June 25, 2020

8 Action Items to Take Today for Your Real Estate Investments

20 minutes

Today we are recapping the highlights of a 3 day virtual conference that I attended recently. We'll cover:

The state of this crisis and what the outlook is.

How you can leverage the 3 loan options from the government and what does each of them mean.

Things that you can do today and what you should be thinking about for the future.

You can read this entire episode here: https://montecarlorei.com/action-items-to-take-today-for-your-real-estate-investments/

Three loans available:

PPP – Originally: you had to use it within 8 weeks from the time you got the loan, you needed to use 75% of it for payroll, and 25% for rent, mortgage, utilities. There were no payroll tax deferral if you took the PPP.

Now: you have 24 weeks to use it, and the number is 60/40: 60% must be used for payroll, and 40% for rent, mortgage, utilities. And now you can defer 50% of payroll taxes until December 31st.

EIDL – gives you $10,000 per employee. When you apply for this grant, you’re applying for the loan, and the SBA is granting these loans, the maximum amount you can get is $150,000 per company, regardless of the number of employees. If you have a management company and a real estate company, you get $300,000. You have 1 year deferral, so you don’t have to pay the loan for 1 year. This is a 30 year loan, at 3.75% interest. Pay close attention to terms of the loan, and get the opinion of an SBA expert.

Main Street loan – it’s backed by the Fed, not an SBA loan. There’s no 500 employee limit, talk to your banker for clarity.

All 3 of these loans are bank loans, you have to go to the bank and apply, and the SBA pays the bank back.

You can get both PPP and EIDL. If you already got the PPP, you can also get the EIDL.

What are the things that you can do today, from looking at your existing properties to how you can negotiate for new properties. And what you should be thinking about for the future.

Stay away from auctions that will come up because lots of people are looking for that.

Hotels are at 22% occupancy, there will be lots of defaults on hotels. Lots of major hotel operators have reserves until October, they have $700-800 fixed cost per door per month.

Example of a deal someone just closed: It was a stadium, that cost about $13M to build, it is not being used currently, and has an income from a cell tower on the property, the income from that is $50,000/year. The seller has been trying to sell for just over $1M, two of the previous offers fell through. They came in and offered $900,000 cash, they sold cell tower right away for $700k at closing ($50k income/month at 7% cap) and now they purchased an entire stadium for $200,000!

Action Items To Take For Your Real Estate Investments:

As far as your existing properties: trim fat and cut expenses

As far as preparing yourself for the future:

Look into Captive Insurance – need to learn more about it, but it sound like it’s something that you could do to prevent future problems like this shutdown. Will do a podcast about what it is.

Invest in Blue cities in Red states.

Look at Industrial – Instacart can pick up from industrial instead of supermarket

Become valuable to valuable people.

Help people solve complex problems.

Now is a great time to build a great team.

Ask yourself “How can I?”

The state of this crisis and what the outlook is:

This is far worse than 2008.

The implications of this debt is ultra low interest rates, forever.

There will be lots of opportunities in 6, 12, 18 months.

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By Steffany Boldrini

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