investors is we protect our investment. So what we're, what's going to be happening already, and it is going to be happening even more through this at 19 um, pandemic, is that we're going to start seeing people are going to start making a little bit lower offers, where I would take ARV times 0.75 I'm probably going to lower that to ARV times 0.65 or ARV times 0.6 minus my, my rehab costs.

But I'm going to start being more conservative on my offers now. So maybe you have to make more offers because if you're making more conservative offers, you're probably going to have less people take those offers. But still it's adapting to what is going on in the current situation. So these are just some of the ways that, you know, investors have to start looking at these things to make those changes. Now also talking to your homeowners. You know, we do have cell phones that have FaceTime, but you can also utilize, if you needed to talk to your title company and you needed to talk to your, your, uh, your buyer or if you wanted, if your seller wanted to see you. And if they don't have, you know, a smart phone, but maybe they have a laptop or computer at their home, you can use things like zoom, uh, which is great for doing online meetings where you can have audio and video and you can, you know, see each other.

Because again, sometimes, you know, a seller wants to to put a face to the name, so maybe you can still do it that way through video chat. By utilizing technology, we're still keeping our social distancing throughout these types of situations. Same thing for real estate investors and continuing their education and learning. You know, there's ways that, that now we can have online, uh, um, seminars, workshops that can be taught through a zoom platform where you can still have that audio and video, you know, and we just adapt to it. Instead of going to, you know, a REIA meeting instead of going to someone's classroom, now we're just doing it from behind the computer. So there's all kinds of different ways that we can look at this. Another change that I've seen recently with, uh, with this pandemic is our changes in marketing. Okay. You know, obviously right now door knocking is pretty much out.

Being able to go to a door, have that face to face and knock on the door and talk to that homeowner to get the rapport with them, uh, in order for them to, to, you know, to do the deal with this, whether it's a short sale where they're facing foreclosure or it's a tie to being a landlord or probate, we're not going to be able to do that face to face now. So now we're going to have a lot more cold calling than we did before. And we can still have direct mail, but I'll talk about that in a second. So cold calling is going to be effective right now, especially in regards to the fact that first of all, people are getting very bored sitting at home. Um, I guarantee that people are answering the phone a little bit more now because they're looking for somebody else to take it just to talk to.

Um, instead of the people that, uh, they've been talking to for the last, you know, 20 some days, um, and their household. So cold calling will be a little bit, I think, more receptive for people. But I also think that it's a way for you to connect with them. And that cold call, it doesn't have to start out, you know, just talking about I want to buy your house cash. You know, sometimes, you know, in the past when there wasn't a COBIT 19 pandemic, we'd cut more to the chase. But now you can still create that rapport by talking to them, Hey, how's the situation? Where are you and your family all safe and healthy? You know, just starting that conversation, you know, how are you fairing through this? You know, how's things going, you know, at the stay at home order. How much longer do you think it's going to last?

And just having that conversation, people love to have a common conversation about things. Especially you're both going through, you know, misery loves company. We're all going through this together. So having those conversations, people are going to be a lot more receptive to that. That can be, you know, your planting of the seed. Again, we might have to adapt to this. You might not be able to close that deal directly over the phone. And most homeowners right now, property owners alike, are not necessarily looking to sell those that are looking to sell, that are motivated right now. Great. I'm going to make you an offer that's a little bit lower than I would have, you know, a month ago because I'm already anticipating the market being lower. I'm already anticipating my buy. My buyers pool is already gonna shrink. You know, there's a lot of buyers that are not liquid that I basically have stopped buying right now.

There's a lot of hard money lenders that have stopped lending right now, but for those fires that are cash that are liquid, as long as the price is right sight unseen, there are still those properties to sell. Now, in regards to other marketing changes, you know, cold calling, direct mail, direct mail is is you know, has been dead for a while. Mass mailings. But in this kind of situation, if you have a different marketing message, a different little bit different strategy where you're reaching out to people and educating them about the COVID19 pandemic, giving them some updates on what's going on with their County, you know, what's going on with their court systems, how much longer evictions and foreclosures is going to be on hold. So by you keeping your finger on the pulse of what's going on, especially if you're connected with your local and national real estate investors association where where they're getting up to date information, then you're going to be able to, to relay that information and be a source of good information for your homeowners and your community.

You're just planting seeds. So you might not necessarily be able to close as many deals right now, but you're going to get a lot more rapport with a lot more people so that when this is over, then you can still be calling homeowners by the phone. Hey Mike, remember me, you know, I called you last week. We've been talking about the COVID 19 situation and this and that and that way, you know, creating that familiarity with them will give you an opportunity when they are ready to be able to come in and purchase the property. Possibly. Now we don't wish for these kinds of situations, but real estate investors in dealing with this and adapting to the, to this pandemic, um, are all looking for the same thing, which is going to be that opportunity. Unfortunately, there's going to be a lot of people that have been unemployed or they're going to be unemployed.

A lot of property owners, short term rentals, Airbnbs, people that can't afford the properties any longer. So there's going to be a lot of opportunity after this. Once the curtain is lifted and everybody is able to go back to their normal lives, people's lives aren't going to be the same. Some people's lives are going to be very effected by this. For some, you know, for for a length of period of time there's, or there's a lot of homeowners that were right on the cusp of getting that loan modification approved. Now if they've lost their job, that's not going to happen. So the way that I look at that as a win win situation, I'm not looking for opportunities to take advantage of people. I'm looking for opportunities to go out and make a win win. I want to go and help homeowners that are losing their houses because their banks aren't forgiving their mortgages or aren't forgiving payments that are missed and things like this that, that employers are still, you know, firing people and laying people off.

I'm going to go out and help those people. And advertently I'm going to make money doing that because when I come in to help a homeowner out of foreclosure or if I come into a homeowner that has a short term rental or a longterm rental that they can't afford anymore and I'm going to get them cash and get them out of that situation, now I have an opportunity at the same time. So again, it's not taking advantage of people. It's just taking advantage of the situation which none of us have any control over. Also, another aspect, um, besides marketing that has changed and the face to face transactions, I've also seen a big change in lending already within probably four or five days, a major lender, a national lender, uh, that I have a $5 million credit line with had already notified us that they are not doing the, the, the percentage of lending that they were doing before they've backed their, their lending down to I believe 70% is what they came down to.

Um, their origination fees and everything. We're, we're um, we're much more, uh, because they are mitigating their risk as well. There's been a lot of, of lenders that have pulled out because of the stock market because a lot of hedge funds and a lot of lenders, they are also in the stock market and they need their cash for their margin goals. So, you know, the reality is, is that that trickle effect of affecting some of the larger lenders that you were getting great deals from and cheap money, it's just not going to be there right now. However, there are going to be some local lenders that are cash that are liquid, that are going to see the advantage of this time and they're going to take advantage of it. So don't let them take advantage of you, but if they're going to charge you a little bit, you know, a extra percentage or a little, uh, you know, another point, then that's fine.

As long as the opportunity is still there, as long as you're still gonna make money, as long as you're being conservative on your numbers, then you, you know, you're going to be fine. So I have seen changes in that. I've probably seen, um, 40% of lenders that have, have, you know, either backed off completely and said we're not letting right now until the end of April or they have just changed the percentages. But you know, lending has absolutely been affected at this time as well. And you know, you have to think about these things because there's always going to be, um, affects positive and negative, uh, and any market. Now there's also another aspect to this of new opportunities. Again, I hate to say it, but there's a lot of people who got into Airbnb who probably didn't know what they were doing, um, who are over leveraged on the property and now they are not making any money.

They are paying only expenses and a lot of people cannot afford that. So right before the crash of the market, I was looking for Airbnb properties and now I'm gonna, I'm gonna really continue because I know there's just going to be those opportunities out there. Again, it's a win win situation. I'm going to help someone out of their Airbnb and cash them out so that they don't go into foreclosure or completely ruin their rep, their credit. And maybe they can start again, you know, in another year or six months. But that's going to be an opportunity for me to pick up some properties cheap. So there's always going to be, you know, like I said, negative and positive opportunities out of this. It's just the mindset of how you need to adapt to these things and how you need to think about these things. It's also important to, as an investor, especially if you're new to this business, to pay attention to things like this.

This is the not, not the last national crisis that we're going to have. You know, we have hurricanes and God forbid we have another virus that comes out next year. Um, you know, there's all types of things that can affect our economy and as soon as the economy is, is affected, real estate is always gonna be affected. So you could use this time to start educating yourself to start seeing the signs and pay attention to successful investors around you. What are they doing? What is their mindset? So there's an opportunity for you to learn, um, about adapting to this, you know, COBIT 19 pandemic. So that's just some thoughts for myself. You know, being a real estate investor for the last 20 years, I unfortunately went through the crash for the market in 2008 which this feels a little bit like that just in regards of some of the signs that I'm seeing, the increases of foreclosures that we'll see over the next month or two.

And I wasn't smart enough, um, unfortunately to survive the craft for the market in 2008 and that's why I lost everything. But I educated myself and I learned that hard lesson and you know, I'm prepared now, you know, now investors that have cash that are liquid are going to be able to again, take advantage of the situation, not take advantage of property owners. So that's adapting to the coven 19 pandemic. Hope that you guys are all safe and healthy and, um, we're going to get through this one way or the other and just pay attention to the signs and see where the opportunity is after.