May 2020 updateUncategorized
I’m not sure if April flew by or if it was the longest month in history, but we made it through and are looking forward to warmer weather and end to the daily downpours around Boston.
A couple of relevant notes on the real estate front:
- The good news for multifamily investors is that rents are still coming in despite surging unemployment. The National Multifamily Housing Council has tracked 80% collection for May 1-6, compared to 78% in April. Last year, May collections were actually behind April (82.9% in April 2019 / 81.7% in May 2019). May 2020 collections should track towards ~95% by the end of the month as a chunk of tenants regularly pay rent mid-month.
- Home prices are going up as the supply of new listings dropped faster than demand, and the median home price rose 8% year-over-year to $280,600 in March. There are signs of purchase demand increasing, as mortgage transaction volumes are rising after plummeting in March.
Rental portfolio update:
The main headline is that people are paying their rents. For our multifamily portfolio – we’ve collected 100% of expected payments in April and May.
We have one single family rental that I self manage, and is rented to the only tenant who has fallen behind on rent. She is an LPN who works at a nursing home and has had her hours reduced due to COVID. While we planned to sell the house this spring when her lease expired, we agreed to extend her lease until the fall due to her concerns about moving and funding another security deposit + 2 months rent while underemployed. We’re confident she will catch up on her payments and are glad to be in a position to help her. Our bank has also agreed to defer our mortgage payments for the next few months, so our bottom line cash flow has not been significantly affected.
The secondary headline is that people are still looking to rent apartments. The five-unit building we purchased vacant back in February has already seen three units leased since we started marketing early-April.
With these factors coming to light, as well as the end of the NH eviction moratorium, we are moving forward with our new 8 unit Manchester acquisition. This should be a great addition to the portfolio with strong cash flow and in the path of progress. If you’re interested in learning more or investing with us, let me know and I will get in touch with more info!
Active development projects:
As mentioned last month, Mayor Walsh issued a city-wide construction ban in Boston mid-March. These bans are set to lift in phases with caveats and restrictions, including COVID safety plans. This is good news for the Saratoga st. project, which can hopefully ramp back up as soon as we get the green light from the city.
We’ve amped up our social media marketing efforts for The Spencer Flats and have seen some great results. Once the 28 modular boxes arrive on site, we’ll begin to engage more aggressively with our digital leads and broker network to pre-sell as many units as possible.
Reading: The Willpower Instinct by Kelly McGonigal. When quarantine life started, I thought of all things I could get done. I would read, write, and take advantage of the extra training time for the Boston Marathon. Instead, I snacked. I snacked hard. This book is a great blend of science, theory, and practical actions to help understand the science of willpower and how you can use it to improve.
Exploring: It had been a while since I spent time on Bigger Pockets (the #1 place to go if you’re interested in getting started with real estate investing), but in times like these its an invaluable resource to see what’s going on in the trenches. There have been tons of great forum posts, blogs, and podcasts recently. They also built a COVID resource center compiling relevant guides all in one place.
Watching: Volnay Live with Catalyst Development’s Gene Voloshin. My friend Ricky started a new Instagram Live series and featured one of the top developers and custom home builders in the Boston area. Gene got his start after purchasing a house, hiring a general contractor, and having $100k stolen by the contractor who never finished the job. After taking over the permits for his own home, he fell in love with development and is now one of the most well known developers in the area.
Thanks for reading and please give me feedback by responding to this e-mail. What do you want more or less of? Let me know!