How is Covid-19 Affecting the Real Estate Market in the New River Valley?

To say that all that has happened with Covid-19 in the past few months was unexpected is the understatement of the century. Who would have thought as the economy was humming along at an incredible rate in January that everything would be ground to a stop in March?

While it will not be possible to know the long term effects of Covid-19 on the overall economy and real estate market for some time, here is some information about how the pandemic is affecting the real estate market today.

Covid-19 and the NRV Real Estate Market

Housing inventory is down in the past month due to Covid-19 fears, however home values have remained stable. Home values are projected to remain stable for at least the next 6 months because of continued buyer demand.
For investor owners, as of April, 2020, we have just seen a slight decrease at Townside Property Management in the pace of leases being signed for the fall. However, even in the midst of Covid-19 we still have leases being signed for next year every day.
You might consider refinancing your mortgage. Rates are at historic lows and you could potentially save a substantial amount of money every month by refinancing at a lower interest rate. Fannie Mae projects that interest rates will continue to fall through 2021.

New Development Continues around the NRV

In Christiansburg on 114:

Stateson Homes continues construction on the Clifton Town Center, modeled after the Daleville Town Center in Botetourt that will feature townhomes, apartments, office space, and a hotel.

Fralin Homes plans to begin developing 9 acres near New River Village into 14 townhomes and 132 apartments that will be called Magnolia Pointe.

Takeaway: There will still be homebuyers and renters who want to live in a mature associations and neighborhoods with full grown trees and wider streets. Upgraded homes in established areas will continue to be highly desirable.

In Blacksburg

Multiple builders are developing hundreds of bedrooms of luxury’ student housing that are renting for $700-$1100 per person per month - most are fully furnished. Examples are Park37, The Retreat, and The Edge which are fully developed.
Terrace View on the corner of Tom’s Creek and Patrick Henry is under new ownership and going through extensive renovation. Jefferson St. Apartments on East Clay are adding 255 new bedrooms across 6 buildings that will rent for $400-$500/bedroom.

Takeaway: Many students will be priced out of the luxury market and will be looking for medium priced rentals that still offer some of the upgrades of the luxury units. The increased rent that older, but upgraded, units can get can make them a good value even in today’s market.

Conclusion

Even in these uncertain times, the real estate market has remained stable. There are less listings, but those still listings are still moving quickly for close to list price. Anecdotally, in the past week I listed a property, closed on a property, and am about to put 2 properties under contract - things are still happening!
However, there is uncertainty in the market, which can lead both to buying and selling opportunities for savvy buyers and sellers.
Continued, historically low interest rates make now an incredible time to refinance if you have an interest rate over 4%. The rates also create a unique buying opportunity - a lower rate essentially allows you to purchase a property on discount.

How are you feeling about the real estate market in the midst of Covid-19? I’d love to hear from you and help in any way I can!

If you have been thinking about getting into real estate as an investor or first time home buyer, with the extra time we all have on our hands, now is the perfect time to educate yourself to get ready to jump in the game when things pick back up. Please let me know if I can point you in the right direction!

Get in touch anytime - I’m here to help!

philipbowling@gmail.com // 978.473.0587

Are you, or do you know the parent of a Virginia Tech student who is having a mild panic attack because their child has come to them worried about where they are going to live next year? This normal part of the college process has gotten a lot more difficult in the New River Valley with the collision of overall growth in the area and VT’s over-enrollment!

I have spoken with a handful of parents who have decided that it might be more cost effective to purchase a property for their son or daughter than write a check to the University for room and board or a landlord. I have also spoken with out of town investors who see the growth of the NRV and realize that these same factors make this a strong and stable market to invest in.

But - for both groups - the worry inducing question that stops them in their tracks is - how?? How do I even start to go about the process of purchasing an investment or student property around VT?

4 Steps to Take Worry Out of Student Rental Purchase / virginia tech / blacksburg

Here are four steps that can help clear the fog of the unknown and get you on the path to purchasing a student rental:

Talk to a Local Realtor that You Trust
Get Your Financing in Order
Run the Numbers
Decide on Rental Strategy

Step 1: Talk to a Local Realtor that You Trust

Yes, this a little bit self serving being that I would consider myself a local Realtor you can trust. However, this is truly the most important step. Why? Market Knowledge and boots on the ground to manage the purchase process.

Do you know about potential properties before they come on the market?

With investment type properties consistently selling in 1-3 days on the market, are you able to get to Blacksburg to see the place you saw online before it goes off the market?
Is the place you saw on Zillow even on the market anymore or did it sell a year ago?
Have you figured out how to get loan approval for a difficult to finance condo in an association that is less than 50% owner occupied?
How do you handle the current tenants renting the property when you take possession?

An agent with experience in this geography will be able to guide you through issues like these along with the 100 other things that will come up through the property search and purchase process.

Step 2: Get your financing in order

Did you know that financing an investment property is a different ball of wax than purchasing a personal residence? Since you are not occupying the property, the banks see lending to investors as a riskier proposition then an owner occupant, and you will pay a slight premium for this. There might be a larger down payment necessary. You will probably incur a higher interest rate. There are also sometimes regulations from the secondary mortgage market (think Fannie Mae and Freddie Mac which service most conventionally financed loans), that make it difficult to purchase in condo/homeowner associations that are less than 50% owner occupied. These are hurdles you want to jump before you put in an offer to purchase a property - it is no fun to find out that your loan has been denied once you are a few months into the process and a few days away from closing!

A lot of these issues are not things that Rocket Mortgage or Lending Tree are going to be able to advise you on. For some issues that come up, even your local lender might not have experience with what goes into purchasing a student rental. It is wise to connect with a local lender here in the New River Valley who helps buyers get loans for student rentals day in and day out to help make sure you cross your t’s and dot your i’s with your financing to avoid losing the investment property you worked so hard to find.

Please reach out for my list of local lenders who would be happy to help you out!

Step 3: Run the Numbers

At this point, you have an agent helping you find properties that match your criteria and you have a local lender who has helped you define the boundaries of what is possible within your criteria. Now it is time to start running the numbers as you begin to look at properties to make sure they are sound investments within your goals for the property.

Do you have an investment worksheet that will take income, capital improvements, maintenance, PITI, management fees, vacancy, etc. into account to let you know your overall return on an investment purchase? If not - please get in touch with me and I’ll send you what I use to evaluate properties and we can talk about your investment goals.

For Investors - Your goals (i.e. investing in an appreciating asset for the long term vs. investing for cash flow (monthly cash profit from the property)) will determine what a good property is. At the very least, you probably want to make sure you are not losing money on the property each month.

For parents - this is where you have a leg up on investors. You would already be in the hole the cost of room and board or monthly rent/utilities for your Tech student. So, while ideally you could purchase a property where your student’s roommates rent would cover your expenses, if you could just be in the red $300-$600 a month, you are still coming out ahead when you factor in the properties potential appreciation and your principle debt pay-down.

Step 4: Don’t forget to rent it! Determining your rental strategy

When you get here, you’ve crossed the finish line … sort of. There is so much work that goes into finding and purchasing a student rental that you can almost forget that buying the place is just the starting point! From the minute you purchase a student rental until the day it is leased out, you are potentially losing money! Most likely you will purchase a unit that is already rented, so you will have from your closing date until the current lease end to decide your rental strategy.

For Investors: If you are living out of town, while it is possible to manage your property from a distance, it is wise to factor in the cost of property management. This both saves the worry of figuring out how to find, screen, and write leases for tenants as well as the headache of handling maintenance requests when a toilet breaks at 2am. A good property management company will charge around 10% of gross rents, but will more than pay for themselves in the long run allowing you to invest from a distance without needing to be hands on with the property.

For Parents: The same options are open to you as an investor, but self managing can be a lot easier since you will be related to one of the tenants. Your student can hopefully connect with and screen potential roommates. But - make sure to get leases signed and call local property management companies or search online to get an idea of the rental amount to charge. Even as a parent, you might still consider using property management - either after your student moves out if you keep the unit as an investment, or so that you do not have to develop a list of contractors to call when there are maintenance issues to deal with.

I have first hand experience watching Townside Property Management - they do an incredible job managing properties in the New River Valley, and do not charge lease up fees (an extra charge whenever the unit turns over generally equal to one month’s rent)!

Conclusion: I hope that breaking down the purchase process of a student rental into these steps helped clear some of the fog of how this might work for you! By following these four steps, you will be well on your way to making a sound purchase that will serve Tech students and help you build wealth at the same time. As you can see, a lot of this comes down to building a strong team around you. With a Realtor, Lender, and Property Manager you can trust, you can have confidence moving into the rental market!

I am passionate about helping people build wealth through real estate so that they can spend their time doing what matters. It would be my pleasure to help you find a student rental that helps you achieve your real estate goals!

Please call (978 473 0587), email (philipbowling@gmail.com) or sign up below and let me know how I can help you or anyone you know with real estate in the New River Valley!

Covid-19 and the New River Valley Real Estate Market