Dallas-Fort Worth Real Estate Investor Club

COVID CHAOS

  • 20 Mar 2020 2:53 PM
    Quote
    Message # 8845757
    rockne ardoyno

    Landlords can't evict. Banks can't foreclose. So, landlords are now strapped into seats on a plane that is in a nosedive and certain to crash. If tenants decide not to pay rent, and landlords stop paying the mortgage, even with a lender forebearance or deferral, the loss is fully absorbed by the landlord who will in the end be left with a uncollectable judgement from some Justice of the Peace.

    This sets the stage for the probability of an unlimited and indefinite equity transfer from property owners to lenders. So, since mortgages account for the largest portion of most households monthly bills. Basically, the Fed is deliberately trying to insure that the majority of the economic burden resulting from this crisis comes from home equity. 

    Also, why would any lender fund a new loan under these conditions.




    Last modified: 24 Mar 2020 10:29 AM | rockne ardoyno
  • 21 Mar 2020 10:19 AM
    Quote
    Reply # 8846818 on 8845757
    Neil Aggarwal

    Rocknye:

    In response to your last question about lenders, here is my point of view:

    I have no problem making new loans right now.  As a matter of fact, I am supposed to close one early next week.

    Most foreclosures do not go through the courts, they are handled by a trustee.  I do not believe that is restricted.
    Even if they are restricted, the foreclosure ban will be lifted in a month or two.

    So, if the borrower does not make the payments, I will eventually get the property at something close to the 70-80% LTV I lent on it. That is not a bad result for a lender.

    Don't take this wrong.  I do not want to foreclose. I don't force borrowers to take a loan.  They have to be aware of the risks and understand what they can handle. I do not want to enforce the deed of trust. But, if forced into it, I will do what I have to do to protect my money.

    Thanks,
      Neil Aggarwal
      Property Financing, LLC
  • 21 Mar 2020 9:14 PM
    Quote
    Reply # 8847591 on 8845757
    Robin Carriger (Administrator)

    The emergency order issued by the Texas Supreme Court on Thursday regarding evictions expires on April 19, 2020, so there's NO reason to panic.  Evictions can still be filed, but processing them will just be delayed until after the order expires.  Tenants would, IMHO, be extremely unwise to try to exploit this order by not paying their rent if they could pay it, AND by April 19, the US government should've already paid most of them an amount that will more than cover their rent as part of the Coronavirus Stimulus bill the US Senate is hashing out this weekend.

    For what it's worth, anybody who owns property should, as a basic part of asset management, keep several months of mortgage payments and other expenses in reserve at all times, so they can endure black swan events like this.

    BTW, the full text of the emergency order can be found by clicking here.

    Thanks,

    Robin
  • 08 May 2020 12:49 PM
    Quote
    Reply # 8956039 on 8845757
    Deleted user

    So now the moratorium has been extended to May 15 or there about. But AFAIK Tarrant County still maintains the position of postponing evictions indefinitely. 

    I have one property that was in an eviction situation since well before this started. This tenant has taken advantage of me all year. (I could have had a judgment in March, but a property manager SCREWED UP the paperwork so I had to start over.) The "lease" was up in April...

    Does anyone have any creative ideas for dealing with this so I can stop the bleeding? 

    Thanks
  • 08 May 2020 5:53 PM
    Quote
    Reply # 8956619 on 8956039
    Neil Aggarwal
    P Robertson wrote:

    Does anyone have any creative ideas for dealing with this so I can stop the bleeding? 

    I assume you sent them a notice of termination of the lease and a demand for them to move out.

    Have you filed the eviction petition?  If not, do that.

    Unfortunately, I think you have to wait until the courts will schedule an eviction hearing.
    Doing anything else could get you in legal troubles.

    Sorry I can't provide a better answer,
      Neil Aggarwal
      Property Financing, LLC
  • 11 May 2020 1:28 PM
    Quote
    Reply # 8961590 on 8845757
    Deleted user

    All the lenders we were working with are not lending and only a family office & a couple debt funds are. Pretty much ever licensed lender is NOT lending except for a few, and good people like Neil.

    And that also means many are not lending at as high a LTV as they were. I was trying to get a Ramada in Atlanta funded @ 70-75% LTV and they dropped the bomb today they won't go over 55% LTV, so you need a lot of cash and they don't want to be in deals at the old rates should they have to take it back. Its easier to sell and make something back at the lower LTVS.

    Neil, what LTVs are you loaning at now?
  • 12 May 2020 11:19 AM
    Quote
    Reply # 8963693 on 8961590
    Neil Aggarwal
    Chris Winkler wrote:

    Neil, what LTVs are you loaning at now?


    I mentioned 70-80% LTV in my post above. 
    I have not changed my business model since I take a long-term view. 

    Will the market dip?  Probably.
    Will it dip by something dramatic, like 50%?  Not likely.

    Whatever happens, it will come back.  I keep reserves to ride it out.

      Neil Aggarwal
      Property Financing, LLC
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