Private Lending & Conventional Mortgage Advice

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Landlords don't need the SBA for the crisis they need Section 8

Posted Mar 31 2020, 16:25

Someone needs to call the White House and each Governors Office and stop this SBA insanity.

Landlords don't need "Loans" they need payment vouchers.  

Housing and Urban Development is the correct way to manage the rental issue.

This is the correct and efficient way to manage this at the Federal/State level.

This is as simple as it has to be.

Landlords register their properties from their Schedule E from their 1040 with Section 8 online.  

Tenants who have been approved for unemployment are automatically authorized Section 8 vouchers with online verification

At the end of the year landlords will receive a 1099-MISC for each property for the amount of rent received which is totally subject to depreciation.

At the end of the year tenants will receive a 1099-MISC for the amount of rent paid on their behalf and subject to their tax bracket.

This can all be set up online, is totally verifiable, and efficient.

When you no longer qualify for unemployment, you lose your section 8 and landlords only qualify for rentals that have unemployed tenants and not those with the ability to pay.

Again this can all be done online and is simple for both the Landlord and Tenant to understand.

It is also the correct way to do it by the Internal Revenue Code.

This SBA Loan program is a complete sham and is being run by the BANKS under guise of the DEPT OF TREASURY.

I would get a lawyer opinion before I would do this, because not only are you going to go bankrupt you are going to wind up dealing with the bank secrecy act and treasury regulations in addition to the IRC.

WARNING LANDLORDS YOU ARE PLAYING WITH FIRE IF YOU GO THIS ROUTE.  This is the worst way to do this.

You have to ask yourself why didn't congress or the executive branch think of doing it this way?

I will tell you why.  BANKS.

This is a way to run more money through the Federal Reserve and the Banking System.

This SBA sham is a way to bail out the banks and have Landlords on the hook.

I am totally confused as to why the Department of Housing and Urban Development isn't all over this.

I believe this isn't going to be what landlords think it is.

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Anthony H.
  • Rental Property Investor
  • Denham Springs, LA
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Anthony H.
  • Rental Property Investor
  • Denham Springs, LA
Replied Mar 31 2020, 21:32
Same here . I'm curious to see how it pans out.
I say better apply then let it pass. At the end of the day you are not forced to accept the loan if the terms do not suit you.
But I do agree after experiencing SBA through flooding in 2016 this might not be the ideal solution.

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Vinci S.
  • Investor
  • Riverside, CA
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Vinci S.
  • Investor
  • Riverside, CA
Replied Apr 1 2020, 00:33

@Sam Cherry Hi Sam thank you for the info. Can you provide a quick overview or steps into how we can appropriately apply for this help via section 8/HUD? I have some rental properties in Chicago as well as a student rental in Riverside, CA. How can I get ahead of the game here so I can ensure I will be able to pay the mortgages for these three properties? From your original post, it sounds like we would only apply 'after the fact' that we find that the tenant won't be able to pay and has lost their job. What if they haven't been cleared for unemployment yet and have only filed? I heard it typically takes a month or two for their application to go through? If they are not able to pay April 1 ( with grace period for 3-5 days so April 5), will i have to wait until they file unemployment and verify that before I ask section 8 to help? Also, can you send a link I can possibly use to apply for this section 8/hud help? thanks again and sorry for the million questions! You have helped so much already!

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Replied Apr 1 2020, 04:27

What I am saying is the Federal Government needs to make emergency changes to Section 8 to allow us to do this.  They haven't yet.  It is quite simple and straightforward to do.

The government has chosen to use the wrong tool to address the problem.

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Lesley Resnick
  • Real Estate Agent
  • Jacksonville, FL
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Lesley Resnick
  • Real Estate Agent
  • Jacksonville, FL
Replied Apr 1 2020, 05:00

I have less and less confidence in out Government's ability to effectively manage this volume money distribution. The simplest answer is we can only use what limited infrastructure is available. Creating a new HUD program is a great idea. Presenting a new idea, does not make you, "anti-anything". Just a fresh set of eyes on a problem. The reality is it is simply too late to start something new. Further, the local municipalities administer Section 8. My city is shut down and in a good month our Section 8 is spread thin. Money in hand is still 2-3 weeks out?

Real Estate Agent FL (#sl3322996)

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Replied Apr 1 2020, 05:47

For those who have requested a letter here goes:

Dear President/Govenor/Senator/Congressman/HUD Secretary/Govenor (You Fill in the blank)

Thank you for all that you are doing to help citizens and businesses affected by COVID-19.

As you are aware, Landlords provide a vital service to many millions of American.   We provide safe and affordable housing to citizens who can't afford to purchase homes themselves.

Second only to to food, shelter is important as a basic need that no American should live without.

This is why I am writing to you to ask for help in the implementation of emergency changes to the Federal Housing and Urban Renewal Section 8 program.

As a landlord I propose the following:

The qualification for Section 8 should be opened to all unemployed American receiving unemployment benefits.

All Landlords who file a IRS Schedule E are eligible to receive benefits based on properties listed on their Schedule E for 2018 or for any 2019 tax return filed.

Section 8 will waive the home inspection and Landlord requirements for the participants  in this emergency program and will not remove the traditional application process for those seeking to participate in the Section 8 program.   Section 8 will only provide payments while the citizen is receiving unemployment insurance.

This emergency program requirements are easily verified for participates through the unemployment insurance offices and the Internal Revenue Service.   

The program limits payments only for the rent amount.  At the end of the year the citizen receiving benefits will receive a 1099-MISC for rent paid subject to their tax bracket.  

The Landlord will receive a 1099-MISC which they will file with their Schedule E as rent received.   This will not require any tax difficulty for the landlord and is subject to depreciation and valid deductible property expenses.

This provides benefits to two segments of the population simultaneously, efficiently, and seamlessly.

Housing and Urban Development is the correct office to manage this program and provide rapid relief to the people who need it the most.

I can be reached for further questions at.........

Thank you,

J.Q. Landlord

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Replied Apr 1 2020, 05:50

All,

I have extensive background in government programs and how this works. All it requires is the correct collaboration between the IRS, HUD, and government programmers.

It can be done completely online without the need to fill out forms and stand in line.

THE GOVERNMENT ALREADY HAS THE DATA FROM TAX FORMS AND THE UNEMPLOYMENT OFFICE.

THIS IS TOO EASY.

PERIOD.

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Douglas Andrew
  • New York, NY
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Douglas Andrew
  • New York, NY
Replied Apr 1 2020, 06:44

From what I understand, you can apply for the $10,000 EIDL, but depending on what you do next, it will become a grant or a loan. If you don't move to PPP after that, you are paying the $10,000 back. Since many of us have LLC's with no employees, we are not going to qualify for the PPP. Can anyone confirm that? What Sam is driving at here is a very simple concept, if renters can't pay, the banks and our city's need to either forbear ( or forgive a portion of) the mortgage and real estate taxes. This is not a scenario where landlords should bear the brunt of the losses for a controlled government shutdown of the economy. This is not a financial crisis like 2008, we are forced into this situation by the pandemic, and the government actions. The banks can't forbear from what I understand unless there is a time out all the way up the chain, so that regulars can relieve the banks and funds from their obligations for capital requirements and investor distributions ( a regulatory stop on Mark to Market). IF this does not happen soon, there will be a mortgage crisis before the month is over and the dominoes will fall (see Tom Barracks CNBC video " Commercial Mortgages on brink of collapse"). While I understand some of us need cash now, the banks and the government need to work together now, the SEC, the FDIC, the FSB and the Treasury to make this happen.Sam is right, In essence, the Landlord should get a bailout or a time out as well. This is not our cross to bear alone and let's hope the next package speaks to this.

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Katherine S.
  • Investor
  • Grosse Pointe Shores, MI
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Katherine S.
  • Investor
  • Grosse Pointe Shores, MI
Replied Apr 1 2020, 09:17

@Sam Cherry Thanks so much for this post.  Do you know how much the tenant will be granted for rent?  Will the entire amount that we charge the tenant be covered, or will it be held to the amount the local agency finds is appropriate?

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Magesh R.
  • Investor
  • Bradenton, FL
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Magesh R.
  • Investor
  • Bradenton, FL
Replied Apr 1 2020, 09:19
Originally posted by @Pedro Viloria:

I'm interested in seeing how this all turns out. I filled out the SBA loan form but am very skeptical due to the sheer numbers of people involved.

 I just finished filling it up as well. Noticed it was very simple. Elsewhere, I read people talking about uploading PFS, tax returns etc but the form I went through did not ask for such things. Did you end up sending those additional documents as well? If so, how did you do that? or is it a different loan program altogether?

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Replied Apr 1 2020, 09:40
Originally posted by @Sam Cherry:

All,

I have extensive background in government programs and how this works. All it requires is the correct collaboration between the IRS, HUD, and government programmers.

It can be done completely online without the need to fill out forms and stand in line.

THE GOVERNMENT ALREADY HAS THE DATA FROM TAX FORMS AND THE UNEMPLOYMENT OFFICE.

THIS IS TOO EASY.

PERIOD.

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William Coet
  • Lititz, PA
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William Coet
  • Lititz, PA
Replied Apr 1 2020, 10:32

@Sam Cherry You're input and support on these issues is very good.  Thank you for your efforts.  I would like to add that most people who become unemployed will be eligible for additional unemployment benefits (enhanced unemployment) and will be earning more than they were while working.  These unemployment benefits have been, and are now, intended for expenses such as rent.  So in that sense, nothing is different here.

Is this along the lines of what you are suggesting for tenants to receive payment support directly from the government?

https://www.naahq.org/advocacy...

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Replied Apr 1 2020, 12:53

Yes but it is a direct payment to the landlord.  

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Replied Apr 2 2020, 06:32

No one seems to understand that the SBA is for SCHEDULE C businesses.

Landlording is a is a different business.  It is a SCHEDULE E business and Housing and Urban Development is the Correct Department to handle landlords.

Just like Farms are a SCHEDULE F Business and the US FEDERAL DEPARTMENT of AGRICULTURE provides relief to Farmers and not the SBA.

PEOPLE YOU NEED TO UNDERSTAND THE CONSTITUTION AND HOW FEDERAL DEPARTMENTS WORK,

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Sheryl Sitman
  • Rental Property Investor
  • Philadelphia, PA
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Sheryl Sitman
  • Rental Property Investor
  • Philadelphia, PA
Replied Apr 5 2020, 10:55

@Sam Cherry   thanks for drafting that letter!! Can I share it on FB?  Have you received any feedback from sending it?

Am I right in understanding that our Sec of Housing has not really done anything or been active? The info on the HUD site has nothing about an impending crisis with people unable to pay rent. He does suggest washing hands :-(

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Replied Apr 5 2020, 19:17

Yes share it I am trying to get the word out that we as landlords should be seeking to use the correct government office to provide us relief.  

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Replied Jul 24 2021, 06:43

Well it looks like the SBA really came through.  

Can't wait to see all the convictions for fraud that will soon start appearing.  

Looks like the leftists got what they wanted.  To run landlords out of business.  

This scamdemic isn't over but at least it looks like the CDC is going to finally loose it eviction moratorium. 

I feel so bad for all the landlords whose lives have been ruined by all this total B.S.