Increased Risk for Landlords?

[Tekward]

I know a lot of FIRE proponents have leveraged rental properties for their financial freedom. I was wondering if the eviction bans have changes the risk profile for these investments, since they look likely to be extended: https://reason.com/2021/01/16/biden...ordinary-eviction-ban-through-september-2021/


"The conversion of eviction bans from an emergency public health measure to a semi-permanent economic relief program continues apace with President-elect Joe Biden's new $1.9 trillion recovery proposal."

 

[WhiskyDave]

Not yet, as my tennants have all remained up to date...

Most of eviction moratoriums freeze rent increases, but also contain specific wording on re-payment plans and a burden on the tenant to attempt to repay or agree to terms on repayment.

I admit I am still concerned about the duration of this and how it could stay in effect thru 2021 or longer.

Having month to month leases also offers landlords more options.

I would also work with my tenants if neccesary and needed.

 

[foxfirev5]

Good luck with evictions going forward. I've gone with broad index funds at my age and simplistic future investment plan.

 

[Sunset]

So far no affect, keeping my fingers crossed.
Have in the pre-Covid days, had late rental payments, but tenant warns me, and does pay maybe a week late.

Reality is, now that we are retired, I'll be happy to sell off my rental property as I don't need the mental hassle and mental worry. I'll put the money into an ETF and take long vacations without thinking someone may email me about a plugged toilet.

 

[foxfirev5]

Agree. I didn't mean to be a wiseguy. The war on landlords has caught many people off guard. Same as the war on savers. My only point is that if you have a choice - diversify.

 

[Mr._Graybeard]

Agree. I didn't mean to be a wiseguy. The war on landlords has caught many people off guard. Same as the war on savers. My only point is that if you have a choice - diversify.

A lot of fixed-income funds have significant holdings in mortgage debt. While the yield has been welcome, I divested of a big holding at the start of the year.

 

[Koolau]

Agree. I didn't mean to be a wiseguy. The war on landlords has caught many people off guard. Same as the war on savers. My only point is that if you have a choice - diversify.

Yeah, I never understood blaming everything on the landlord. After all, s/he has to pay the mortgage and upkeep, taxes, etc. even if the tenant is off the hook. I understand that these are uncertain times and we all pay a price. Just don't think it fair to make it only the landlord. Landlords are people too.

 

[foxfirev5]

Yeah, I never understood blaming everything on the landlord. After all, s/he has to pay the mortgage and upkeep, taxes, etc. even if the tenant is off the hook. I understand that these are uncertain times and we all pay a price. Just don't think it fair to make it only the landlord. Landlords are people too.

Yo boy, Agree totally. I've been there living on the edge. DW as well has gone collecting rent on a Friday night from a well drilling crew. I'm still sorry about that. She made out alright but that's one of a thousand reasons she can hit the casino any time she wants.

 

[EA-Sports]

Yeah, I never understood blaming everything on the landlord. After all, s/he has to pay the mortgage and upkeep, taxes, etc. even if the tenant is off the hook. I understand that these are uncertain times and we all pay a price. Just don't think it fair to make it only the landlord. Landlords are people too.

I’ve read recent comments on news about eviction freeze where commenters were blaming landlords who had mortgage on their properties, like WTH..what kind of logic is that?? So all landlords must have enough reserve to account for tenants who can’t pay their rent or don’t have any mortgage on their in investment properties so that the landlords can forgive the rents..In that case just nationalize the whole real estate biz..sorry for ranting..I have rental properties and fortunately my tenants have been pretty good with their rents, knock on wood. However, I’m curious with this eviction freeze what happens when a tenant loses their job and can’t pay rent anymore? So tenants stop paying the rent and are protected by eviction freeze but landlords have to dip into their savings to pay their mortgage?

I understand that times are tough for everyone but it does not seem fair for small individual landlords who in many cases provide reasonably priced rental options for tenants.

 

[Mr. Tightwad]

3 tenants, 2 are fully paid up, 1 is a little behind. The one behind has been there nearly 20 years, whenever behind she always catches up.

So far so good.

 

[pb4uski]

It is odd/stupid that there is so much sympathy for tenants who are unable to pay their rent but so little sympathy for landlords with mortgage and property tax payments.

Of course, it seems that Congress critters are unable to think more than one step ahead.

 

[Teacher Terry]

I don’t understand the hate for landlords either. Many aren’t big companies and could be in danger of losing their properties without rent. It’s a hard time for many.

 

[calmloki]

Oregon landlord here. Our eviction freeze is a bit more rigorous than the Feds. We are lucky to own all our property, so no mortgages, and mostly are in small apartments as rentals. However. We have a tenant who is working but has paid two half months worth of rent from May through now, so 8 months of missing rent currently. Can't evict her till June 30, and that assumes the Oregon eviction moratorium isn't extended again. Probably will be a pretty good backlog in the court system then, so add some more months..
We do need to keep up the property tax payments, fire and liability insurance, water and sewer bills, outside lighting and maintenance.
Know what though? I wouldn't want to trade places with my tenant, and when I think of the businesses that are forced to close or the employees who are trying to make it on a whole bunch of nothing I feel very very fortunate.

 

[CSdot]

My tenants have been good. When this hit I decided I would work with the tenants if need be. I would hand them a paint roller and some cans of paint and trade for the rent. So far, payments have been on time.

I have some money (maybe 5% of my 401k) in a REIT, and it dropped 20% last year.

 

[Another Reader]

Had one tenant move out early on after he lost his job and had to move in with family. He gave decent notice and left the place clean. Gave him the full deposit back. No problem renting it out again at a higher rent. A couple of people were late, but really no more than usual. Just rented one that had been vacant for a couple of months while being updated. 18 people requested to see it and the first applicant turned in the application before they saw it. They were well qualified and moved in yesterday. There is an eviction moratorium in Arizona, but so far it has not been an issue.

 

[freedomatlast]

No issues here. All tenants are up to date on rent and paid in full.

 

[pb4uski]

...We have a tenant who is working but has paid two half months worth of rent from May through now, so 8 months of missing rent currently. Can't evict her till June 30, and that assumes the Oregon eviction moratorium isn't extended again. ...

So is this tenant able to pay rent but refusing to because she knows that you can't evict her?

Just wondering... while I know you can't evict her can you report her as behind on her rent to the credit bureaus? That might get her attention.

If she is unable to pay then that is a whole different story.

 

[harley]

Our tenants are all working and keeping up with their payments (knock on wood), so I haven't done much research on this. But our rental units have appreciated nearly 100%, so selling would be an option if things become too much of a PITA. I wonder how that would work with the eviction ban? If the house is no longer a rental would it be an eviction?

 

[Dash man]

We got out of the rental business two years ago except for a seasonal weekly shore house where they pay in advance. Unfortunately, my brother in law had a tenant that went eight months without paying and he isn’t a wealthy guy. Fortunately, the people moved out in December. They trashed the place, but he’s a handy guy and fixed it up and sold it in two days. Hopefully the sale won’t fall through. He has a mortgage, but refuses help from us.

 

[Sunset]

Largely I think the issue is the same as rent controls in areas.
Because for every landlord there are more tenants, and politicians count votes.

Eviction moratorium looks good for politicians, basically buys votes.

If rent control was such a great thing, then it could be extended to all other pricing, like gas/groceries/new car prices, etc...
Of course that is not capitalism so it doesn't happen here, yet we allow rent controls.

I decided years ago not to get more into rentals, as I realized the game is tilted to be not in the landlords favor.

 

[Koolau]

These sorts of issues (in this case, governmental bodies change the rules in mid stream - all the "best" intentions, I'm sure - no politics, right?) EVENTUALLY work themselves out. There are winners and loser, BUT the old expression "Fool me once... etc." comes to mind. I don't know what the consequences will be, but eventually, landlords will find ways to protect themselves in the future. AND it will cost prospective renters. YMMV

 

[NgineER]

1 of 11 not paying rent since August. We were able to secure rent payments from our county and the CARES act. That ended in December however. We can’t evict or terminate the lease even though she is month to month. Trying to get her to pay while not making her mad since that could cause her to trash the place. Hoping that if there is a continuation of the eviction moratorium that there will be some money for landlords again.

 

[EA-Sports]

1 of 11 not paying rent since August. We were able to secure rent payments from our county and the CARES act. That ended in December however. We can’t evict or terminate the lease even though she is month to month. Trying to get her to pay while not making her mad since that could cause her to trash the place. Hoping that if there is a continuation of the eviction moratorium that there will be some money for landlords again.

So there’s some money for landlords in the CARES act?

 

[ERD50]

1 of 11 not paying rent since August. We were able to secure rent payments from our county and the CARES act. That ended in December however. We can’t evict or terminate the lease even though she is month to month. Trying to get her to pay while not making her mad since that could cause her to trash the place. Hoping that if there is a continuation of the eviction moratorium that there will be some money for landlords again.

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?

So there’s some money for landlords in the CARES act?

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

-ERD50

 

[MichealKnight]

About to retire, worried about Landloring

I'm 46, and I will be early-retiring........latest by February 1st so right around the corner and I am very concerned about this 'no eviction' mindset that is becoming more pervasive.

Until now, earning a rather realistic 4-5% annual return by renting out homes was a key part of my nest-egg-management plan. I believe that America's population will increase, and I feel that everyone needs a place to sleep, rather basic theory and furthermore I truly want to diversify from 'paper assets' the best I can and 30-35% allocated in physical homes is my plan.

OK, I AM NOT TRYING TO LAUNCH A POLITICAL DISCUSSION. The following are just for example purposes and I will not state my opinion.

To me, it's not about the CARES act - that is *today*. To me it's about trends and what is coming in the future. And if you look at issues from minnimum wage hikes, to paid family leave, to marriage laws....it all starts with rhetoric that eventually becomes part of the national dialogue and then eventually finds its way into law.

If you look around, you'll see reports of people talking "no evictions!" and graffiti to that effect. and you don't see much pushback. Again...it all starts with words.

Also, look at today's new crop of political leaders. Look at their mindset and philosophy. Ask yourself....are they more favoring of landlords, or more sympathetic to memes and trends du jour such as "no evictions!".

I would say that as the generation and mindset shift continues..... there *will* be more stringent regularions on rent increases and evictions.

Long_term I feel this has reduced *some* of the allure for me and in coming months I hope to research and find defense mechanisms.

So far I only own 2 investment homes - and my rule has been that if a tenant has a complaint, fix it FAST, and not on the cheap. For instance a Mom reported her washing machine not working. My property manager said it will be a week to get it fixed and I said "no, get a new machine delivered NOW". But on the flipside, NO problems with tenants.

However, once people have the protection of law, attitudes will indeed change.

I truly want to own 5-7 rental homes. Soon. But I believe that within 10 years, people will be allowed to not pay rent, and have much more protection than they have now.