3 Coronavirus Questions to Ask About Your Fix-and-Flip’s State Policies Before Investing
If you are like most real estate investors, the coronavirus pandemic has you looking harder than ever before for good deals. While some investors are working like crazy to keep things going at all, others are raking in returns hand-over-fist. The difference between the two experiences is not the quality of the investment projects or the experience of the investors. In fact, some of the best investors in the business are currently struggling to stay afloat! The difference, in many, many cases, is one that won’t surprise you once you hear it: geography.
Every real estate investor knows that location is everything, but in the wake of the massive economic upheaval in the United States as a result of the coronavirus pandemic, location is more important than ever. Whether we successfully reopen the country in the next month or remain closed for the summer remains to be seen, but one thing that you can count on is that the location of your investment properties – especially fix-and-flips – will play a huge role in the success of your investments. This is a time where it makes sense to buy based on location, and here are three questions that will show you why:
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What is the state policy on working outside the home?
Most states have implemented regulations around how to work around others, including physical distancing requirements. However, some states are far more stringent than others. For example, the state of Michigan’s stay-at-home orders halted all “non-essential business operations” in the state, even if those businesses did not require workers to be in proximity to any other people. This not only shut down major construction projects where lots of workers would have congregated, but it also shut down smaller operations and even kept solo operations, like handyman services, at home.
Needless to say, doing a flip in Michigan would be pretty hard right now! The state of Georgia, on the other hand, issued “shelter-in-place” orders that allowed local leaders to specify which nonessential businesses were required to close and permitted many operations to remain open as long as strict physical distancing guidelines were observed. In the southern state, fix-and-flip deals continued to move forward because work was allowed to continue as long as workers kept their distance.
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How is the state handling showings and closings?
The National Association of Realtors (NAR) recommended weeks ago that virtual and remote home showing should be the norm when someone is buying a home, but not everyone is willing to buy without seeing a property in person. Find out if the state where you are considering investing will permit a licensed professional, such as an inspector, to provide a video tour of the home or if a potential buyer has any way to access a property prior to purchase. Please note: We are not recommending you conduct in-person showings. We simply note that it is easier to promote and sell a property if the seller feels they have options, and those options are not currently available in every state.
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Does the state permit “coronavirus clauses”?
Some buyers and sellers are reporting they are including “coronavirus clauses” in their transactions in order to protect themselves from potential oversights due to not viewing a property in person before closing. Make sure that any clause you place in your documents is legal in the state where you are using it and that you are able to enforce it if necessary.
