COVID-19 Check In
What a crazy couple of months! Here is a quick update on the state of Engineered Cash Flow during these unprecedented times.
Rental collections
As far as the portfolio in April and May, I'm happy to say that we are all caught up on rental payments! I attribute a lot of this to my property manager, who has taken a smart approach to the whole situation. He has been proactive with tenants, and has made it clear that rent payments are not optional and that we are willing to work with tenants as long as they proactively communicate. With Philadelphia starting to open up its economy, I'm optimistic that things will continue to stay steady and improve on this front.
Vacancies
Both vacant new properties that we finished rehabbing were fulfilled during April at the pre Covid market prices that our Pro Forma was targeting. It just shows you, people always need a place to stay regardless of what's going on in the world. Yet another reason I love investing in real estate.
Stock Investments
Back in February, I cashed out my retirement funds at the stock market peak before Covid happened (I was liquidating for a large investment deal that ended up falling through). This happened to be perfect timing (although pure luck on my part). I then later entered some REIT positions at the bottom of the market drop and was able to snatch some 3-4x returns there.
While I am mainly a real estate investor, I am always looking for unjustified investment disruptions that I can capitalize on. I locked in the gains and at this point, have exited all positions. While I believe in the continued short term upward stock trend, I think that will only last so long against the economic headwinds that are brewing. I also believe that there will be some significant real estate investment opportunities towards the end of the year and I want to be ready for them.
Acquisitions
We have entered a new state for investments! Engineered Cash Flow is now in the great state of Texas. I am working with a team on the ground in the Ft Hood area that I met through investing in Philadelphia. Currently, we are closing on 5 units, which are collectively projected to cash flow at $1500/month. I'll create a follow up post on that deal, but our strategy is to double close on the bundle deal by selling one of the units to another investor. The sale of that property will cover the down payment for the bundle, allowing me to enter this deal with very little actually invested. The projected returns are looking very good! More details to come after closing.
W-2
As most of you know, I also have a W2 job in the engineering industry. While there have been quite a few layoffs across all industries, the company I am currently at is doing very well and is actually looking to grow considerably through these times. I am very thankful to be in such a position.
Refinancing
Back in February, we wrapped up two Single Family Rental (SFR) renovations (I'll be posting details about each of those projects in later posts). Both units were financed under 1 year bridge loans. Back in February, we were at the closing table getting those refinanced into long term debt. We had appraisals done, term sheets presented, and everyone was ready to move forward right when Covid happened. As some of you have observed, lending abruptly stopped at that point so we've been stuck holding those loans in the meantime. Luckily, I made sure from the start to have plenty of extra time after the projects were completed to be able to weather unexpected events like these, but it is definitely cutting into the property cash flow until we can refinance (still cash flowing even with the bridge loan, though!). Talking with various lenders, it looks like June 1 will be when we'll be able to get the ball rolling on these refinances, so the wait should be over soon.
How has your portfolio fared during these challenging times? Have you been able to take advantage of any of the opportunities that Covid has provided? Let us know in the comments below.
