COVID19 Greensheet

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Done for you – $10,000 grant & loan setup from the 2020 CARES ACT services – Sign up here

ACCESS CRISIS KIT HERE

WEBINAR ON STIMULUS PLAN – HERE

 

20.05.6 5-Year NOL Carry Back notes

A result of CARES Act
NOL is when deductions exceed gross receipts (includes depreciation)
Tax Cuts and Jobs Act – can offset 80% of taxable income & can be carried forward indefinitely
NOW can go back 2018 (from 2013) -2020 (from 2015)
Effective for those who are Real Estate Professionals on taxes (REP)
Need to have a business
Could be a good time to cash in some gains and take the tax hit now.

 

20.04.24 Updates (Source – Morgan Stanley)

20.04.19 Updates

The following is a working list of possible action items surrounding the COVID19 crisis:

CoStar on March 25th, 2020

Doom & Gloom

#Wait&see

Cares Act (March 2020)

  1. #1 – Payroll Protection Program (PPP) – Applied to anyone under 500 employee (see more below)
  2. #2 – Small Business Loans
  3. #3 – Grants
  4. #4 – Others

#1 – Payroll Protection Loan (PPP):

If you work in the Gig Economy, are a 1099 worker, a 1 person business, independent contractor , work for hire, self-employed, YOU ARE ELIGIBLE FOR A PAYROLL PROTECTION LOAN along with any business with less than 500 employees

#2 – Small Business Loans:

  1. SBA 7(a) – up to $10M
  2. SBA Express – up to $1M
  3. EIDL – up to $2M – Payroll

I would suggest having your CPA apply for you on these. Let me know if you need a referral.

#3 – Grants:

  1. EIDL $10,0000
  2. PPP for 8 weeks – not taxed
  3. Extra $600/week un-employment
  4. $1,200/tax payer – this is what the common man is getting (Use 2018 return or 2019 if filled already)
  5.  

#4 – Others:

  1. IRAs/401k – $100,000 withdrawl from your retirement accounts penalty free. You have 3 years to pay back taxes too. You can also choose to pay back in three years. Another option is $100k loan and have 6 years to pay back. These loans can stack on what loans you already have. Waiver for without a 10% early withdrawal period for 100k out of your retirement account you will have to pay the income tax over the next few years. You can also take a loan up to 100k too. Available to:
    • A taxpayer (or their spouse) who has been diagnosed with COVID-19;
    • Experienced adverse financial consequences from being laid off, furloughed, quarantined, hours reduced or unable to work due to childcare.
  2. Estimated payments – You currently pay these four times a year but now 4/15, 6/16, 9/15 are now due on 10/15/2020.
  3. Net Operating Loss Carry Back – The stimulus packages incentives people who buy thing now. However it appears to be able to back to 2017 and amend your past tax returns.Here is what I am seeing – the new law does remove the limit of pass-through losses of $500k. Prior to this, 2017 Tax Reform limited the amount of pass-through loses to $500k, so if someone had say W2 income, or capital gains in excess of $500k the K1s could not offset all of that income.Net operating loss rules – This is exactly why I told people to delay your taxes to October always
    • Old law – can only be carried forward and be used against the 80% of the taxpayers taxable income. NOLs cannot offset 100% of income.
    • New law – CARES Act removes the 80% rule and allows taxpayers to offset 100% of income through the use of NOLs. The act also allows taxpayers to use NOLs created after Dec 31, 2018 to be carried back 5 years!
  4. Federal Student Loans – Taxpayers now have the ability to pause the payments on your federal student loans for six months until September 30, 2020.

    • Interest shall not accrue during the suspension period.
    • These 6 months will count for purposes of any student loan forgiveness program

    Employers can pay up to $5,250 of your student loans tax free to the employee.

 

 

Cares Act II (TBD)

  1. I believe there will be another stimulus package coming online not because the Covid19 epidemic will go into the summer but congress will likely forget somethings and there will be more to come.

 

Investing in the Future:

Based on our Hui Deal Pipeline Club survey (April 2020):

Most non-accredited investors are falling like flies. This makes me a little sad because these are the people who need to invest the most but they were too slow to take what little money they had out of their stocks/mutual funds and run around with their tail between their legs.

80%+ of my Accredited investors are licking their chops getting ready for this 2-3 months of crisis to be over because they see it as a double white swan event (oil and Covid19).

Not getting ahead of ourselves COVID19 like SARS might be an annual occurrence however not to this extent. It is important to note that Green Street Advisors released research which estimates the property value declines in different sectors of Commercial Real Estate. See a few of the percentages below:

  • Senior Housing: -49%
  • Student Housing: -30%
  • Malls: -29%
  • Manufactured Homes: -28%
  • Apartments: -23%
  • Single Family Rentals: -19%
  • Self-Storage: -16%

Don’t know what the above asset classes are? Check out our guide here.

 

Forbearance Information – For Large MFH over $1M loan size (Not 1-4 unit) (Updated 20.03.28):

First off the catch is you can’t evict anyone until the forbearance is paid off

Government was asking (and praying for landlords to be kind to their tenants):

BUT….

On Monday 3/23, the Federal Housing Finance Authority (FHFA) issued a press release that spoke to steps that Fannie Mae would be taking to provide relief to their many Borrowers.

Generally…

Borrowers will be offered a 90-day/3-month forbearance during which time the Borrower will not be obligated to pay principal, interest or escrow contributions (the previously required monthly payment).

  • Additionally, during this time, there will be no late fees assessed to the loan and no interest charged to the Borrower.
  • At the expiration of the forbearance period, the forborne amounts will be required to be repaid through 12 equal installments.

Other Sources:

https://mf.freddiemac.com/COVID-19/

https://multifamily.fanniemae.com/multifamily-covid-19

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Moves-to-Provide-Eviction-Suspension-Relief-for-Renters-in-Multifamily-Properties.aspx

https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-announces-nationwide-covid-19-relief-plan-affecting?_ga=2.109225548.89832450.1586375221-115104478.1585941257

https://mfguide.fanniemae.com/node/14026?view=recent_guide_communication

When can Borrowers take advantage of this program?

Borrowers have between April 1, 2020 until August 1, 2020 to commence the forbearance agreement.

What does a Borrower need to provide to take part?

A “Hardship Letter” or the like expressing real challenges in making timely payments. A Borrower must evidence inability to make payments (realized or anticipated) in order to qualify.

A Delinquency Report or a current rent roll that outlines units that have vacated due to the current pandemic or are expected to vacate/not pay due to the pandemic. Borrowers will be required to execute a pre-negotiation letter with Fannie Mae. The forbearance agreement contains language outlining that if a Borrower enters into the agreement, that they will not evict tenants for non-payment for 90-days after the forbearance agreement effective date. Fannie Mae guidance includes the longer of 90-days after the forbearance agreement effective date, or until the mortgage loan is brought current. The forbearance agreement is non-negotiable. If a Borrower does not wish to comply with any part of the agreement, then they will not be eligible. If, after the 90-days/3-months, any Borrower requires additional forbearance, Fannie Mae will need to collect additional information in consideration of that need.

Other items:

Required Repairs (as Identified under Schedule 6 of the Fannie Mae Loan Agreement)

Green Program repairs–loans with Green repairs due through 6/31/2020 will be given a 90-day extension. Any additional extension will have to be reviewed and approved by Fannie Mae.

Inspections – During the life of the loan, lender may inspect for 1-2 years

(Guideline inspections) depending on several factors. Fannie Mae has indicated automatic extensions of 60 to 120 days depending on the previously rated condition of a property. By and large, these extension windows should carry most due dates for inspections well into the summer or early fall, when, hopefully, the pandemic has subsided.

Reserve Disbursements – For our Borrowers seeking reimbursement from a Repair or Replacement Reserve escrow held with us, we are offering to wire these reimbursements for free, upon approval

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