October 2020 Markets Update

Wow, what a crazy year! Anyone ready for it to be done yet? (we are!) With all of the craziness going on, what’s going on in both the real estate market and with turnkeys? We want to try to help shed some light and update you as to everything we know about it.

General Market Update

Despite the unknowns of everything COVID and 2020, and a looming recession, real estate sales have been going through the roof. Turnkeys being a big part of that! There are a few reasons why demand has gotten so strong and sales have picked up so much:

Supply. With COVID, supply of available homes went down dramatically. Partially because of the general unknown of everything going on, including potential job losses, and also for logistically reasons such as not wanting interested buying trapesing through their houses and bringing their germs.

Demand. At the same time supply went drastically down, demand for residential more suburban-style homes went through the roof. Why?

De-densification. Nobody wants to live in crowded apartment buildings all of a sudden! People want out of crowded cities, they want space, and they want away from germs. Also, so many people are working from home now and spending so much more time at home in general, that a desire for more comfort and space in a home has become very real.

So think about it—supply is down, demand has gone up dramatically, and then…

Interest rates. Interest rates are at record lows right now! It would be almost impossible to borrow money for cheaper than you can borrow it right now.

Now, on the more negative side?

Eviction moratorium. It’s back! Oyy. This time though, supposedly the requirements for proof of COVID-related hardship are stronger than they were with the first moratorium. How strict those requirements will be, no idea. But there are definitely cases of landlords who have been succeeding with non-COVID-related evictions. So, that’s something. How will this play out? Who’s to say, but investors are coping with it and continuing to buy. But on the buying note…

Foreclosure moratoria. A major factor for turnkeys is that the lack of availability for foreclosing on properties right now (mortgage forbearances, courts closed, etc.), many turnkey providers are either running low on inventory or they are completely out of inventory. Turnkey providers get a large portion of their properties through foreclosures, so obviously if there no foreclosed properties, it’s going to be a problem. So, many turnkey providers are on hold until the moratoria lift!

Construction delays. This is happening throughout all the markets! Just think of the logistics surrounding getting contractors into properties, masked up, social distancing, and coordinating around other contractors. Especially properties with tenants in, that’s causing even more headaches.

So, what about individual market updates? We’ll include which ones are out of inventory because of the moratoria!

Specific Market Updates

These updates include either market updates for the city specifically or updates on the turnkey providers we work with in those cities, or both.

Atlanta. *limited inventory*The Atlanta properties are a limited inventory, but they are NICE. Arguably the highest-end properties of all the markets, but not all of them are recently rehabbed. They are considered “off-market” properties, not necessarily turnkeys. However, they do come with tenants and property management in place, and degrees of rehab vary. It sounds like the provider is down to about 10 properties left that will be available to sell. That will be the end of the line of the Atlanta inventory, since this is not technically a turnkey operation.

Baltimore. *wait list* B-neighborhoods, some of the most extensive rehabs of all the markets. And with Baltimore expenses being notably low, cash flow is still very high. Not everyone is comfortable with Baltimore, but many argue some serious value in the market. Of which, we agree. However! This provider is on a wait list. The anticipation is the properties should start flowing again within 1-2 months. TBD on that, but once the inventory supply starts again, they anticipate being able to get through the wait list pretty quickly.

Chicago. *wait list* The last available property for the time-being looks to be going under contract! Chicago will now be going on a wait list. Remember, they offer both standard turnkeys and BRRRRkeys. Property taxes in Chicago can suck, but despite those, cash flow is still really high. Great time to get introduced to the seller and learn about the market, the properties they typically offer, etc. This is the smallest-scale turnkey provider of all of them, but that means amazing communication, attention to detail, and everything else that can get shortsighted with bigger providers. Highly recommend hopping on the wait list!

Cleveland. *out of inventory* This one’s been crazy! This was also a limited inventory due to the foreclosure moratoria. All of the available properties went under contract, but four of them came back for various reasons (buyer financing falling through, extensive construction delays, etc.). Very quickly, all four went back under contract with one buyer and three of them now have additional backup reservations. Nothing’s done until the ink’s dry on the closing docs, so if you do want Cleveland properties, you can still reach out, but know that it could be the end of the line for these until the foreclosure moratorium lifts.

Harrisburg. Going strong! Pretty much everyone that goes out to see these properties ends up putting one or more under contract. Huge hit with everyone. The city remains strong. The only downfall here is the turnkey provider isn’t exactly the most organized with communication, so occasional headaches there. But everyone’s working on that! But despite that, the properties seem to speak for themselves.

Houston. *leaving turnkeys and going to new construction* The Houston provider is rounding out the standard turnkeys and moving solely into new construction. The returns on these are lower, but that’s typical for new construction. The new construction properties are mostly duplexes! So great chance to get a multi-family in a Texas city… with cash flow!

Indianapolis. Indy has been one of the longest-running turnkey markets. Inventory continues to be available, but it’s getting fewer and farther between.

Kansas City. *out of inventory* We’ve decided to call it quits for now in Kansas City due to lack of a solid turnkey provider there. But we’re keeping an eye out for a great provider! Still love the market, just need the operator.

St. Louis. Still selling properties there, but honestly there’s just higher cash flow elsewhere and not quite as much demand for St. Louis compared to other markets. So a little more quiet on that front.

To see available properties in all the markets, check it out here!

Reach out with any questions!

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