Investment property during Covid19

[Coronita]

Key consideration again is the specific location rental property is located, not a one size fit all solution. I’m sure the rental markets in different parts of Arizona probably look different than different parts of California which look different from different parts of Nevada, depending on how deeply the industries were impacted by covid, which a heavy bias towards areas specifically impacted by a high concentration of tourism.

Completely different set of rental rules in Arizona. The only real test is to put a similar property on the market to see what sort of rent it could fetch and how many and quality of tenant pool. You might find someone interested in a pie-in-the-sky rent price, but if it’s for someone with a 550 credit score, there’s a high probability they wont pay soon. On the other hand, those odds go down significantly if that person is 700+. If the bulk of the interest is in the low credit/low income scoring range, then either you’re pricing it to high or you’re investing in area that’s going to high a higher probability of problematic tenants….That’s not to say people with high credit scores can’t wig out on paying…That’s possible too, but the probability is lower…Zillow makes this easy, because as part of people contacting you, they can fill out their credit score. Those that conveniently leave it blank have something to hide. Because those with higher credit scores like to mention it because they are looking for an edge over every other applicant, even the possibility of a lower priced rent for that better score.

[FlyerInHi]

You already said that you would not buy if you had not already paid the $5000 deposit.
Just tell the builder that you can’t buy because of COVID-19 and see what they say.

Or try to push Escrow out further to see if the builder drops prices on similar units.

If you think you can buy for $5000 less in the future, then you have your answer

[Coronita]

things probably aren’t as bad in Arizona. Definitely not as bad is they would be in Nevada. Good thing OP decided Arizona.

[Coronita]

speaking of rental relief. Things are changing so quickly.
I forgot that many of the moratorium rules expire soon 5/15 including the moratorium on evictions. I suspect some will get suspended but at the same time here’s an interesting idea being floated…

https://www.google.com/amp/s/www.mercurynews.com/2020/05/12/california-considers-sweeping-relief-for-renters-landlords/amp/

It’s actually not a bad idea. Rental loss income tax credit for landlords due to covid. The tax credit could be used to offset income elsewhere and could be sold immediately for cash. Also, discounts for property tax and income tax early payments since the state is bleeding on cash…

In this case , folks eith streams of income could for instance use the loss of rent income as an offset for example on W2 income from a job. The caveat though is it still wouldn’t do you good on federal taxes. interesting though. The good part would be it does require both tenant and landlord to prove economic hardship to qualify. But even so, looks like the state might be paying small time landlords
to stop the evictions and allow people to stay in return for a lot of state funded financial benefits….Awesome!

I can’t believe some of the moratoriums already start to expire soon… time passes so fast

.No worries piggs. It’s someone else’s problem.thst will be paying….

[Hobie]

My cynical side says not to expect any sort of tax break. Governor doesn’t understand the magnitude of keeping the state closed and the resulting loss of tax revenue. Calif has to push tax increases and new fees to recoup some of it losses.

[bpnbpn]

Yep I saw the details on rent relief program. It’s bit vague for the landlords. Not sure if the landlord also have to prove financial trouble to get the rent refunded. That will be bad as landlords who are still employed but will have a gap by losing the rental income. This is an unprecedented situation and very hard to predict what will happen.

AZ also coming up with similar program that will pay the landlords the rent but will have a cap based on the tenant’s base income.

[The-Shoveler]

[quote=Hobie]My cynical side says not to expect any sort of tax break. Governor doesn’t understand the magnitude of keeping the state closed and the resulting loss of tax revenue. Calif has to push tax increases and new fees to recoup some of it losses.[/quote]

When they get done adding up all the tax revenue lost by the states, it will just dwarf all the stimulus so far by a large factor and it is still going up.

I think many states will seek BK.

It will be a very very large defect, unthinkably large, just mind blowing. Unlike the FED, the states cannot just conjure up money with a few strokes on a keyboard no matter how much Newsom wants to.

[scaredyclassic]

[quote=The-Shoveler][quote=Hobie]My cynical side says not to expect any sort of tax break. Governor doesn’t understand the magnitude of keeping the state closed and the resulting loss of tax revenue. Calif has to push tax increases and new fees to recoup some of it losses.[/quote]

When they get done adding up all the tax revenue lost by the states, it will just dwarf all the stimulus so far by a large factor and it is still going up.

I think many states will seek BK.

It will be a very very large defect, unthinkably large, just mind blowing. Unlike the FED, the states cannot just conjure up money with a few strokes on a keyboard no matter how much Newsom wants to.[/quote]

What is the law by which states may declare bankruptcy?

Or I’d it more of a michael Scott move. He just shouts I DECLARE BANKRUPTCY. Later it must be explained to him that’s legally insufficient.

[The-Shoveler]

Well I guess we would just have to figure out what it means when they just start defaulting.

Or what a mostly volunteer fire department etc.. looks like or something.

I think this is why Buffett said he would never live in CA.

[scaredyclassic]

[quote=The-Shoveler]Well I guess we would just have to figure out what it means when they just start defaulting.

Or what a mostly volunteer fire department etc.. looks like or something.

I think this is why Buffett said he would never live in CA.[/quote]

Municipal finance will be tough.

I used to work in public finance. I remember when muni bonds were fairly safe.

Defaulting on all those bonds might free up some cash.

Cant remember what the security was tho. Repo a state park?

A lot were unsecured I think.

Man that was a lifetime ago. So much fine print

[Coronita]

Are you sure you really want to back out of an Arizona property?

https://finance.yahoo.com/news/tsmc-build-chip-plant-arizona-185039746.html

Seems like Arizona is in this administration’s good graces and should benefit form any sort of pork that comes out of this administration. Seems like more jobs coming to Arizona.

“TSMC to Build Chip Plant in Arizona With Government Support”

(Bloomberg) — Taiwan Semiconductor Manufacturing Co. is planning to build a multibillion-dollar chip plant in Arizona, a potential realignment of global trade designed to allay U.S. concerns over supply chain security.The Taiwanese company is negotiating a deal with the administration of President Donald Trump to manufacture semiconductors in the U.S. to create jobs and produce sensitive components domestically for national security reasons, according to people familiar with the situation. Talks have been progressing swiftly in recent days and an announcement could come as early as Friday, according to the people, who asked not to be identified because the deal is not public yet.

“We are now actively evaluating the U.S. fab plan,” TSMC Chairman Mark Liu said on a recent analyst conference call, referring to fabs, the industry term for chip factories. “There is a cost gap, which is hard to accept at this point. Of course, we have — we are doing a lot of things to reduce that cost gap.”

TSMC is the largest and most advanced maker of chips for other companies. Its factories, which are primarily located in Taiwan, produce important components designed by Apple Inc. and most of the largest semiconductor companies, including Qualcomm Inc., Nvidia Corp., Advanced Micro Devices Inc. and China’s Huawei Technologies Co. That makes TSMC a crucial part of many electronic devices, such as smartphones, laptops and servers running the internet, and corporate and government computer networks.An agreement would call for TSMC to build a plant in Arizona by 2023, according to the people. It’s unclear what type of support the project will get from the federal government or the state of Arizona.

A cutting-edge fab is expensive to build. TSMC spent NT$500 billion ($17 billion) to build an advanced facility in the southern Taiwanese city of Tainan that will churn out components for new iPhones this year. It plans another $16 billion in capital spending this year.

If the federal government provides cash for a U.S. plant, it’ll mark a shift in policy and rhetoric from a Republican administration. Trump’s White House has rarely supported such direct industrial intervention, favoring market dynamics. However, emerging trends may be forcing a reconsideration. The U.S. government is already giving or lending billions of dollars to keep companies afloat in the midst of a pandemic-fueled recession. The crisis has also highlighted how vulnerable global supply chains are to such shocks.

Semiconductor companies have not really slowed down due to covid, at least not yet. And neither has their stock price…

https://finance.yahoo.com/quote/TSM
https://finance.yahoo.com/quote/AMD
https://finance.yahoo.com/quote/INTC
https://finance.yahoo.com/quote/AVGO
https://finance.yahoo.com/quote/NVDA
https://finance.yahoo.com/quote/QCOM

Semiconductors are critical to high tech supply chain. Asking a US company to build something from the ground up is not feasible (Intel is the only US company that still has a fab). However, getting Taiwan Semiconductor (who is #1) who is also a U.S. ally might actually work… Because TSM would have a vested interest to have a fab on US soil if it means skirting future import tariffs. And sensitive chips used for military and communications could be securely done here, instead of overseas. It could be a win for both US and Taiwan.

I’m biased. Maybe if you were talking about a rental property in Nevada, I would say hell no, back out. But seems like Arizona and Colorado…I don’t know. The probably aren’t getting hit as hard.

[FlyerInHi]

To the original poster, whatever you decide to so, please update us every so often in real estate prices In Chandler. It would be interesting to get a peak to trough snapshot in this recession.

[bpnbpn]

[quote=FlyerInHi]To the original poster, whatever you decide to so, please update us every so often in real estate prices In Chandler. It would be interesting to get a peak to trough snapshot in this recession.[/quote]

Absolutely. We did send our intention to pull the offer and the builder confirmed that they won’t be able to refund the earnest money. we haven’t officially signed the cancellation notice yet. I plan to take few more days to finalize it.

AZ does look enticing to be honest. It’s an affordable market unlike CA.

[bpnbpn]

[quote=Coronita]Are you sure you really want to back out of an Arizona property?

https://finance.yahoo.com/news/tsmc-build-chip-plant-arizona-185039746.html

Seems like Arizona is in this administration’s good graces and should benefit form any sort of pork that comes out of this administration. Seems like more jobs coming to Arizona.

“TSMC to Build Chip Plant in Arizona With Government Support”

(Bloomberg) — Taiwan Semiconductor Manufacturing Co. is planning to build a multibillion-dollar chip plant in Arizona, a potential realignment of global trade designed to allay U.S. concerns over supply chain security.The Taiwanese company is negotiating a deal with the administration of President Donald Trump to manufacture semiconductors in the U.S. to create jobs and produce sensitive components domestically for national security reasons, according to people familiar with the situation. Talks have been progressing swiftly in recent days and an announcement could come as early as Friday, according to the people, who asked not to be identified because the deal is not public yet.

“We are now actively evaluating the U.S. fab plan,” TSMC Chairman Mark Liu said on a recent analyst conference call, referring to fabs, the industry term for chip factories. “There is a cost gap, which is hard to accept at this point. Of course, we have — we are doing a lot of things to reduce that cost gap.”

TSMC is the largest and most advanced maker of chips for other companies. Its factories, which are primarily located in Taiwan, produce important components designed by Apple Inc. and most of the largest semiconductor companies, including Qualcomm Inc., Nvidia Corp., Advanced Micro Devices Inc. and China’s Huawei Technologies Co. That makes TSMC a crucial part of many electronic devices, such as smartphones, laptops and servers running the internet, and corporate and government computer networks.An agreement would call for TSMC to build a plant in Arizona by 2023, according to the people. It’s unclear what type of support the project will get from the federal government or the state of Arizona.

A cutting-edge fab is expensive to build. TSMC spent NT$500 billion ($17 billion) to build an advanced facility in the southern Taiwanese city of Tainan that will churn out components for new iPhones this year. It plans another $16 billion in capital spending this year.

If the federal government provides cash for a U.S. plant, it’ll mark a shift in policy and rhetoric from a Republican administration. Trump’s White House has rarely supported such direct industrial intervention, favoring market dynamics. However, emerging trends may be forcing a reconsideration. The U.S. government is already giving or lending billions of dollars to keep companies afloat in the midst of a pandemic-fueled recession. The crisis has also highlighted how vulnerable global supply chains are to such shocks.

Semiconductor companies have not really slowed down due to covid, at least not yet. And neither has their stock price…

https://finance.yahoo.com/quote/TSM
https://finance.yahoo.com/quote/AMD
https://finance.yahoo.com/quote/INTC
https://finance.yahoo.com/quote/AVGO
https://finance.yahoo.com/quote/NVDA
https://finance.yahoo.com/quote/QCOM

Semiconductors are critical to high tech supply chain. Asking a US company to build something from the ground up is not feasible (Intel is the only US company that still has a fab). However, getting Taiwan Semiconductor (who is #1) who is also a U.S. ally might actually work… Because TSM would have a vested interest to have a fab on US soil if it means skirting future import tariffs. And sensitive chips used for military and communications could be securely done here, instead of overseas. It could be a win for both US and Taiwan.

I’m biased. Maybe if you were talking about a rental property in Nevada, I would say hell no, back out. But seems like Arizona and Colorado…I don’t know. The probably aren’t getting hit as hard.[/quote]

You always bring in great data points. This is an interesting news. Let me think through this weekend. I fully get the point that the best time to buy is when there is blood on the street. I am not sure whether I am triggering too soon before there is a lot blood on the street.

[Coronita]

$12 billion Arizona plant

Confirmed. This is a big win.

I have a feeling Arizona and Colorado are going to be hotspots for the next areas of good and healthy job growth and migration from CA and Nevada.

https://finance.yahoo.com/news/tsmc-build-chip-plant-arizona-185039746.html

[Author]

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