Eviction crisis coming?
Berry StarnesPro Member
Member since 2021 · 51 posts · 22 votesEviction crisis coming?
Most Popular Reply
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5yOriginally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
31 Replies
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
- Member since 2021 · 51 posts · 22 votes5y
Originally posted by @Joe Splitrock:
Originally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
Thanks for your feedback
- 5yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Joe Splitrock:
Originally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
I agree, and don't completely agree.
I think that those REI that have a network of other REI who for the most part haven't had rent nopay issues feel this way. However there are many on the other side, that have had enough nopays that evictions may be an issue. I have a network of both, so I see this as a potential problem, that could be anywhere from a slight problem to a huge one. I see a potentially bigger one though, that those %&##* in Washington didn't think of (what else is new). Foreclosures.
I know a number of REI that have been able to get their lenders to allow delays in loan payments due to the moratorium with the understanding that any back payments must be paid once the moratorium was lifted (with a grace period giving time to collect back rents). Well, we've arrived at that time. How many back rents are not going to be paid? How will this result in foreclosures?...and how many? Even if this is a slight problem, how will it impact the out of control RE pricing? Will it?
This will be a very interesting period for REI and the industry as a whole.
- 5yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
When you find a place, ideally it will be vacant and you can find your own tenant. If it is occupied, then verify that they are current with their rent, what their rent is and make sure you get prorated rent and the deposit transferred to you at closing. Rend through the lease to make sure you know what is and isn't covered.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes5y
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
Skyline Properties - Member since 2021 · 51 posts · 22 votes5y
Originally posted by @Joe Villeneuve:
Originally posted by @Joe Splitrock:
Originally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
I agree, and don't completely agree.
I think that those REI that have a network of other REI who for the most part haven't had rent nopay issues feel this way. However there are many on the other side, that have had enough nopays that evictions may be an issue. I have a network of both, so I see this as a potential problem, that could be anywhere from a slight problem to a huge one. I see a potentially bigger one though, that those %&##* in Washington didn't think of (what else is new). Foreclosures.
I know a number of REI that have been able to get their lenders to allow delays in loan payments due to the moratorium with the understanding that any back payments must be paid once the moratorium was lifted (with a grace period giving time to collect back rents). Well, we've arrived at that time. How many back rents are not going to be paid? How will this result in foreclosures?...and how many? Even if this is a slight problem, how will it impact the out of control RE pricing? Will it?
This will be a very interesting period for REI and the industry as a whole.
Joe, This was my logical conclusion. If there are many people delaying their payments then it is essentially a large balloon payment. The way our country lives paycheck to paycheck makes it hard to believe that many of these people will be able to pay. Most everyone I know is NOT paying student loans, but when it starts back in September how will they be able to pay for this? They have been used to using these funds to do other things with for the past 18 months. Maybe they have been investing in stocks..so, do they have to sell for a loss (let's face it most of these people were investing in high flying Kathy Wood Fund stocks)? Drag the market down? Rent/mortgage due, student loans due, inflation, nobody working....I don't see this ending well. Granted the housing market is showing solid signs per the data, I don't think we are calculating the past record of our society into what is about to happen in the near future. I foresee plenty of foreclosures coming. I will wait patiently for these opportunities.
- 5yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @JD Martin:
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
You are 100% correct. The problem is, not every REI falls into that group.
- Member since 2021 · 51 posts · 22 votes5y
Originally posted by @Joe Villeneuve:
Originally posted by @JD Martin:
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
You are 100% correct. The problem is, not every REI falls into that group.
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Berry Starnes:
Originally posted by @Joe Villeneuve:
Originally posted by @JD Martin:
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
You are 100% correct. The problem is, not every REI falls into that group.
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
One thing your going to see is massive rent increases in some areas.. of course areas dominated by Section 8 will stay fairly consistent but in free market rents landlords are going to really go for it .. Now time will tell if it will work if by raising rents 20 to 30% coming out of the moratorium will create vast amount of vacancy's and rental rate wars among landlords OR there is simply not enough housing to put people in and it creates this spike. Not to mention some tenants being pretty peeved and take it out on their rental on the way out..
- 5yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Berry Starnes:
Originally posted by @Joe Villeneuve:
Originally posted by @JD Martin:
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
You are 100% correct. The problem is, not every REI falls into that group.
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
Not true.
- 5yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Originally posted by @Berry Starnes:
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
Maybe the older more seasoned ones are, but there are a ton of newbies on here.....several new ones every day.....they are certainly not the cream of anything yet, may never be.....
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Bruce Woodruff:
Originally posted by @Berry Starnes:
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
Maybe the older more seasoned ones are, but there are a ton of newbies on here.....several new ones every day.....they are certainly not the cream of anything yet, may never be.....
YUP when you see 10 post a day " Hey I just bought my first rental" and others on BP have decades of experience and everything in between. And for sure its not a one size fits all industry. Location matters Tenants matter and of course condition of the property once brought into service matters.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes5y
Rent collections were barely moved by covid. (Per Apartment Building Owners Association)
Mortgage collections barely moved. Lots of people claimed forebearance just in case, but the vast majority of people who actually continued to make their mortgage payments, so delinquency rates barely moved. (Per Mortgage Bankers Association).
Of course, telling people there is no crisis doesn't make for good click bait. Sensational stories rule whats posted online and in the news, but the fact of the matter is the crisis everyone expected simply never emerged.
District Invest Group546 Reviews - Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes5y
We've been lucky but then again we screen, screen, screen. BUT lately whenever there is a vacancy we see that the mkt rents have increased so much that we just cash-in, staying just under those higher rents & we always get it. Plus we rarely have any down time between tenants.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Joe Villeneuve:
Originally posted by @Joe Splitrock:
Originally posted by @Berry Starnes:
Not to play Gloom and Doom as I am genuinely curious. Since I currently am in the process of researching for my first investment property I don't have any first hand knowledge of this situation. From the few (one) that I have heard from their tenants are surprisingly paying rent. However, it makes sense to me that there should be tenants not paying their rent. I was wondering how many investors here have tenants they fear they will need to evict due to the moratorium being lifted? Are they not paying? Thanks!
From talking with hundreds of landlords, this doesn't seem to be a widespread problem and it will vary regionally. This is nothing for you to worry about at this point in your investing journey. The media and politicians are making this a bigger issue than it is for their own benefits.
I agree, and don't completely agree.
I think that those REI that have a network of other REI who for the most part haven't had rent nopay issues feel this way. However there are many on the other side, that have had enough nopays that evictions may be an issue. I have a network of both, so I see this as a potential problem, that could be anywhere from a slight problem to a huge one. I see a potentially bigger one though, that those %&##* in Washington didn't think of (what else is new). Foreclosures.
I know a number of REI that have been able to get their lenders to allow delays in loan payments due to the moratorium with the understanding that any back payments must be paid once the moratorium was lifted (with a grace period giving time to collect back rents). Well, we've arrived at that time. How many back rents are not going to be paid? How will this result in foreclosures?...and how many? Even if this is a slight problem, how will it impact the out of control RE pricing? Will it?
This will be a very interesting period for REI and the industry as a whole.
I will admit I am clouded by my local view of things and real estate is very regional. My network of people is mostly here on BP or local landlords. My market has done particularly well at delivering rent assistance from early in the pandemic and eviction freezes came late and lifted early. My city is at near 100% occupancy in all rental units. I don't even see foreclosures being an issue here, because anyone in trouble could easily sell the property before it even went to foreclosure.
I do wonder nationally and in areas with prolonged COVID shut down if there will be repercussions. Even if there is not a wave of foreclosures, increased housing inventory from those looking to sell after payments come due will be a factor.
- Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes5y
I had a couple of cash tenants in the same duplex play games with the rent money.....and they were the same ones that were doing so before Covid. They are now "former tenants".
As a further hedge against inflation I promptly fired the PM that was managing that duplex because I had basically been begging them to put Section 8 tenants in that duplex for years and they pretty much refused to do it. I hired a PM that is putting Section 8 tenants in the duplex.
As for rasing rents by 20-30% I do not think that is the wisest idea. That will have a tendency to make your tenants a little upset,...even if they are paying well under market rent. I'd still keep it at somewhere between 5-10%.
- Member since 2021 · 51 posts · 22 votes5y
thank you for all your Rosy Forecasts! It's encouraging to hear that nobody had any issues with tenants during this time. I'm in Michigan which was one of the states that locked up and never seemed to want to open up. We had a few restaurants that had to open up against orders or they were going to go under. Can't fault them for that. I have seen numerous for sale signs on commercial real estate (too many to count) and "now hiring" signs on every single business. Not joking. Something just doesn't add up for me, so I wanted to make sure that things were as great as everyone says they are. I still have a shred of doubt about what the immediate future brings when it comes to tenants being willing to pay or having jobs once stimulus and unemployment dries up. Be fearful when others are greedy keeps popping up in my head. However, Real estate may be one of the best places to be in during this time as inflation kicks in and there will always be deals to be made. I can't help but think the can has simply been kicked down the road a little on this one.
- Real Estate Agent · DFW Metroplex · Member since 2020 · 9 posts · 4 votes5y
@Berry Starnes I think as a new investor your in a unique position, entering the market at this time. By going through due diligence you can see, if a property is tenant occupied, what their track record has been with rent payments. If you pass on deals that are potentially eviction situations or non paying tenants and focus on finding ones with good tenants in place or placing well qualified tenants, you will probably save yourself some headaches. Just one man’s thoughts.
- Member since 2021 · 51 posts · 22 votes5y
Originally posted by @Aaron Clough:
@Berry Starnes I think as a new investor your in a unique position, entering the market at this time. By going through due diligence you can see, if a property is tenant occupied, what their track record has been with rent payments. If you pass on deals that are potentially eviction situations or non paying tenants and focus on finding ones with good tenants in place or placing well qualified tenants, you will probably save yourself some headaches. Just one man’s thoughts.
One man is all it takes. Thank you for your comment
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Russell Brazil:
Rent collections were barely moved by covid. (Per Apartment Building Owners Association)
Mortgage collections barely moved. Lots of people claimed forebearance just in case, but the vast majority of people who actually continued to make their mortgage payments, so delinquency rates barely moved. (Per Mortgage Bankers Association).
Of course, telling people there is no crisis doesn't make for good click bait. Sensational stories rule whats posted online and in the news, but the fact of the matter is the crisis everyone expected simply never emerged.
If it had emerged like the Cicada's we would have had a melt down like 2008 or worse.. instead we had a blip for 2 months or so when investor capital froze or slowed retail never did and now we have one of the great bull runs in real estate ever the last 10 months or so.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Berry Starnes:
thank you for all your Rosy Forecasts! It's encouraging to hear that nobody had any issues with tenants during this time. I'm in Michigan which was one of the states that locked up and never seemed to want to open up. We had a few restaurants that had to open up against orders or they were going to go under. Can't fault them for that. I have seen numerous for sale signs on commercial real estate (too many to count) and "now hiring" signs on every single business. Not joking. Something just doesn't add up for me, so I wanted to make sure that things were as great as everyone says they are. I still have a shred of doubt about what the immediate future brings when it comes to tenants being willing to pay or having jobs once stimulus and unemployment dries up. Be fearful when others are greedy keeps popping up in my head. However, Real estate may be one of the best places to be in during this time as inflation kicks in and there will always be deals to be made. I can't help but think the can has simply been kicked down the road a little on this one.
Keep in mind Landlords in many areas were affected.. my GC here in Oregon owns about 25 rentals and 1 of his clients has not paid since the start of covid and thats a 2500 dollar a month rent.. some of the apartment owners in some areas have some serious delinquencies some dont. but you starting out your on the back side of this.
- 5yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Originally posted by @Jay Hinrichs:
Originally posted by @Berry Starnes:
Originally posted by @Joe Villeneuve:
Originally posted by @JD Martin:
I have not had a single tenant miss a rent payment due to COVID or anything else. Ever.
Set your expectations on the front end, get the right tenants, own property in a landlord-friendly state. That's my advice as you look to buy.
You are 100% correct. The problem is, not every REI falls into that group.
My guess is the majority of REI on BP are the cream of the crop. There are plenty that are flying by the seat of their pants
One thing your going to see is massive rent increases in some areas.. of course areas dominated by Section 8 will stay fairly consistent but in free market rents landlords are going to really go for it .. Now time will tell if it will work if by raising rents 20 to 30% coming out of the moratorium will create vast amount of vacancy's and rental rate wars among landlords OR there is simply not enough housing to put people in and it creates this spike. Not to mention some tenants being pretty peeved and take it out on their rental on the way out..
In my expensive RE market, the RE has appreciated over 25% in the last year (that is close to $200K increase in value in the last year on average). That pretty much means there will be zero foreclosures in this market.
The rents after a flattish 2020 (first flat year in a decade) are going bonkers. What do you do with good tenants if the market rent is going up >20%? I know some will be shocked if I raised rent at the market rate increase, but some of my good tenants that were ~$200/month under market rent a year ago are not $500 to $600/month under market rent.
The ironic part is that I was advocating for extreme rent increases to compensate for the increased risk resulting from the extreme COVID regulations. In my market we likely have the most extreme covid rental regulations in the nation. The tenant could not pay and break every item on the lease not related to health and safety and you cannot legally evict them. I, therefore, understand the extreme market rent increase. Increased risk dictates higher compensation to compensate for the increased the risk.
The local politicians have caused this extreme rent explosion. They were reacting to what the tenants wanted without considering the likely consequences. Not enough supply/rentals, newly identified risks, investment value appreciating over 25%, a low rent increase rate in 2020. It is easy to see why rents are increasing like never before.
Some of my tenants are going to be shocked at their next rent increase. We sent out a few in the last month with $300 to $400 increase. None of them gave notice yet and with this increase they are all still below market rent.
In my market there will not be an eviction crisis, but it seems like the already outrageous percent of income required to cover housing expenses is likely to increase further.
- 5yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
With their last announced extension of the national Eviction Moratorium, the CDC included a statement that this would be the last extension. Given the politics involved, it wouldn't be a shock if they backtracked on that, but it would be a surprise out of left field.
So, assuming this end of the month expiration date holds for landlords, what can landlords expect?
Well, with hundreds of thousands, if not millions, of backlogged cases, landlords should expect the following:
1) A landlord just starting the eviction process now, should expect to wait 3-6 months to get an actual court date, depending on the jurisdiction.
2) Judges may still adjourn cases to force landlords to pursue CERA funds instead of eviction. Expect judges to side with any tenant that claims they have applied and just need more time.
3) While it would be more efficient for courts to continue to use Zoom for hearings, courts may deliberately switched back to in-person hearings, and force landlords to sit in courts for hours, to put more pressure on landlords to work out deals with tenants.
4) With the backlog of cases, expect overworked court staff to make more mistakes, like losing paperwork. Landlords should not assume their case is being scheduled and passively wait, they should followup with courts to confirm their paperwork is being processed.
5) Landlords will have the same problem with overworked eviction attorneys. They should followup with their attorneys to confirm paperwork is being submitted to courts and track discussions & dates for accountability.
6) Judges will be more receptive of tenant proposed payment plans to address past due balances. Landlords should protest payment plans that exceed the remaining term of the lease and request proof the tenants are back to work and how much they are making.
7) Bailiffs will also be busy. Even when a judge issues a judgment in favor of a landlord, tenants will be less likely to move as many will choose to believe the Eviction Moratorium isn't over. Other tenants will have a difficult time finding landlords willing to rent to them.
8) Squatters will be a bigger problem for landlords, especially in Class C areas. Tenants that can't find a landlord willing to rent to them, that are then removed by bailiffs, will choose to squat in vacant properties.
9) Application fraud, regarding residence history, will increase and be an ongoing problem. Applicants will claim they lived with relatives or have people pose as their previous landlord, to hide their recent history of not paying rent. Landlords will have to do more research to get to the facts.
10) Landlords will have to decide whether to consider recent nonpayment of rent history an "act of nature" or not, and how it will affect their application approvals. HUD will eventually issue a Fair Housing statement regarding the Eviction Moratorium and indirect discrimination.
COVID has caused unprecedented challenges for landlords & tenants, and the ripples will continue to cause challenges for several years.
Logical Property Management4.9458 Reviews - Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes5y
Interesting read on rents...
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