May 2020 - Real Estate Braddahs Ep 27

For a free e-version text “ebook” to 587-317-6099
May 2020 Topics:
● Oahu Statistics
● Hardest Hit States (C-19)
● Landlording Article (C-19)
● Homeowner Hack

Ep. #27
May
2020
Monthly
Market
Update
SimplePassiveCashflow.com/

deanueda@gmail.com
Call/Text: 808.228.8209
Dean Ueda, Real Estate Professional
Dean H Ueda RS-78445
Keller Williams Honolulu RB-21303
I take a HOLISTIC approach to
real estate. With my past
experience as a CPA in the
finance and accounting sector
and an active real estate
investor, I have unique skill sets,
expertise and perspective to
provide my clients with
actionable intelligence to make
informed decisions.
Join the Free Hawaii Investor club!
Text “aloha” to 314-665-1767
@deanuedahawaiirealtor
@dean.ueda

Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767

Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
March 22: Stay at Home Work from Home Mandate for Oahu
+ 30 Days (Real Estate Transaction from Acceptance to
Recording)
= April 22
Let’s Wait for MAY!
Only 9 days included in April Numbers
We can still analyze the data...

Hot off the Presses!!!
Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
Condos = 3.6
SFH = 2.5
Months of Inventory: If no more homes came on market, how long
it would take for current inventory to be sold off.
General rule of thumb: anything less than 6 months of inventory is
a SELLER’S MARKET.

Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
Condos
SFH
Let’s keep a watch out for these statistics because these
trends will affect prices. If sellers are holding off on listing
their homes proportionately to the slowing of sales, we may
see not much a change in months of inventory, which would
be a good sign for price stability.

Hot off the Presses!!!
Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
Condos = 2,193
SFH = 1,173

Wallethub.com Report,
April 13, 2020
Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
https://wallethub.com/edu/states-with-the-most-affected-small-businesses-due-to-coronav
irus/72977/#expert=frances-milliken

COVID-19 LandLord Article (Viewer Submission)
Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
https://www.biggerpockets.com/blog/filling-vacant-rentals-while-practicing-social-distancing?utm_source=newsletter
● Automated Showing Box???
● Beware of Scams
● Buyers/Rentals will Still Want to Physically Walk Through
the Rental
● Include Video/Virtual Tour
● Offer Virtual Walkthroughs via FB Live/Zoom/Webex etc
● Leave it to the experts (i.e., Licensed Property Manager)

HOMEOWNER HACK (If you got the Time?):
Dean Ueda, RS
deanueda@gmail.com
Call/Text: 808.228.8209
Text “aloha” to 314-665-1767
To preserve the lifetime of the exterior paint
job of your home: Shoot down the exterior
of your home, with a garden hose (power
washer/scrub) to take off the surface dirt
and debris. This may extend the exterior
paint for more than a few years. Remember
to close windows, openings and cover any
electrical outlets/lights. Wait 24 hours before
using electrical outlights/lights.

Lane Kawaoka, PE
Lane@SimplePassiveCashflow.com
FREE PODCAST ON
ITUNES/GOOGLE PLAY
OUR COMMUNITY
Email: Lane@SimplePassiveCashflow.com
Consult: SimplePassiveCashflow.com/contact
Freebie: eCourse trial - text “simple” to 314-665-1767

FREE INVESTOR DOWNLOAD TOOLKIT:
SIMPLEPASSIVECASHFLOW.COM/START
Not ‘Faux’ NewsData Reports & Commentary by Lane & Friends
Under Armour to
Furlough 6,600
Workers Beginning
April 12
Posted on April 6, 2020 by Taylor Williams in Company
News, Maryland, Southeast, Top Stories

https://www.cpexecutive.com/post/unemployment-claims-top-6-6-million
https://www.cpexecutive.com/post/us-braces-for-more-job-losses/

GDP fell at a 4.8% annual rate, the first quarterly drop since 2014 and the
worst quarterly drop since 2008.
Consumer spending plunged 7.6%, the most since 1980. It accounts for
~70% of GDP.
Services dropped the most on record, driven mostly by one industry:
healthcare. The pandemic required providers to pull back on profit drivers
like elective procedures and routine visits. 43,000 healthcare jobs. Medical
practices have temporarily furloughed staff, while 22% have laid people off
permanently, according to one survey.
Next quarter, economists are projecting at least a 30% annual decline.
“We are going to see economic data for the second quarter that is worse
than any data we have seen for the economy," Jerome Powell said
yesterday.

SOURCE: https://www.cbre.com/-/media/files/the-weekly-take/theweeklytake_market_050120.pdf
WEEK IN REVIEW
Ignore Q1 GDP; Difficult Q2 Will Give Way to Staged Recovery
• We appear to be past the peak of infections, but U.S. GDP is expected to contract severely in Q2
before giving way to stronger growth starting in Q3, supported by government stimulus and pent-up
demand.
• While New York faces job losses in April and May, office-using employment is down only 0.8% from its
peak, reflecting the local economy's strength heading into the crisis.
• First-quarter seasonality typically reduces Chicago's total employment by 2.0%. The drop in Q1 2020
was not far off at 2.5%. With stay-at-home restrictions through May 30, job losses likely will worsen.
• Los Angeles job losses have been heavily concentrated in retail and hospitality; a quick rebound is
anticipated as the local economy may reopen within weeks.
• Dallas/Fort Worth, Houston and Atlanta are hopeful markets to watch as their economies begin to
reopen in phases.
• Washington, D.C. has been less severely impacted than other markets and has a stable outlook,
underpinned by the government sector.
• Boston and Philadelphia are bolstered by a tenant base weighted to life sciences, which remains a
growth sector.
• The presence of fledgling venture-backed firms raises caution in tech-driven San Francisco.
• In Asia Pacific, loosening restrictions in Hong Kong, Shanghai and Beijing have precipitated economic
growth as retail activity picks up under a phased reopening.

https://www.wsj.com/articles/nearly-a-third-of-u-s-renters-didnt-p
ay-april-rent-11586340000

SOURCE: https://www.multihousingnews.com/post/majority-of-tenants-paid-april-rent-report
https://www.nmhc.org/news/press-release/2020/nmhc-rent-payment-tracker-finds-rent-payment-rate-at-93-percent-of-prior-month/
Rent Payment Rate at 93 Percent of Prior Month

SOURCE: https://www.multihousingnews.com/post/will-student-housing-be-impacted
“I think the reality is, it’s a fairly
likely scenario that some of
the preleasing will be
backloaded until parents and
students feel comfortable that
university’s fall semester will
open,” said Katz.

SOURCE: https://www.cpexecutive.com/post/how-coronavirus-is-impacting-office-leasing
“Tenants and landlords are all trying to
work together, understanding the
respective needs of one another. I’d even
go so far as to say lenders are doing the
same thing,” said Levering. “Everybody is
trying to play nicely in that sandbox.”

SOURCE: https://www.citylab.com/life/2020/04/coronavirus-safe-travel-airbnb-rental-business-host-bailout
Can Airbnb Survive
Coronavirus?
FEARGUS O'SULLIVAN
APRIL 3, 2020
Across the world, Airbnb bookings have tanked. Data analysts at AirDNA
say that bookings across Europe collapsed in March, dropping 80%
compared to the previous week in the week beginning March 9, and another
10% on top of that in the week of March 16. In the U.S., where virus
response lagged, the figures for falls in booking are uneven, but scarcely less
dramatic. By the middle of March, bookings in New York City, San
Francisco and Seattle had already dropped more than 50% compared to the
week beginning January 5, with drops of over 35% in Washington, D.C., and
Chicago.

SOURCE: http://www.greenstreetadvisors.com/

SOURCE: https://www.multihousingnews.com/post/best-value-in-downturn-may-be-workforce-housing
vulnerable industries
(hospitality and food), only about
3.3 million (18.6 percent) live
in multifamily rental
apartments. About 9.4 million
(52.7 percent) lived in
owner-occupied housing and
the remainder (28.7 percent)
lived in rental housing that is
not multifamily, such as
single-family homes,
townhomes, duplexes or
mobile homes.

CBRE (4/9/2020) Executive Summary
● COVID-19 and its impact on the U.S. economy will lead to increased multifamily vacancy and declining rents over at least the next two
months.
● CBRE Econometric Advisors (CBRE EA) expects the multifamily market to bottom out in Q3 and begin a recovery in Q4.
● Overall vacancy is expected to rise 2.7 percentage points to 6.3% by Q3 2020 from its recent-low 3.6% in Q3 2019 and to recover fully in
2021.
● Rents are projected to drop 6.7% from peak (Q3 2019) to trough (Q4 2020). Rent recovery should begin in Q1 2021 and be completed by Q2
2022.
● The Federal Reserve pledged to keep interest rates near zero until full employment returns and inﬂation exceeds 2%. (4/29/2020)
Vacancy Recovery to Start in Q4
BRE EA projects multifamily vacancy to rise 2.7 percentage points to 6.3% in Q3 2020 from the most recent low of 3.6% in Q3 2019. Vacancy should
begin to decrease in Q4 2020 and return to its former low levels by Q3 2021—a relatively rapid recovery phase.
Rents Projected to Fall through 2020 and Rebound in 2021
Rents are expected to decline through 2020, with lower rental rates for new leases and renewals. Average rent is projected to drop by 6.7% to $1,603 in
Q4 2020 from $1,717 in Q3 2019. A healthy rebound in rents is expected through 2021. Rents should reach their pre-coronavirus level by Q2 2022.
Changes in rents and vacancy do not fully capture the income downside for property revenues. Economic downturns lead to much higher revenue
losses from credit defaults (residents not paying rent). Additionally, this downturn has a new factor that could weigh on rent collections in that some
residents may not be able to pay back deferred rent payments.

SOURCE: https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-outlook-darkens.html
● From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will
be required to make a down payment equal to 20% of the home’s value.
● The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic
outlook and stress in the housing market,
● More apartment renters!
● Lower condo prices

Fannie Mae- and Freddie Mac-backed lenders are
requiring 6-18 months payments (PITI) in reserve at
closing prior to funding deals; what they are saying is
that it depends on debt service coverage ratios. This
can have a negative impact on whether a deal works or
not, as you may have to raise more money from
investors, lowering the returns to investors and you

SOURCE: https://www.cpexecutive.com/post/top-15-fastest-growing-megacities-whats-changing

SOURCE: AAA

SOURCE: https://www.cpexecutive.com/post/grocery-stores-pick-up-while-most-retail-slows-down

What is impacted the
most?
https://www.nytimes.c
om/interactive/2020/0
4/11/business/econom
y/coronavirus-us-econ
omy-spending.html

SOURCE: https://rebusinessonline.com/roark-capital-invests-200m-in-the-cheesecake-factory-amid-pandemic-related-closures/

SOURCE: https://www.cpexecutive.com/post/cmbs-late-payments-starting-to-mushroom

SOURCE: SimplePassiveCashflow.com/covid19

Check IRS.gov for the latest
information: No action needed by
most people at this time
IR-2020-61, March 30, 2020
https://www.irs.gov/newsroom/ec
onomic-impact-payments-what-yo
u-need-to-know

AAAA

No more DRY POWDER

Key Provisions Of COVID-19 Stimulus Bill Enacted March 27, 2020
➢ Allows 5-year carryback of net operating losses [NOL] for non-REIT business for 2018, 2019 and 2020.
➢ Increases the limitation on deductible business interest from 30% to 50% of EBITDA for 2019 and 2020.
➢ Excludes from income the cancellation of debt related to new, emergency small business loans.
➢ Provides small businesses [tenants] with $367 billion in loan assistance.
➢ Provides payments to many individuals and families, extends unemployment insurance and other social
safety net programs.
➢ Lifts reductions in paper losses for three years.

Markets Likely To Experience A Long, Post-COVID-19 Recovery
➢ Florida: 127m – 130m visitors per year, over 19% of the population is 65 and older, the annual threat of
hurricanes and high cost of living. Could take 24 months or longer to recover [albeit below historical
levels].
➢ New York: Emerging as the epicenter of coronavirus, compounded by decades of bureaucracy, among
the highest state and local taxes in the U.S., nearly $70 billion in unfunded pension liabilities, New York
was the #1 “move out” state in 2019 and dependent on nearly 63 million tourists per year. Watch for deal
volume to decline, tenants to relocate out of NYC and visitation totals to drop significantly.
➢ Illinois: High corporate taxes [45% increase in January, 2020], high property taxes, a net migration rate,
a $137 billion unfunded pension liability with a $250 billion obligation that is growing, and that doesn’t
include $30 billion in unfunded pension liabilities for the City of Chicago. Watch for tenants to relocate
all or a portion of their business out of the state.
Source: CEL & Associates, Inc. and multiple external data sources.

Markets Likely To Experience A Long, Post-COVID-19 Recovery
➢ California: Locking down 40 million people for many weeks is economically devastating, high gasoline
taxes, unfunded pension liabilities [conservatively $333 billion statewide], ranked #48 of all U.S. states in
overall economic freedom, loss of many foreign visitors, and the impact of the reduction in port activity
will be challenging. Watch for the “blame game” to occur that will cause many businesses and residents
to examine moving elsewhere.
➢ Nevada: Around 56 million tourists annually [nearly 50 million visited Las Vegas...6m – 7m were
conventioneers], gaming- and entertainment-dependent with dramatic boom/bust cycles. Watch for some
small- to mid-size hotels and restaurants to go out of business, and the negative economic multipliers of
the “shutdown” could take years to recover. Casinos will experience a sharp decline in visitors.
➢ Airline Hub Cities: Dallas, Atlanta, Chicago, New York City, Denver, Orlando, Washington, DC,
Los Angeles, Seattle, Charlotte, Houston and Seattle are among the top airports for passenger traffic.
It will take 18 – 24 months to “get back to normal,” assuming no repeat pandemic occurrence in 2021.
➢ Oil-Dependent Markets: The dramatic fluctuation in the crude oil/energy sector [prices, rig counts, oil
drilling operations]; shifting energy policy and emergence of alternative energy sources will create multi-
year challenges for markets such as Houston and other energy-dependent region

Real Estate Sectors Likely To Experience Enhanced Building Operation Regulations*
➢ Lodging Facilities
➢ Apartment Communities
➢ Retail Centers
➢ Gaming Facilities
➢ Healthcare
➢ Office Buildings
➢ Conference Facilities
➢ Entertainment Centers
➢ Outdoor Assembly Venues
* Integrated security systems, onsite cameras, thermal imaging, required “wearable” technology, sensors, screening
systems, minimal cleaning standards, employee health certifications, written backup/emergency plans, and
adherence to a converged security platform.

Why Real Estate Will Remain A Preferred Investment Class, Post COVID-19
➢ A low interest rate environment increases returns.
➢ Americans need to live [apartments], shop [grocery-anchored retail] and
produce/distribute goods
[warehouse/distribution facilities].
➢ Continued strong demographics [population growth and household formation].
➢ Favorable tax treatment [1031, Carried Interest, Capital Gains, Opportunity Zones,
etc.].
➢ Capital in non-performing real estate asset classes will shift monies into multifamily, last
mile and
healthcare.
➢ Attractive investment option for flight capital.
➢ Aging population [healthcare asset investing].
➢ Inflation protection.
➢ Asset appreciation plus cash flow.
Source: CEL & Associates, Inc.

Hope on the way?
https://www.statnews.com/feature/coronavirus/drugs-va
ccines-tracker/

Most people are upset about
more debt. Investors are
cheering in their homes!
https://finance.yahoo.com/news/f
ederal-reserve-announces-23-tril
lion-in-funding-for-households-lo
cal-governments-123445078.htm
l

To counteract all the Media's fear-mongering with the Yellow hat from Edward De Bono here are a few of the
positives from this Covid19 experience:
1) Appreciation for stay at home spouses
2) People getting outside and walking around and physical fitness (it looks like Halloween - without the costumes
- every day outside on my street)
3) Virtual learning being accepted... less freaking meetings
4) People questioning the news and media
5) Appreciation for teachers who watch our kids
6) Time with our smaller family units
7) Virtual wine tastings and Zoom cocktail parties

Trends
1. Online shopping more effective through Amazon, Visa
2. Remote-based environments through outsourced IT solutions. Contactless transactions for
merchants and financial service providers.
3. Provide Telemedicine for Medical and Veterinary Clinics

Find us at ReiAloha.com
Suggestions?
Questions?
Topics?
Text “aloha” to 314-665-1767

Legal Notice and Disclaimer
This presentation does not constitute the
rendering of legal advice or services. The
information being presented is intended for
informational use only and is not a substitute
for legal advice. State, national and
international laws vary, as do individual
circumstances; so always consult a qualified
attorney on all legal matters.

May 2020 - Real Estate Braddahs Ep 27

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May 2020 - Real Estate Braddahs Ep 27