Real Estate News & Commentary

What the December Coronavirus Stimulus Might Mean for Real Estate Investors

Expertise: Real Estate News & Commentary, Real Estate Investing Basics, Mortgages & Creative Financing, Personal Finance, Personal Development
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Paper check from the United States Treasury

The ongoing pandemic has hit our country hard, causing significant loss of life and changing our habits. We are all looking forward with the hope that new vaccines will quickly get us back to a new normal.

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Interestingly, however, from the standpoint of the typical BiggerPockets single family rental investor, 2020 has been a surprisingly stable, if not profitable year.

Does anyone reading remember when, in early April, a bunch of big time news outlets reported how “NEARLY A THIRD” of American renters didn’t pay April rent? Well, those headlines got a lot of clicks and some good discussion going on BiggerPockets, but the fact of the matter is that the biggest reason for that drop in April rent collections was that we were comparing rents collected April 1-5, 2019, with rents collected April 1-5, 2020. April 4th and 5th were Saturday and Sunday in 2020. Banks are closed on Sunday.

Oops. False alarm. The real estate market didn’t crash, and doomsday did not materialize.

All in all, rent collections have been remarkably strong for landlords in the single-family rental market, and we will probably end 2020 collecting just 2-3% less rent than 2019. In fact, rent prices have increased, on average, across the country for single-family rentals.

That, coupled with strong appreciation rates, means that many landlords I know are having one of the best years in a long time.

Note that it hasn’t been a picnic for the entire industry. Apartment rents have fallen year over year. Renters and homeowners alike are ditching the city and their apartments for single-family homes.

Related: Where Is the Housing Market Headed in 2021? Top 10 Predictions From an Economic Expert

And, of course, this dynamic is impacting some markets differently. It’s not a good year for San Francisco and New York landlords. There are also plenty of stories about landlords unable to evict poorly behaving tenants, plenty of markets severely impacted by COVID pressures, etc. However, the fact of the matter is that for all the doomsday predictions, the market as a whole has held up remarkably well.

And I think most of us will agree that massive, unprecedented government intervention played a big part in that.

Government’s Role in the Single-Family Rental Market

While the $1,200 stimulus checks made all the headlines earlier this year, I think the real backbone of the rental market in 2020 has been the CARES Act’s impact on unemployment and its expansion of benefits.

Unemployment benefits in the U.S. are complicated, but to understand how they might impact the rental market, we need to look at two things:

  • The amount of unemployment benefits
  • The length/duration of unemployment benefits

First, let’s talk about the amount of employment expanded by the CARES Act. Prior to the CARES Act, unemployment benefits averaged about $378 per week.

The CARES Act increased minimum payouts to 50% of the recipient’s previous weekly payout, slightly adjusting the average payout starting in April. It also added an extra $600 per week through the end of July 2020.

Second, the duration—most unemployment benefits expired after about 26 weeks prior to the CARES Act. For example, in a world with no CARES Act, someone laid off on April 1st might stop receiving benefits around October 1st.

Under the CARES Act, benefits extended for 13 more weeks. With the CARES Act (April edition), someone laid off on April 1st might stop receiving benefits on January 1st. This person is receiving far more in benefits, in most cases, and for a longer duration. This is what helped millions—maybe tens of millions—of tenants continue to pay rent throughout 2020.

As a student of the small residential real estate market (1- to 4-unit properties), the two periods that worried me a bit this year were September and then January 2021 (upcoming). September worried me because I wondered just how important that $600 bonus per week was for many households. The $600 per week expired at the end of July, so you’d think that it would have been available for August rent, but not for September rent.

Related: Top 50 Housing Markets for Home Price Appreciation and Sales Growth in 2021

My concerns about September appear, in retrospect, to have been unfounded. We didn’t see a collapse (or really any noticeable changes) in the rental market come August.

January 2021 worried me, as well, because with all the turmoil going on in politics this year, I wondered if the government would pass another stimulus package, extending unemployment yet again.

Well… hopefully you at least read the headline of this article. Yes, we passed another round of stimulus.

While there were other factors included in the April CARES Act, like the PPP programs preserving jobs and the $1,200 stimulus checks, for me the real meat and potatoes supporting rents in the single-family rental market appears to be good old fashioned (but seriously turbocharged) unemployment benefits.

Now, About the Current Stimulus Package

That was a lot of background, but I think it’s important to review that and have it all as context as we digest the latest and similarly massive December 2020 stimulus package and think about the consequences that it might have on the rental market.

First, what’s in it:

  • $286B for direct aid (mostly direct checks and unemployment benefits)
  • $325B for small businesses
  • $82B for schools
  • $69B for public health measures
  • $45B for transportation
  • $25B in rental assistance
  • A bunch of other “smaller” items adding up to a total of ~$900B

While the new stimulus goes lighter on the stimulus checks—$600 per person, instead of $1,200—it continues to pump money into unemployment or directly to households via stimulus checks to the tune of $286 billion. Note that in recent days, our government appears to be gearing to increase stimulus checks to $2,000 per person, up from $600 per person prior to Christmas. Unemployment benefits will be continued for another 11 weeks and further boosted by another $300 per week on top of that through March 14th. This is the heart of the bill, or as I’ve said probably too many times in this article, the “meat and potatoes” as far as the single-family rental market is concerned.

The other piece of the bill that impacts real estate investors (aside from general stimulus that real estate indirectly benefits from) is the $25 billion allocated for rental assistance. This will be allocated toward lower-income families to help them pay rent or pay off past-due balances.

Related: Foreclosures in the US Increase as COVID Cases Continue To Rise

Coupled with this, the measure extends the eviction moratorium through January 31st.

Moody’s Mark Zandi estimates that tenants nationwide might owe $70 billion in back rent by the new year—or about $5,850 per family across 12M families. Eviction moratoriums will have to be paired with rental assistance—perhaps as much as $100B by the time this is all said and done.

This $25B seems like it is just the tip of the iceberg to me. This is America, and I think our government is going to have a hard time halting evictions without making property owners whole on rents. While it may seem frustrating to some not to be able to evict a tenant and there may be timing issues with rent collections, I wonder if the eviction moratorium may ultimately be a form of subsidized rent for landlords. I wonder this because in conjunction with enforcing the eviction moratorium, I believe that the federal government and state governments will basically have to make good on all that back rent with various forms of rental relief.

So, What Do I Think Is Going to Happen?

After all that, I’m going to go with a pretty boring prediction: I think more of the same is going to happen over the next few years. I think that more stimulus is likely to come over the course of 2021, and that our government will continue to prop up households with unemployment and stimulus checks until the pandemic is “over”. I think that this will result in more of the same for real estate investors in the form of continued significant property price appreciation (for single family rental properties in particular), coupled with more modest rent growth.

I believe this because the big levers, at the very highest level, that impact landlords and rental property investors are:

  • Interest rates
  • Tenant demand
  • Inflation
  • Supply

Current government policy is to reduce interest rates and assure everyone that the low rates are here to stay. Low rates mean lower payments and rising property values.

Current government policy is to double and triple down on economic stimulus generally and distribute straight up cash to the unemployed and lower-income folks generally. This additional stimulus will keep demand strong.

Current government policy is to build up increasing amounts of debt and expand the money supply, leading to higher risk of inflation.

I really don’t see a big change in supply coming. We still aren’t building enough homes, and I think we will continue to see rents and property prices increase until we do. The lack of supply would drive prices up even if inflation or low interest rates weren’t changing variables.

I think that Congress is going to keep pumping money into the economy until this pandemic is “over.” I think that the Fed is going to keep interest rates low for quite some time. And I don’t think that any sane tax hike can possibly pay for the actions our nation has taken in any short-term to medium-term timeframe.

If low interest rates are here to stay, that tells me that prices have even more room to climb. While you may think prices are insane, the fact is that the monthly mortgage payment matters a lot more to most homeowners (and maybe a lot of real estate investors) than the price of the property. When interest rates fall, the payment decreases, and your average homebuyer can buy more property at the same price. Your landlord can still achieve cash flow on a lower rent-to-price ratio.

The Constitution protects private property, and I think that it will be hard to indefinitely extend the eviction moratorium without rental relief. Relative to the massive numbers (trillions and trillions), a hundred billion or less to bail out tenants who haven’t paid rent during the eviction moratorium is a small price to pay and will avoid a lot of messy lawsuits (i.e., landlords suing former tenants and/or the government for back rent).

Related: Housing Markets Post-COVID: Which Ones Win? Which Lose?

I also speculate that with stimulus money and unemployment, many folks have similar levels of income and cash flow over the course of 2020, compared with 2019. And we have certainly seen a reduction in spending in most households over 2020. That money, in most cases, is going to be available to be put toward rent.

Again, we are not seeing a dramatic drop-off in rent collections industrywide. The government has been gifting hundreds of billions of dollars to folks who are disproportionately tenants, and that money flows right on through to their landlords in the form of the rent check.

The Bottom Line

It appears to me that the current set of policies are likely to create a world in which low interest rates may be here to stay for a while and in which rents are being subsidized by society by adding to the public debt and likely ultimately paid for via inflation.

Of course, I’m sitting here as the CEO of BiggerPockets, saying that I think real estate is likely to benefit from the current state. I get it, conflict of interest, know your source and all that. But honestly, I think that’s the case—at least in the short-term to medium-term.

One day, when interest rates rise and/or Fed policy changes and inflation is no longer a thing, we might have a giant mess in the single family rental market. But I wonder if that day is some time off. I’m just one guy, and I could be completely wrong on all this, but this is how the market presents itself to me today.

I also can’t resist, and I know I’ll get beat up in the comments for this, but I want to leave you with a final thought. Take a minute and consider the three big levers that our government is pulling:

  • Effectively insuring landlord rents with unemployment and rental relief benefits
  • Forcing interest rates lower
  • Setting our country up for inflation long-term

These items, in my opinion, combine to amount to the destruction of wealth for the poor and middle class, siphoning wealth from wage-earning Americans and into the pockets of landlords and real estate investors. Admittedly, the alternative, allowing evictions to take place, rents to correct, and renters and landlords to go bankrupt alike, is a hard, stark outcome.

What do you think? Am I right? Or am I wrong?

Let me know in the comments!

Scott Trench is a perpetual student of personal finance, real estate investing, sales, business, and personal development. He is CEO of BiggerPockets.com, a real estate investor, and author of the best-selling book Set for Life. He hopes to now share the knowledge he has acquired with others so that they will have the tools they need to repeat his results in just 3-5 years, giving them the option to go anywhere they want in the world, work any job, start any business, or finish out the journey to financial independence and retire young. Scott lives in Denver, Colorado and enjoys skiing, rugby, craft beers, and terrible punny jokes. Find out more about Scott’s story at JoeFairless.com, MadFientist, and ChooseFI.
    Devan Williams Rental Property Investor from Clarksville TN
    Replied 26 days ago
    Hi Scott, Interesting point on inflation. I spoke to a financial advisor at my bank in September and asked him about the “fiscal cliff” that was such a hot topic a few years ago, and how the nation had gone way over it. His response was alarming, essentially, no one knows how much longer the US can continue to print dollars thru the crisis, but it will go further than most people think it can, but at the end of the line, the rebalancing/correction/crash will leave a scene like something from Zombie Land. I still see my growing real estate portfolio as a safer option long term than a stock market built on imaginary money. Thanks for the read and Happy New Year! Devan
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 26 days ago
    Thanks for the comment, Devan! I appreciate the feedback. Happy New Year! I have no idea how long that can last, but it does seem like we've stopped even pretending to have public debt that can be reasonably repaid. Something's up. And I have to think real estate is a safer bet than a lot of options...
    Christopher Smith Investor from brentwood, california
    Replied 26 days ago
    No need to wait for Zombie Land, the currency is already going under devaluation. It's actually increasing the value of overseas investments because of our currency devaluation. So the process of "printing" money is already having an effect.
    Christopher Smith Investor from brentwood, california
    Replied 25 days ago
    You can easily see this if you look at the currency tilt. I have some significant investments in china which have been moving up robustly due in part to the swing toward the yuan.
    Christopher Smith Investor from brentwood, california
    Replied 25 days ago
    Dollar has already lost 10% of its value against the Yuan.
    Brian Garlington Realtor from Oakland CA
    Replied 26 days ago
    @Scott Trench Great article my man. It seems that if the government wants to continue with the eviction moratorium.....the day "should" come sooner rather than later where they help out the very people (us landlords) that have been "housing" folks that aren't paying rent. Yes we know that the tenants are supposed to magically come up with all that back rent by February 1,2021.....but many of those tenants are simply not planning for this.....or are simply ignoring this fact. Time will tell, and again, great article my man.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Brian - really appreciate the comment here. I don't know whethere the government "should" bail out landlords from a moral perspective, but I think that from a legal perspective, it's probably either that, or they get 12 million lawsuits... against BOTH tenants AND the government.
    Seth Williams Real Estate Broker from Winthrop, MA
    Replied 26 days ago
    Awesome read!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Thanks, Seth!
    Daniel Peavey from Atlanta, GA
    Replied 26 days ago
    Smarter than Brandon!!! 😂😂
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    SHHHH!
    Tim Parker Investor from Bremerton, Washington
    Replied 26 days ago
    Couldn't agree more! Inflation is the only way out for government. But the danger is VENEZUELA. Short term, I agree that property owners are safe. We have to be careful, though, because eventually value will matter.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Yep. It's scary, but it makes me wonder if now isn't the time to begin levering up... Not saying I will or that I'm committing to that, but I wonder if the exact opposite of 2008's crisis is about to happen.
    John Daley Real Estate Investor from Kansas City, MO
    Replied 26 days ago
    Agreed. No one can predict what long term effects will be, but I think we are in for more of the same for the next 1-3 years.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    We will see!
    Victor Thompson Investor from Athens, GA
    Replied 26 days ago
    Hey Scott. I enjoyed the article as well and agree with you that the alternative would be a mess, especially during the pandemic. I also, worry about the fiscal cliff because I am confused what it is exactly and all the variables involved. I am a small time landlord that had tenants not paying rent before Covid and I could not evict because of the moratorium. I am weathering the storm, but am reluctant to think that tenants that were not paying rent will start paying when they get relief for two reasons. 1) They have to apply for rent relief 2) They have to actually pay the rent when they receive the money. Have had people claim they have Covid previously and although that is terrible if true there is no way to verify. I know landlords that have not received rent is a small group, but I would like to see some rent relief seeing that there was no way to evict or collect rent and my landlord bills were never paused. Again thanks for sharing your experience view.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    I think many landlords who are not able to evict will either sue their tenants AND the government for imposing on their rights to private property, OR, the government will provide more rent relief. We'll see.
    Chris Kuropatwa from Atlanta, GA
    Replied 26 days ago
    Thanks for this. Good read.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Thanks, Chris!
    Glenn F. Rental Property Investor from Virginia Beach, VA
    Replied 26 days ago
    "Things" or assets like houses, cars, gold, food, etc will always keep their intrinsic value. That's why they inflate when the dollar looses value. One positive is if you have mortgages you are paying that will cheaper dollars in the future. Lock in those long term fixed rates! And Scott, how come you aren't pro? Ha
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    I am "Premium" :).
    Sharon Rosendahl Investor from Stanwood, Washington
    Replied 26 days ago
    Great article. I know the cliff is coming but I want to ride the wave before the crash. I am careful about not over leveraging. I am very conservative with my personal living situation. I feel that the next 4 years there will be lots of propping up going on so life will be ok.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    The question is whether the cliff will be inflationary or deflationary. In an inflationary environment, those who are under-leveraged may miss out! It's crazy - my analysis is telling me to lever up and buy a lot more, but I am too conservative to deviate from my long-term approach much.
    Jamaal Gill
    Replied 26 days ago
    Hello Scott, Great article. I'm a prospective real estate investor so I'm still a baby compared to the rest of you pros. In my experience of working in Finance and seeing how inflation worked after the 2008 crisis, I see in the long run that inflation will be a huge factor in our lives but not as much as people think. The fact that USA is printing money is hardly a surprising fact when on a global scale, the rest of the world is also doing the same while at the same time hedging their currencies on the US dollar. The dollar is actually propping up the entire world economy at the moment (in my opinion). Until, traditional institutions begin to see the dollar as a risk, we won't see a divergence of investment into anything else. We have been seeing a lot of money being dumped into bitcoin but unfortunately, I don't think the technology framework is there yet for it to be accepted as a dominant form of currency so people are leveraging/hedging their bets that the Federal Reserve won't be able to control the amount of inflation (or "zombieland" as one of the previous commenters mentioned) from getting out of hand. In my opinion, and again, I'll preface this with 'it's my opinion', the technology to use bitcoin as a dominant form of currency isn't there. The bitcoin exchange would not be able to handle the amount of data that normal credit card processors (VISA, Mastercard, Discover, AMEX) could handle. Sorry...just now getting to real estate. So for real estate, the pandemic presents an enormous opportunity for buying if you have cash when the eviction moratorium finally runs out and many home owners start to go through the process of foreclosure (or decide to sell their homes at a discount). The enormous amount of debt that COVID has caused not only for real estate investors but tenants alike will put a damper on the financial markets (decrease in spending, correction in the stock market, real homelessness). There are many foreclosures that haven't happened due to COVID as well. Personally, depending on the type of government we have, they may in fact try and create a Universal Basic Income program similar to the stimulus checks we've been receiving. But we'll see about that. Anyways, Inflation is a scary issue to think about for the future but it won't be an issue as long as the rest of the world continues to buy American bonds (treasury bonds) and use them as the world's safe haven for investments. When the economy grows enough to cease the printing of cash (expansionary monetary policy) then we should start to see some glimpses of the inflation to which Scott mentions but the Federal Reserve can control this very carefully via traditional institutions. Low interest rates aren't going anywhere for the next 5-10 years. 2022 is where we may see some normalcy again. 2023-2028 interest rates will remain low (they tend to stay low also depending on which party is in control of the executive office). By 2030, unless something else major happens, we should start to see the interest rates climbing again so fixed rates are your friend in the long run and variable interest rates can be played with in the short term (since folks are trying to make $$ off the spread from the fed funds rate and their target rate). I'd still stick with fixed interest rates in the short term only because for cash flow purposes, they're easier to manage. Ok my word diarrhea is over. Thanks for your informative article, Scott!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Great points here! I would just chime in on two points here: First, we are not seeing an enormous amount of debt that COVID has caused for real estate investors and tenants alike. American debt levels are actually decreasing over the course of the pandemic. This isn't true for everyone, but it is true on average. Second, I think that the key assumption in your argument is that "inflation is not an issue as long as the rest of the world continues to buy American bonds" - this is the key thing that we take for granted. If that begins to change, I think things may get out of hand quickly from an inflationary perspective. Regarding your comments about bitcoin (or, similarly, but not mentioned by you here, a return to a gold standard), absolutely. The bitcoin network cannot process enough transactions to be practical for daily use. But, derivatives pegged to bitcoin and redeemable in bitcoin is one solution proposed that could work.
    Jake Blickenstaff Rental Property Investor from Athens, GA
    Replied 26 days ago
    Great read man! Looking forward to what the next couple years look like.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    We will see. I think that they will be great for investors, and hard for a lot of other folks...
    Josh Gold
    Replied 25 days ago
    Agree with Jamaal... inflation is a problem, but the alternative of not providing any expanded benefits and stimulus is much worse. At least the debt is in our own currency. Many countries owe large debt in someone else's currency, and that is even worse. As people pointed out, paying back your mortgages can get easier with inflation. Housing prices tend to outpace inflation in many, if not most US areas. So as a landlord you are in a decent position for when inflation happens.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    The alternative may be worse... temporarily. Our current approach may result in a worse problem down the line, however. It's good to have the world reserve currency, AND be able to print as much of it as we like. I hope that continues for many more generations.
    Domenic Fragomeni
    Replied 25 days ago
    Great article Scott. The people I talk to locally think I’m crazy when I tell them I really don’t think the market is going to tank in 2021. Sure, I’ve had probably 4 or 5 tenants out of 50 get behind on rent, but the other ones have paid as usual. I directed the ones that got behind to apply for CARES assistance through local agencies, and as of now I have collected 100% of rents that were due. I never thought I’d say this, but the government has actually done a really good job on this, at least based on my experience. One thing you didn’t mention was that for landlords that haven’t been as fortunate, the unemployment eligibility was expanded to include the self employed. I also got an SBA disaster loan on another business I own, and the streamlined application process was so simple that I couldn’t even believe it. Landlords can apply for these as well. I don’t know that there’s ever been a time when government assistance was so easily accessible to those that need it (and frankly, even those that don’t). And I’m not sure there ever will be again
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Interesting perspective here! I haven't directly worked with the government processes handling the distribution of funds and benefits. My commentary is more geared towards the market impacts and effects of the policy, rather than the quality of it's implementation.
    Steven Westlake Developer from Houston, TX (Cypress)
    Replied 25 days ago
    Thanks Scott, I’m on both sides of this unemployed oil field engineering guy and owner of 6 units and a new build lot. And it’s starting to loom like I’ve worked my last W2 year, yea!
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Congrats! Or, I'm sorry? LOL don't know which one to say here, but I'm guessing it's "congrats" - I hope your real estate career goes swimmingly!
    Steven Westlake Developer from Houston, TX (Cypress)
    Replied 25 days ago
    Look not loom, stupid spell correct
    George Cocokios Investor from Goodyear, Arizona
    Replied 25 days ago
    Great article Scott, you always offer valuable insight and opinion, so for that I thank you. I'm a real estate investor in Phoenix and have been fortunate to not be affected by covid regarding non payment this year, and for that I am very thankful. All my tenants found a way to pay rent, a few paid late, but all in all, nothing missed. In my opinion I feel there is a fear that people will be evicted when that opportunity arises for not paying rent, and then it may be hard for them to find decent housing. Phoenix is a smoking hot real estate market right now, for ownership and investors. Buyers are fighting over each other and offering over asking price for a low inventory of existing homes, and builders cannot come close to feeding the insatiable appetite for new builds. Investors are buying direct from developers and renting them out as there is very little existing available. All this has positively affected rents in Phoenix and 2021 does not see an end in sight. I agree with you and other readers that inflation will crop here soon, without a doubt, and that will just feed more fire to the housing market increase. I'd like to comment on Jamaal's post regarding price declines on upcoming foreclosures: I agree next year that may happen, but I don't think there will be the opportunity to buy at prices anywhere near where they were in 2008-2012, there is just too much demand for housing right now and too few available thus propping up prices from a competitive buyer standpoint. Real estate has been a blessing to me, but I am also hedging on a personal note as well in my strong belief that taxes will surely rise not just with the next administration but for many more administrations to follow. All this spending has to be paid back somehow, and that somehow will be in the form of higher tax brackets. I'm preparing myself now by moving as much as I can from taxable accounts to Roth accounts while the tax brackets are low. I'm greatful for having found BiggerPockets years ago and for all the tremendous posts and articles share by you Scott and others. Keep up the good work.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Thanks for the thoughtful comment! My one question here is about the "how" that the government will go about increasing taxes. Personally, and I might get beat up for saying this given my position here at BiggerPockets, but I think that a higher, flat tax on ALL sources of income, be it dividends, capital gains, or labor, would be more fair than the current system that taxes labor higher than other sources of income. While that would begin to solve the problem and make things more "fair", I also think that there's no reasonable tax hike that can get us to a balanced budget in the near term. We will either have to cut spending sharply, particularly on the greater than 50% of gov't spending that is medicare/medicaid and social security (even less likely than a massive tax hike) or inflate our way out. Inflation is the easiest, and I think by far the most likely outcome.
    Bernie Thornnton
    Replied 25 days ago
    WAKE UP you say (A bunch of other “smaller” items when you talk about the covid relief ) Well the smaller items you talk about are giving our hard-earned money to countries that hate and want to kill us I don't you but think that is something I wouldn't calling small WAKE UP AND QUIT BEING SHEEP
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Baa.
    Buonomo Dan
    Replied 25 days ago
    Recently we were notified that the tenant could no longer afford to pay the amount of rent he has been paying. With COVID we were concerned about getting a new tenant, do we agreed to lower the rent $400/month for him to stay. Is there any relief for us?
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    The demand is VERY high for homes. Much lower for apartments. Personally, I've found it a bit harder to find tenants in my duplexes and quadplexes. But, personally, I also chose to rent a nice condo, and got a great deal. So I get hit a little on the rental business, but offset that with great value in my personal life.
    David Rosenberg
    Replied 25 days ago
    If you are in Colorado there is an excellent program for your circumstance. https://dola.colorado.gov/doh_care/landlordLogin.jsf
    Marina Spor Investor from Buena Park, California
    Replied 25 days ago
    I too was afraid of finding tenants during Covid, but was surprised to find strong demand for 2 rental homes this year (around July) in Anaheim, CA. Both homes were nice and larger - 1 a condo and the other a house. I was even able to increase the rent to the new tenants.
    Brent Wilcoxen
    Replied 25 days ago
    With so many folks leaning towards inflation I’ll take the contrarian point of view. First, I agree that housing supply and demand factors point toward increasing prices over the next few years. As an investor that owns SFR’s I certainly hope that is the case. However, consider this. According to the Bureau of Labor Statistics, all items CPI ending November 2020 increased 1.2% YOY. That compares to an increase of 1.7% for 2019. The Wall Street Journal reports the Federal Reserve's balance sheet went from $4.14 Trillion on December 20, 2019 to $7.36 Trillion on December 18, 2020. That’s an increase of $3.22 Trillion YOY. (QE) The National Debt exploded to $27.45 Trillion from November 2019 to November 2020 according to statista.com. That’s an increase of $4.44 Trillion the past year. Combining the fiscal and monetary stimulus of $7.66 Trillion over the past 12 months with a paltry CPI increase of 1.2%, inflation doesn’t look like the immediate threat. Deflation does. The way I see it playing out is deflation in the near term. The Fed will fire up the printing press to a greater extent to pay for our ever increasing National Debt which will then lead to inflation. It’s the only way to service and pay our debt. And an easy out for our politicians. Ultimately it will lead to the world giving up on the United States as being the world’s reserve currency. The question then becomes will the dollar be replaced by bitcoin as Jamaal touches on, an Asian currency as Chris speculates, or a return to the gold standard? Or maybe something different altogether? To me this is the ultimate question. Guess wrong and your assets will plummet. But if you can get ahead of the game you are in the driver’s seat. This is what I’ve been trying to figure out the past year or so. I look forward to the comments and speculation of others. Thanks for the article Scott.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Brent - if the Fed had not acted, or ceased acting, then I would agree that deflation would be the bigger threat. If the currency was one that could not be printed, or was tied to a gold standard, or some form of hard money like Bitcoin, I'd also agree that deflation would be the threat. But the thing is that because deflation was a threat, and the Fed simply pumpd trillions of dollars into the economy, they were able to counteract deflation. That's the thing with our currency. Whenever deflation is present or a threat, we pump money in. Because of that, deflation is not as high a risk in my mind. It's too easy to avoid. We won't have that same control over inflation. I think when deflation looms, we'll pump money into the economy at all costs. When inflation looms, we might be helpless to stop it.
    Miranda Paton
    Replied 25 days ago
    I enjoyed your article a great deal, Scott. But the paragraph that starts with "This is America" and then proceeds to argue (on that basis) that the Feds will ultimately payback landlords lost me. I suppose this is because I'm a small-time landlord and I'm not sure the slew of us together is a "too big too fail" phenomenon for the government. Just how much does anyone care if a bunch of non-Huge Corporations lose their investments? Also, I own a duplex in Oregon where that state just passed HB 4401, measure which extends a state-wide eviction moratorium and also establishes a $150M fund to be used to compensate landlords. It is touted as a great measure for everyone because 1. a whole bunch of people aren't evicted during the winter and a pandemic, which is arguably benefits the public at large; and 2. this is the first moratorium to provide any help for landlords. The upside for landlords is that this process for getting back rent paid is shorter and cheaper than getting that via eviction, judgment and collection. The downside is that the landlord must agree to forgive 20% of that back rent. Here's a link to a one-page summary: https://www.lbrha.com/resources/Rent%20Compensation%20and%20Moratorium%20Extension.pdf Note that there is $150M in the compensation fund and that some kind of eviction moratorium has been in place for more than 6 months. Back rents are due in total 30 days after the moratorium ends. Tenants have to do very little to gain protection-- just provide an affadavit of financial hardship due to any number of reasons; landlords need their cooperation in filling out that form AND must inform tenants in writing of the eviction moratorium. There are some problems I can see. First, I think the lengthening of the eviction moratorium incentivizes non-payment of rent. If I recall correctly, folks who get more than 90 days behind on their mortgage never catch back up and lose their homes. With no equity to lose, why would tenants be any better? Thus, the longer the moratorium, the more economically-rational it becomes to let the debt continue to mount since you'll personally never pay it anyway. Will $150M be enough to make a sizable fraction of Oregon's landlords whole? I have no idea. Will Oregon do better at making sure the individual, "mom and pop" landlords get paid before the corporate investors do? I hope so. Note that that was not the way that first round of payroll lending went (Ruth's Chris Steakhouse, a publicly-traded restaurant, I'm looking at you). All this is to say to all y'all reading is that if you want to see how the quick weaving of a government safety net for the rental industry is going, keep tabs on what's going on in Oregon.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    Miranda - my point with "this is America" is that we have rights with respect to private property here. It's one thing for a tenant not to pay rent, for a landlord to evict the tenant, and then to be left holding the bag for the mortgage. It's another for the landlord to be forced to continually be left holding the bag, and unable to evict for a prolonged period of time, due to an eviction moratorium. I personally wonder if our supreme court will decisively call that a violation of constitutional rights (specifically, the 5th amendment), and require the government to make landlords impacted by the moratorium whole, or at least partially whole. Not really more of a comment than that! I could be wrong here.
    Matt Crusinberry from Hollidaysburg, PA
    Replied 25 days ago
    Unless government entities fail to use the funds allocated appropriately, then it's gets pushed to other parts of the gov. But tell me more how the government is going to help, as businesses continue to close... https://triblive.com/news/pennsylvania/pa-misses-deadline-to-spend-108m-in-rent-mortgage-relief-from-cares-act/
    Scott Trench President of BiggerPockets from Denver, CO
    Replied 25 days ago
    I'm a Milton Friedman guy, so I agree with you..
    Abdul Hamid
    Replied 25 days ago
    Thanks for this. Good to read all different comments.
    Amy Pfaffman
    Replied 25 days ago
    Thanks for the reflection. I'm a little confused, though. There's no rent relief yet, is there? I haven't even heard talk of that. I agree that it would be a good investment overall for the economy. I do hope we don't end up with an even bigger divide between the low- and middle-class folks and the more wealthy landowners. I don't think that's good for anyone in the big picture.
    Wes Salous Investor from Oklahoma city
    Replied 24 days ago
    Great article Scott. Gov should help renters financially to keep things in balance for us the landlords too. The US can and should spend on us the CITIZENS instead of international waste support and special groups lobbyists. Tax payers should see their money back where it needed in our country.
    Jim Thompson
    Replied 23 days ago
    Great article and comments from everyone. This is devolving from the original topic, but all on my radar now. I'd like to read more on "the financial cliff" mentioned, in terms that a non-economist might comprehend. Like how exactly might the poor and middle-class be impacted the most? With that, if correct, might provide ideas on how to avoid being impacted. As to Scott's comment "We will either have to cut spending sharply, particularly on the greater than 50% of gov't spending that is medicare/medicaid and social security (even less likely than a massive tax hike) or inflate our way out. " I agree spending is out of control by both major parties, but how could you overlook the pink elephant in the room... the military spending is $700B+ which actually is discretionary (maybe not by the lobbyists). Wouldn't we be more safe as a less debtor nation? Scott where are you with a Canadian style healthcare system as a potential long-term solution to the medicare/medicaid problem?
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 22 days ago
    Great breakdown Scott!
    James Edward Laws Jr.
    Replied 22 days ago
    Phenomenal presentation Scott! The growth of insight really shows in the alternative and parallel responses, especially the lengthy responses. Love your follow-up feedback; good food for the minds of all real estate investors!!!