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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: Page 1
Aug 25, 2020

Darrin Gross:

Michelle Bosch, what is the BIGGEST RISK?

 

Michelle Bosch:

You know, the BIGGEST RISK that we have right now is that for the percentage of the tenant base that is unemployed, or that has lost their job because it is worked for housing, we buy c properties and B neighborhoods you know, that that if they've lost their job and unemployment you know, kept gets cut down, that they might not be able to To make their rent payments, so though, that's a big risk right there. Another risk is that you know, the economic recovery is longer than expected. And that therefore, you know, we are seeing having to carry, you know, a delinquency or a vacancy, you know, well right now not even a vacancy because we cannot evict So, so you know, that we're carrying a delinquency for longer than we want to, you know, what I mean? And some of the measures that we've taken it, you know, in order to preserve cash is in the beginning we are funded in order to be able to have you know, well capitalized asset number one, but now we've we've pretty much you know, cancel any big CAP X project for all three properties. We stopped already immediately because we were coming to the point where we were going to have to make payments you know, cuz on two of those three properties, we we've syndicated the asset and it's So we we stopped, you know, payments to our investors just out of precaution. And the properties have had amazing collection rates that I could have paid them. But I continue to hold on to that cash, because I want to have a little bit more time and visibility into what happens right now come July, August, you know what I mean, in terms of where we're at, you know, with the economy where we're at with unemployment and, and yeah, so those those are some of the things that we're doing but we hope that by being a from an asset management perspective, a first in class community because that's what we strive for, you know, when we come across a sea, you know, class acid in the neighborhood, we want to become the best. C there is such that there is a if there is an economic pressure, you know, that even people that are in a B property right now, that might be slightly nicer that when they have to downgrade that they're going to downgrade into the next nicest C which would be us, you know what I mean? Um, so. 

 

So that's kind of how we're going about doing that is just making sure that we're well capitalized. I'm not excited about forbearance at all, I believe in making pay if I can pay my bills, pay my bills. And, and yeah, so now our conversation is starting to shift actually with, you know, our investors and into opportunities, because we know that there, there are owners and operators, large multifamily that bought in the last year, even within the, you know, last quarter of, you know, to 2019 that we're expecting, you know, in forecasting in their models, rent increases, you know, 3 5 7 percent and now, those increases are not materializing. I mean, they are gonna leave and there'll be opportunities out there for us to go and Again, just like we bought here in Phoenix back in 2008.  This time we're going to be buying large multifamily. So kind of positioning ourselves for that, you know, having that, you know, that conversation and opening that mindset to the investor that, you know, that wants to invest with us that, that this is the right time to buy, you know, when this happens, and even though everyone else is trying to sell and trying to get out that it's okay to be a contrarian, but it's okay to, you know, you have to stomach and go against the grain of what everyone else is doing, because we've done it before and it's, it's paid off tremendously. So, um, so that's kind of where we're at right now. Yeah.

 

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