Increased Risk for Landlords?

I would say landlording is less desirable than in the past, except for the fact we never intended to be landlords to start with so we never found it desirable. We will probably find ourselves rerenting the place soon and I dont like the idea of my choice of tenants being everyone who may have gotten tossed from prior places not due to back rent (evictions ban bars that) but for other reasons in violation of the lease that they are allowing eviction for (I dont even want to speculate what those offenses may bring to my property).
 
ERD50 said:
Are you saying that you can't ask someone to leave when their lease is up? That just doesn't seem right (which doesn't mean it is not true!). Can the Government really force individuals to modify contracts after they have been agreed to?



I guess even the "no eviction for lack of payment" is a contract modification. While I understand the intent, this just seems like a breach of the law. Seems a more legal way to handle this would be for the Government to pay the rent, and then deal with recovering it from the individual (or just pay it out of general taxes, or some combo). As others have mentioned, this isn't fair to landlords, and it seems to violate "equal protection"principles?







I was curious about that as well. Had not heard about that.



-ERD50
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What I’m saying about the month to month lease is that I could tell her to move out, but since I can’t evict her she could just stay put without recourse at that point.
 
EA-Sports said:
So there’s some money for landlords in the CARES act?
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My county’s webpage has changed since they were paying rent past due for qualifying tenants, so I can’t find the verbiage.
Minnesota set aside money to be available for tenants who had lost their jobs to COVID-19, I beehive it was $100M available through the first week of December. I remember it stated as being part of the CARES act, but it could just have been how MN allocated the allotted resources.
 
Lucky me.
The main reason we sold our house (family homestead for a century) was that the do-good landlord next door converted her place to low income housing. A complete disaster to say the least.

Last March, just as Covid was starting, I went to the landlord and offered to assume all her mortgages on the house, plus $500K in cash. A great offer.

She flatly refused saying that she wouldn't sell to me for any amount because "you'd throw all those nice people out". I countered that the 'nice people' had had the police over two or three times a week for seven months. Actually our plan was to tear the place down and put in a big pool.

Now, I see that she did me a great favor. We sold our house, built a nice new one in the woods and now she's stuck with people who can't pay.
 
Our city used to be fairly balanced - obviously there are renter's rights but evictions were also pretty straightforward, no rent control, etc.

Now there's an eviction moratorium, and for whatever reason, rent control is now back on the table. Last year an ordinance was passed that doesn't allow rejecting a tenant for credit score or history. Rejections for criminal history can now only go back a certain number of years (I think 3), and a written explanation for the rejection must be sent to the applicant and filed with the city.

We nearly bought a 4-plex a few years ago. I now feel like we dodged a bullet. I know a landlord here that owns one 12-unit apartment building. Two tenants haven't paid since early summer, which basically means he's breaking even. If another one stops paying, he'll be in the red.

Like in most industries that are overregulated, all this is going to do is drive out the mom and pop landlords and cause consolidation into a few mega-companies that have the money and muscle to push back. Landlording used to be a great way for immigrants, those with less education to make a good living through sweat equity and hard work, but I'm not sure that's the case anymore.
 
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NgineER said:
What I’m saying about the month to month lease is that I could tell her to move out, but since I can’t evict her she could just stay put without recourse at that point.
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Wow. I can at least understand the intentions behind a moratorium on eviction for non-payment, if the renter lost their income due to COVID. But a lease has a time limit, agreed to by both parties. The landlord might have been thinking of selling, or moving in themselves, or tearing it down at the end of the lease, any number of possibilities. I just don't see why the pandemic should change that aspect of the agreement.

In fact, I know someone who ran into this issue. Due to a death in the family (the "bread winner"), they decided to sell their primary residence, and planned to move into a rental that they owned when that lease was up. Fortunately, the renters were looking to move at that time anyhow, so there was no conflict, but it could have put them in a bind, on top of dealing with their loss. And by moving into the rental, they can start unwinding some of the tax implications from the time it was a business property. Since they really could not afford to live in their old house, this would have been complicated.

sergio said:
Our city used to be fairly balanced - obviously there are renter's rights but evictions were also pretty straightforward, no rent control, etc.

Now there's an eviction moratorium, and for whatever reason, rent control is now back on the table. Last year an ordinance was passed that doesn't allow rejecting a tenant for credit score or history. ...
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Another "Wow!". IIRC, several of the landlords who post here were saying that the credit score was the one thing they could use w/o fear of being hit with a discrimination charge (or at least it wouldn't stick). It was a number, use the same criteria for everyone and you are deemed to be "fair".

Now they are taking that away? Being a landlord never appealed to me anyhow, but this is really getting into some strange territory.

I never liked the idea of rent controls either. I've never seen a case where any sort of price fixing didn't create more problems that it was supposed to solve. I guess I'd rather see the Govt give direct support to the people who need it, than to get in the middle of a free market exchange. That just seems like a complicated ends to a means.

-ERD50
 
I feel for any landlord that has past due tenants and cannot get them evicted. All of the state laws are usually skewed toward the tenants' rights in the best of times. Even if you get an eviction order, they have weeks to get out before the sheriff posts a court order and watches while you hire movers to haul their junk to the curb.

Right now, Memphis is just wondering what's going to happen to the 10,000 eviction orders in progress. I guess some cities have higher quality renters than others. They don't have enough sheriff's deputies to issue all the summons and follow up on the court orders.
 
marko said:
....She flatly refused saying that she wouldn't sell to me for any amount because "you'd throw all those nice people out". I countered that the 'nice people' had had the police over two or three times a week for seven months. Actually our plan was to tear the place down and put in a big pool.

Now, I see that she did me a great favor. We sold our house, built a nice new one in the woods and now she's stuck with people who can't pay.
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Yeah, but at least those people who can't pay her are "nice people". :D

Perhaps you should [-]rub salt in the wound by [/-]send[-]ing[/-] her a note thanking her for not selling to you.
 
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If tenants get rental income support from the gov then evictions should still be allowed.

If evictions are not allowed then the landlord should get the support money.

The problem is giving support money to tenants who can not be evicted if they do not pass it on to the landlord.
 
marko said:
Lucky me.
The main reason we sold our house (family homestead for a century) was that the do-good landlord next door converted her place to low income housing. A complete disaster to say the least.

Last March, just as Covid was starting, I went to the landlord and offered to assume all her mortgages on the house, plus $500K in cash. A great offer.

She flatly refused saying that she wouldn't sell to me for any amount because "you'd throw all those nice people out". I countered that the 'nice people' had had the police over two or three times a week for seven months. Actually our plan was to tear the place down and put in a big pool.

Now, I see that she did me a great favor. We sold our house, built a nice new one in the woods and now she's stuck with people who can't pay.
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Glad it worked out for you. Heh, heh, your neighbor may learn the hard way that not all of her tenants are actually "nice."
 
My parents were tenants all their lives.
I have also been a tenant (hated being at the whim of the landlord to move, etc).

But not all tenants complaining are telling the truth.
So landlords sometimes get a bum rap for being hard hearted.

Mom rented out her inherited house (while mom was still a tenant :confused:) to a family. Mom told me that she rarely increased the rent as the tenants could barely afford to live.
After living there for 15 yrs, the tenants offered to buy the "unprofitable" rental from mom, and enjoy the benefits of ownership.
I guess they weren't quite so poor, yes Mom sold to them as it was such trouble being a landlord. :facepalm:
 
marko said:
Lucky me.
The main reason we sold our house (family homestead for a century) was that the do-good landlord next door converted her place to low income housing. A complete disaster to say the least.

Last March, just as Covid was starting, I went to the landlord and offered to assume all her mortgages on the house, plus $500K in cash. A great offer.

She flatly refused saying that she wouldn't sell to me for any amount because "you'd throw all those nice people out". I countered that the 'nice people' had had the police over two or three times a week for seven months. Actually our plan was to tear the place down and put in a big pool.

Now, I see that she did me a great favor. We sold our house, built a nice new one in the woods and now she's stuck with people who can't pay.
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How do you know they cannot pay? Has she told you that?
 
I’m out

I’ve had lots of rentals in the past. But when the deck is stacked by the government (as it is currently), the risk is extreme, and unmanageable by me. I leave games like that until conditions improve. They get to live free in my real estate, and I get the right to pay loans, taxes, insurance, maintenance, and utilities? No thanks. If I owned rental real estate right now (I don’t), I would short-term rental it (think airbnb, vrbo, etc) for no more than a month at a time. In my area, the short term rentals have exploded driving normal rental real estate out of existence. But that’s another debate.
 
MichealKnight said:
I



Until now, earning a rather realistic 4-5% annual return by renting out homes was a key part of my nest-egg-management plan.
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Is it really that low? Seems high risk- low reward. I’ve got an itch to do some real estate investing but that stat along with the pandemic restrictions has scared me off for now.
 
4-5% is very conservative. But it all depends on your local market and what type of property you are buying.
My town was great for duplexes or triplexes 3-5 years ago, now they are very expensive, to the point of cash flow issues with an investment property rate loan.

It also depends on how much of your money you have invested. If you can fix things up and then finance you might end up with not much of your own money invested.

The worst property we have is 8% return on investment.
The best one we have is 300% on investment.

The interesting tidbit is that they both cash flow about the same amount ~$6-7k, after long term capex and expenses that are not happening in this year are set aside and after the mortgage has been paid.

The difference is that one was purchased and rented as is (with 25% down) whereas the other one was financed after fixing and has $2k of my cash locked in it.

A SFR your equation is different. You have access to conventional loans and non-inflated interest rates, ~3%?down, fewer utility expenses and appreciation in line with local real estate.

Duplexes don’t necessarily follow the same market ups and downs. The market was flat for the first two years we started investing. You could count on buying a property for about $100k/unit. Three years later the prices are up 50%, but rent is up about 10%.

Purchase price matters, a lot.

The benefits i see is that most of our properties we get a premium because they are nicer than average, so we get a premium.
Our financing is fixed rate, yet our rents are increasing annually.

But it is not for everyone.
 
Sunset said:
The pandemic is not a risk.

It's the gov't making illegal evictions, so today all tenants could simply live rent free. :cool:
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Correct. It is one thing tenant can't pay and tenant/landlord figure out a mutual arrangement on their own or let the market drive the price. But it is completely another matter when government is forcing their will to cause an undue hardship on one group of people. My 2 cents.
 
Thanks for the detailed description. I’m sure the numbers vary a ton from region to region. I think being a landlord is the worst part about investing in real estate, and that was before all the issues brought on by a pandemic. It makes stock market returns look like easy money.
 
Years before the pandemic I heard too many horror stories from friends about the trials of renting. Too much trouble and work to make it worth the aggravation and my time. Now with being retired and with the additional problems resulting from the pandemic I would never consider renting to anyone and use even a minute of my retirement. Don't need any more complications to spoil these later years.



Cheers!
 
Not a landlord, but DW was for a while. Some good tenants, but the last one was eventually a deadbeat and DW decided to sell because of the eviction hassle. The tenant drove a late model car, had a nice 80" tv, furniture, etc... and a job with a local union. Turned out he had racked up a couple of DUIs and was paying a lawyer to get him out of things instead of rent.

It would be nice if tenants had to prove to an independent 3rd party authority that they can't afford their rent.
 
Badger said:
Years before the pandemic I heard too many horror stories from friends about the trials of renting. Too much trouble and work to make it worth the aggravation and my time. Now with being retired and with the additional problems resulting from the pandemic I would never consider renting to anyone and use even a minute of my retirement. Don't need any more complications to spoil these later years.
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I agree. I think you have to be born with a gene :), or at least have a certain type of personality, that sees the issues of renting as a welcome challenge and risk instead of a problem. My Dad was a landlord for a while, and seeing it up close and personal as part of his "maintenance/collection" staff as a child :), he was not a good landlord because he was too nice to his tenants and accepted their excuses. I applaud those who can, I could not.

The view of landlords is being driven by the view of income inequality. Landlords are are 'haves", renters are the 'have nots". My guess is that the typical renter looks on their landlord as at least a millionaire, to whom missing a couple of months rent should not be a big deal. When was the last time you saw an extended new report/documentary on the trials and tribulations of being a landlord with problem tenants, vs one sympathetic to someone about to or being evicted (and saying little about the eviction reasons)?

As as was stated earlier, there are more renters than landlords, so more votes, so politicians tend to take a similar view.

A precedent has been set with this, one that can be expected to be exercised more frequently in the future.
 
A good friend with 21 units rented out is $15k behind in rent from his various tenants.

No evictions in Minnesota and in North Dakota, you just have to fill out a form and you can't be evicted.

He sounded very fed up. It is not risk free, hands off or easy money.

All he can do is wait until people can be evicted again and then get judgements against each tenant. Costly and unlikely to return any of the lost money. Sad times.
 
jollystomper said:
I agree. I think you have to be born with a gene :), or at least have a certain type of personality, that sees the issues of renting as a welcome challenge and risk instead of a problem. My Dad was a landlord for a while, and seeing it up close and personal as part of his "maintenance/collection" staff as a child :), he was not a good landlord because he was too nice to his tenants and accepted their excuses. I applaud those who can, I could not. ...
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+1 My dad had an apartment building for about 10 years and finally threw in the towel and sold it. I think I would be similar and would likely be too sympathetic to tenants tales of woe so I long ago decided that I wasn't interested in rental real estate. While I manage my mom's single tenant commercial property and it goes well I might consider buying that from her at some point.

I wonder what impact this eviction moratoriam will have on the value of residental rental real property, but it make my interest in it even lower than it was before.
 
As a retired commercial real estate appraiser I should also note that income properties are valued on their INCOME (duh huh!). When income is down for any reason it affects the value of the property exponentially. So, in theory at least, landlords face a double whammy. They lose income to non-paying tenants, and then love value on the building because it generates less income.
 
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