Senior Renters Are Attractive

As families migrate away from the high population concentrations of the northeastern cities, looking for more space, a lower cost of living, expanding employment opportunities, and lower taxes, they are likely to bring along their senior members who tend to retire close to family. These seniors will need housing, and despite the health crisis that has occurred in skilled nursing settings across the country during the pandemic, other senior living environments, such as independent living, assisted living, and memory care communities can still claim that seniors are better off in their care versus at home (MHN article). Independent senior living is attractive because seniors can be protected from uncontrolled interaction with younger family members better in an apartment than in a single-family home where multiple generations live together.

Photo by Tristan Le on Pexels.com

For investors in and operators of senior living communities, seniors make attractive renters because they do not depend on employment income to pay their rent. According to a July 16, 2020 MHN article, rent collection in the senior living real estate sector has remained strong during the pandemic. For other commercial real estate multi-family sectors, federal unemployment benefits and loan and rent forbearance measures have bolstered rent collections for a few months, but the true rent collection and apartment occupancy picture in the long term will not begin emerging until after the end of July when government unemployment benefits expire. It is uncertain how many renters will be able to keep paying their rent, how many vacancies will be created, and how rental rates will be affected by the withdrawal of federal program support.

According to the National Multifamily Housing Council, 87.6 % of renters made full or partial rent payments by July 13. That is slightly down from a month ago and from the same period last year.

Marketing a senior living community may require appealing to the adult children of seniors as much as to the seniors themselves. According to Brett Gelsomino, Vice President of ZOM Senior Living some amenities to consider in new multifamily rental construction projects for seniors and in remodeling projects include amenities that ZOM is putting in its South Florida communities:  walkable locations nearby, pools, lounges, dining venues, library, and business centers, garage parking, valet service. He expects that there will be pent-up demand for senior living communities by mid-2022.

Demand for senior living communities could rise as soon as the covid-19 pandemic expends itself and people can move about again. Hopefully by 2021. Who knows? If you have the funds and the desire, building through low economic times is good for the economy and good for your mental wellbeing. If you need funding, apply now.

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I am working online with the rest of you.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References:

Laura Calugar, Multifamily Housing News. https://www.multihousingnews.com/post/close-up-on-south-floridas-senior-housing-sector/ July 16, 2020.

IvyLee Rosario, Multifamily Housing News. https://www.multihousingnews.com/post/national-multifamily-report-may-2020/ July 19, 2020.

Multi-Family 2020

Investing in, constructing, renting, and remodeling healthy multi-family living environments is still important and even more important now that the coronavirus has rubbed our faces in the dangers of living and working close to other people. Since more land has not materialized in most cities to give us more room to live on and in, builders and investors need to be creative about how to design or redesign compressed housing that will prevent and control the spread of an infection that is viable in air and on surfaces. People are and will be looking for homes that keep them safe from infection.

The Problem of Close Quarters

The necessity of elevators and lobbies, as well as the cost of swimming pools and on-site gyms they pay for but cannot use are scaring renters away from large apartment complexes. These are the places where dwellers must maneuver around each other in tight spaces, share air for minutes at a time, and touch buttons and handles others touched just moments ago.

Photo by San Fermin Pamplona on Pexels.com

Consider in Your Budget Some New Things

To update your multi-family housing project in this time of coronavirus spread, include in your remodeling budget something new, such as, touchless and voice technologies that can improve the safety of getting into or out of a home without touching contaminated surfaces, new air handling technologies that vent air to the outside and clean air within an elevator or other room after each use.

If your project has many units on multiple stories, you may need to consider some robotic or AI technology that will keep the number of occupants in an elevator down to one at a time. Perhaps the elevator itself could be modified into a capsule that only holds one person at a time, a capsule that could be disinfected and dried automatically between uses. Ah that will be expensive. Some complexes would require numerous elevator capsules.

Photo by Miguel u00c1. Padriu00f1u00e1n on Pexels.com

It looks like fighting the virus will not be energy efficient. Supplying cleaner air includes containing contaminated air or exhausting it to the outdoors, diluting the virus in the air by injecting clean and filtered outdoor air, and cleaning the air within a room. Any of exchange of air with the outside will make temperature control more difficult and less energy efficient. Thus, to make your multi-family housing as safe as possible, you will likely need to install larger electrical capacity.

Smaller Price Tag for Separate Entrances

If a large complex seems to come with a price tag that is too high, there are smaller multi-family investment projects that have designs that handle the problem of indoor common areas by doing away with them. Small apartment buildings, duplexes, and joined houses work well as rental investments. They include individual entryways and even small yards or gardens.

Small units of 2 to 5 homes can easily be designed with individual outdoor entries that meet social distancing requirements. In one design I recently studied online at http://www.houseplans.com, the complex included 5 units. Each house was three stories, but the overall complex was only one housing unit tall. All homes included a ground-floor separate entrance. Those that had garages had two entrances counting the front door and an entrance from the garage.

Although this design might not be great for seniors because of the stairways, I found it a manageable complex size that allowed each home to be independent. Each unit in this design is roughly 1170 sq. feet with 2 beds, 2 baths, 3 floors, 1 garage, 3 levels, and separate outdoor entries. The garage and second bedroom or home office were on lower level. The living room, dining room, and kitchen with washer and dryer and utility room were on the second floor. The master bedroom, bath, walk-in closet and roof-top deck were on the third story. Five printed sets of plans cost $950.00.

If you need funding for your project, apply now. I am working online with the rest of you.

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Patrick St. Cin

W – 512-213-2271

Patrick@REICapital.cash

http://www.reicapital.cash/

References

https://www.houseplans.com/plan/5850-square-feet-2-bedrooms-2-bathroom-luxury-home-plans-1-garage-33631

Tax Backlog

National Taxpayer Advocate Erin M. Collins released her first report to Congress June 29, 2020. She was sworn in on March 30, 2020 while IRS offices were closing one by one across the country. The IRS has begun reopening its operations, but it will take some time before they are restored to full capacity. The disruption caused by the COVID-19 pandemic has had an enormous impact. These are the general taxpayer challenges she presents in her report. Her report can be found at irs.gov.

Unopened Mail and Paper Returns: Among the taxpayer challenges arising from COVID-19, and a challenge for the IRS (I might add) is the about ten million pieces of unopened paper mail sitting in trailers at IRS campuses.  The IRS could not process or respond to written correspondence from taxpayer because their operations were shut down during the coronavirus pandemic.

Taxpayers who filed a 2019 paper return and are entitled to refunds may be in for a long wait. The IRS had to suspend the processing of paper tax returns, and as of May 16, it estimated it had a backlog of 4.7 million paper returns. Although the IRS is reopening some of its core operations, it is not clear when it can open and process all the returns sitting in mail facilities.

Delayed Flagged Returns: All tax returns claiming refunds are passed through filters designed to detect identity theft and other types of refund fraud. Some of these filters produce “false positive rates” of more than 50 percent (meaning that more than half the taxpayers whose returns are stopped by certain filters are entitled to the refunds they claimed). Affected taxpayers are often asked to mail in documentation to substantiate their claims, but the IRS has not opened or processed many of their responses, delaying their refunds. Refund delays can have a significant financial impact on low-income taxpayers, as refunds often constitute a significant percentage of their annual household incomes. Notably, some of the refund delays have been generated by claims for the earned income tax credit or additional child tax credit.

No Taxpayer Assistance: Taxpayers who have needed help from the IRS have had difficulty obtaining it. The IRS shut down its Accounts Management telephone lines on March 21, 2020, so taxpayers could not reach a live assistance by telephone. The IRS shut down its Taxpayer Assistance Centers on March 20, 2020, making it impossible for taxpayers to obtain in-person assistance. The IRS also shut down its mail facilities, so it was unable to log or process taxpayer responses to compliance notices.

There was a substantial reduction in Volunteer Income Tax Assistance, Tax Counseling for Elderly, and Low-Income Taxpayer Clinic services.

Photo by Nathan Cowley on Pexels.com

Confusing Old Dates on Compliance Notices. IRS systems prepared over 20 million notices during the pandemic that could not be mailed due to closure of notice production centers between April 8 and May 31. The IRS is mailing these notices now. However, some collection notices bear old dates and include response deadlines that often have passed. The IRS plans to include “inserts” with these notices explaining that response deadlines have been postponed, but the report expresses concern that receiving compliance notices with response deadlines that have passed will be confusing and concerning to many taxpayers who may not read the inserts.

In addition, The National Distribution Center was shut down, depriving taxpayers of a means to acquire pre-printed forms.

The only resources readily available during the coronavirus shut down were IRS.gov and automated telephone lines.

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Your local advocate’s number is in your local directory and at Taxpayer Advocate Service – Contact Us.

If you need funding, apply now. I am still working online.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

Photo reference: Edvard Munch between 1893 and 1910.

Deferment Fog

Although real estate agents are seeing increases in inquiries about homes in the suburbs compared to the same period last year and house sales are up slightly in the second-home market, consumers are not applying for as many loans and banks are not lending as much.

Millions of Americans, 29 million, filed for unemployment last week for the first time according to Investopedia.com, slightly more people than expected, but less than the previous week.

As they lost their jobs or were forced to close their businesses, homeowners who could not make their mortgage payments asked their mortgage servicers for permission to pause their payments. Once a rare occurrence, the number of accounts in deferment, forbearance, or some other form of relief rose to 100 million between March 1 and the end of May according to today’s Wall Street Journal article by Anna Maria Andriotis.

For lenders and borrowers, these are difficult times because the coronavirus stimulus package includes a provision that says lenders that allow borrowers to defer their debt payments cannot report these payments as late to the credit reporting companies, making credit scores an unreliable marker of how a borrower is doing paying their loans back.

Banks are pulling back on credit because lenders are having a difficult time determining if applicants’ credit scores and credit reports reflect their true levels of risk. Not only do they not know who to lend to, but they cannot tell how much their loan losses will be if the economy remains a mess.

Across the board, lending standards have been tightened. Even mailed credit card solicitations fell from 316 million in February to 74 million in May. (Wsj.com)

It takes more work to find borrowers who will pay their loans back. A lender will have to sort through more data. Some lenders are asking borrowers for permission to look at their payment history on accounts not appearing in their credit report and to analyze their banking accounts.

If you need funding, apply now. I am working online with the rest of you.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References

Andriotis, June 29, 2020, Flying Blind Into a Credit Storm’: Widespread Deferrals Mean Banks Can’t Tell Who is Creditworthy, available online at https://www.wsj.com/articles/flying-blind-into-a-credit-storm-widespread-deferrals-mean-banks-cant-tell-whos-creditworthy-11593423001?mod=hp_lead_pos5

Migration Boom

People are moving. Single-family houses in the suburbs are opportunities real estate investors should consider.

According to an article in Mansion Global, apartment living in densely populated urban areas is already losing its appeal to Americans as they process their experiences during the coronavirus pandemic. Many people are eyeing options for relocating to the suburbs and a single-family home after facing the challenges of coming into contact with infected individuals in apartment building common areas and restrictions on their use of outdoor spaces like pools and game rooms.

Buyers crave —ROOM— living space, outdoor space, privacy, flexibility, and safety.

When you are researching a purchase of a rental property, evaluate:

  1. Is there room for an office in the house?
  2. Does the house have a good-sized yard?
  3. Is there a pool in the backyard?
  4. Is there a deck or porch that offers a sheltered option to living indoors?
  5. Is the neighborhood safe to walk around in at night?
  6. Is there a neighborhood association and is it restrictive?
  7. Did local authorities try to restrict people’s use of their yard during the pandemic?
  8. Consider taxes. People are richer in states where taxes are lower.
  9. Big or tiny, single family homes in suburbs near major cities offer good opportunities for people to escape living in densely populated apartment buildings where entrances and recreation space is shared and access is restricted. If you need funding, apply now. I am working online with the rest of you.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

graphic:tsca / CC BY-SA (http://creativecommons.org/licenses/by-sa/3.0/)

Fluctuating LTV

The loan-to-value (LTV) ratio is the amount a borrower can borrow from a lender compared to the appraised value of the property that he or she wants to buy. The LTV determines the amount of a down payment a borrower has to supply from his own pocket to invest in the property.

Loan-to-Value ratio = Mortgage amount ∕Appraised value of the property.

For example, if the lender offers a loan at a 90% loan-to-value ratio, the borrower must supply 10% of the total cost of the purchase. In a fix-n-flip loan the same is true, the lender that supplies up to 90% (for example) of the home purchase price, requires the borrower to provide the other 10% of the price.

The Coronavirus pandemic has changed things rapidly including the market value of homes, thus affecting the LTV ratios lenders depend on. Please call for the most up-to-date loan-to-value ratios on our loans for your upcoming projects. 512-213-2271

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Default

If a borrower defaults on a home loan, which is more likely to happen if they do not have much of their own money in the home, the lender takes back the home and sells it to get back the money they lent. Market fluctuations can cause lenders to lose money if the value of a house goes down and the borrower defaults on the loan. The value of the home may be less the amount of the loan. The coronavirus pandemic may make home prices goes down, but that is not certain and may not be true in all locations.

Equity

If the borrower had equity in the home and defaults, then the borrower loses the equity they have in the home because the lender takes the property and sells it to recoup their investment and expenses as quickly as possible.

Equity is the amount of money that would be returned to homeowner if the asset is liquidated (sold) and all debts are paid off. It is in a home owner’s best interest to sell a home before they default on a loan and pay the loan off if possible both so they can get their equity out of the home and so that they can keep their credit history in good shape.

FICO Score Requirements

The FICO score required on loans relates to the buyer’s credit history. It reflects how often they have been late or defaulted on loans in the past. Before the coronavirus pandemic set our lives, marketplace, and economy into a spin, REI Capital Resources required a FICO score of 650 on a hard money loan with a term of up to 24 months. Many people have lost their jobs and their credit scores have suffered. Watching the unemployment rate go up, lenders across the country have tightened up their FICO requirements and these requirements are changing daily. Please call me for our latest FICO requirements. 512-213-2271.

Selling to Avoid Foreclosure

Owners in default or facing default will sometimes take less than the market value for a house to avoid foreclosure. They may settle for only getting part of their equity back, reasoning that some is better than none. None is what they will get if they go into foreclosure and the lender takes back the property and sells it for the balance owed on the loan. The borrower may even give up all their equity to sell the house before defaulting to keep their credit history intact and their FICO scores high.

Buying Opportunity

The distressed homeowner’s situation becomes the buyer’s opportunity. The homeowner needs help to retain their high FICO score and some equity, and the fix-n-flip buyer needs to purchase a property for the lowest price. It can be a win-win deal.

As a direct lender, it is my job to help you get a purchase and rehab loan as quickly and as easily as possible. The perfect fit is still out there. Call me though for the most up-to-date information.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send me an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Waking Up

Real Estate is waking up. U.S. mortgage applications to purchase a home 🏠 rose 9% last week from the previous week and from a year earlier, according to the Mortgage Bankers Association’s seasonally adjusted index. It was the sixth straight week of gains and a 54% recovery since early April. Investopedia.com.

Photo by Pixabay on Pexels.com

This is despite the sobering news from the Labor Dept. Weekly pay fell 11% in April from the prior month. That was the biggest drop on record, but it will likely be broken in May. Investopedia.com This, plus historically high unemployment, will be immense hurdles for people buying homes but might be incentive to start a business fixing and flipping homes to add to your own income and to provide homes, maybe small homes, to young and old consumers alike. Both want to get out of community living and out of big mortgages. I have the funds to help you fill this void in housing.

Real estate agents are using more virtual tours to showcase their homes. You might be able to use a video 🎥 to showcase your remodeling experience on a loan application for a private money loan for your next project.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Fixing Up Houses for Seniors

The coronavirus pandemic has cast a shadow of mortal danger over senior community-living and assisted-living options, nursing home options, and the option of living fulltime on a cruise ship grazing the buffets and watching people, waves, and whales.  Instead of looking forward to being safe with others our own age, with staff to care for us, and convenient medical care, we find that living in community might expose us to a virus we have no immunity to and a particular susceptibility for.

Even if one eyes being sick alone with anxiety, aging in place, at home has become even more attractive in recent months, and it has also become more possible. Advances in electronic technology have given many seniors more tools to use to assist them in staying at home while they age. Online shopping and delivery of even groceries and the surge in telemedicine are a couple of the technologies that have taken off during the pandemic. According to the Wall Street Journal article by Peter Grant, Senior-Housing Communities Face Higher Vacancy Rates Amid Coronavirus, virtual “doctor visits through American Well, also known as Amwell, increased 1000% during a six-week period (1).”

While senior community investors are taking a beating right now, a fix-n-flip real estate investor might be able to turn a profit on small rundown houses by remodeling them into the perfect haven for a senior citizen who wants to avoid community living. The task will mean focusing on details that seniors would be looking for and then marketing those amenities when you sell the home. I’ve scoured several articles for ideas about what to remodel in a fix-n-flip for seniors.

The first Advice I found was “buy a single-story home.” (3)

ENTRANCE

Make a no-rise entry by adding a ramp instead of steps. (3)

Repair uneven or cracked walkways outside and add nonslip surfaces. (3)

If stairs must stay, add 1 ½-inch diameter rails on both sides. (3)

Add reflective strips to top and bottom of stairs. (3)

Create doorways that are wide enough for a wheelchair.

Add benches and hooks for packages both inside and outside an entrance. (3)

Make a cleanup station or mud room near the door so guests can wash hands, remove shoes, discard coats, and pick up a face mask at the entrance and not expose inhabitant to pathogens.

Put a roof over at least one entryway. (3)

KITCHEN

Install appliances with easy-to-read controls and push buttons. (3)

Install a wall oven. (3)

Make a microwave drawer. (3)

Use lazy Susan’s, rollout drawers, glass doors, and open shelving in cabinets and pantries. (3)

Install a single lever kitchen faucet. (3)(4)

LIVING AREA

Removing small step ups and down between rooms and replacing them with ramps.

Install flooring that is nonslip even when wet in bath and kitchen. (2) (3) (4)

Install outlets where they will be most useful, such as on walls where a flat screen would be used so cords don’t show and a little above desk height on walls and in the corners for charging devices or plugging in computers.

BATHROOMS

Install u-shaped and vertical grab bars in the shower and near the bathtub (2) (3) and add back bracing to the walls in these areas. (3)

A walk-in tub.

Install a curb-less entrance to the shower. (4)

Give shower floors a non-slip coating. (4)

Install shower seating, some are fold down. (2) (3)

Install adjustable handheld shower sprayers. (2) (3) (4)

Add extra lightening to shower area. (3) (4)

Install tall or comfort-height toilets and bars to grip when one is lowering and lifting themselves off the toilet. (4)

Add lever faucets to bathroom sinks. (3) (4)

OUTSIDE

Install new decks with handrails and no splinters.

Add Raised garden beds to the landscaping.

I can have private funding for your project. Let’s get our economy going again.

Fill out the BLN application at   http://reicapital.blnsoftware.com/send me an e-mail or

give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.REICapital.cash

References:

Keep Moving

I am sharing with you a blog from a science writer that contains information about respiratory coronavirus transmission. The blog, The Risks – Know Them- Avoid Them, by Erin Bromage, offers information that we laymen and women might not have processed yet. The information is biological and physical and spelled out very clearly. We need to reopen for business, but we need to do so safely, and in order to do that, we need to know the risks and how to avoid them. I was most impressed by how the article, highlights how being in an enclosed space, sharing the same air for a prolonged period increases your chances of exposure and infection. Our guidelines for reopening our economy tend to emphasize distance but have not mentioned much about exposure to the virus over time.

“Infection could occur, through 1000 infectious viral particles you receive in one breath or from one eye-rub, or 100 viral particles inhaled with each breath over 10 breaths, or 10 viral particles with 100 breaths. Each of these situations can lead to an infection (Bromage Blog).”

Although we have not determined just what the infectious load is for COVID-19, for other coronaviruses the number is 1000 virus particles. It is this principle that is behind why grocery stores can open and bars and restaurants must close. It is this principle that should concern you if you share a small office or work in an open space with a lot of people, or work 8 hours on an assembly line 6 feet from another human being who is potentially infected. In the grocery store you pass through quickly, shelves break up the aisles, and you typically don’t talk much as you shop. In bars and restaurants, you linger and talk. At work, you talk and breathe for hours near or in the same room with others.

Photo by Pixabay on Pexels.com

Taking this to heart, I would suggest that real estate buyers, agents, and lenders pass through homes that you are viewing quickly. Don’t linger too long. Don’t carry on discussions face to face in small rooms or cars.  If you must discuss things, do it outside the home and stand more than 10 feet apart with the wind behind both of you.

Keep greater than 6 feet of distance between you and another person, especially if that person is talking, yelling, or singing and is upwind of you. In an Indoor situation, up wind means between you and an open window, the air conditioner blower, or a fan.

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Don’t drive in the same car to a property.

If you are showing a house, make sure it has been vacant for several hours before showing it, so all airborne virus particles have had time to fall out of the air. This doesn’t address surface contamination, but at least your clients won’t breath in an infectious dose as they move from room to room. You should wipe down counters, door handles, and surfaces that will be touched.

Do in-person showings and meetings by appointment only. This way you can judge how many people are around you.

Always pay attention to the physical situation when you are moving about the community. Ask yourself, how many people are here? How big is this room? Is there ventilation and enough of it?

Be sure to read this great article by Erin S. Bromage and apply the knowledge you gain to your work and play.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash

Reference:

Restraint

Home Loans in Forbearance Grow to 3.8 Million

According to an article in the Scotsman Guide, the Mortgage Bankers Association (MBA) forbearance numbers increased again last week but at a slower rate.

MBA estimates about 7.54% in servicers’ portfolios were in forbearance as of April 26, up from 6.99% a week earlier. A total of 3.8 million homeowners are now in forbearance plans.

Photo by Andrea Piacquadio on Pexels.com

Forbearance in the context of the mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. According to the agreement, the lender delays its right to exercise foreclosure if the borrower can catch up to its payment schedule by a certain time. (Wikipedia)

As we get back to work and restart our economy, lenders are exercising restraint. Never before have so many Americans lost their jobs in so short a time. Let’s be creative and work for a quick recovery.

Please let me know if I can help you with a private loan.

Fill out the BLN application at   http://reicapital.blnsoftware.com/ or send my an e-mail or give me a call.

patrick@reicapital.cash

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

www.REICapital.cash