Unfair madness! Landlords getting hosed.

Unfair madness! Landlords getting hosed.

Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes

Some Perspective... 0.15%

That's the percent of American people who have Covid-19 at the time of this writing.  NOT even 1% of the total population.

Suppose the disease were to quadruple before this is over, that would only be 0.6%. Still not even 1%

I am not saying the Covid-19 pandemic is not serious. It is serious! But bear with me, I'm going somewhere here.

Percent of tenants with eviction protection 100%

Specifically in California landlords have been totally neutered.

THIS IS NOT RIGHT, THIS IS NOT FAIR!

Private citizens should not be compelled by law to provide free housing at their own detriment. As a landlord for 20+ years this is the most backwards and un-American situation I have ever seen. What good are constitutional protections, checks and balances if they only serve us when convenient? We need our rights, and freedom most when times are difficult. Where is the ACLU?

Do I think a tenant who has suffered a hardship outside of their control should be thrown out into the street? No of course not. But, 99.9% of landlords will do everything in their power to work with a tenant ALREADY, if for no other reason because they don't want to pay for turnover and vacancy.

I think some responsible laws could be put in place that prohibit abusive landlords from unfair evictions and also require landlords to work with tenants, but the current situation is totally 1 sided and unfair!

Consider, if a tenant loses their job they have options. They can apply for aid, they can look for an online job. They could take a temp position at a grocery store if they like. However, if a landlord has a tenant who can't (or wont') pay rent they can ask for rent and hope for cooperation but can do nothing beyond that to improve their situation.

This absurd! Is anyone thinking this through? How can this possibly not end badly? Allow me to list some problems.

  1. If a tenant hears they "don't have to pay rent", many will simply push it as far as they can regardless of their actual ability to pay or not pay. Why not cease the moment? Wouldn't you?
  2. If a landlord does put a 3 days or quit notice and the tenant doesn't comply. Normal law states that the landlord can not collect anymore rent AFTER the 3 days are up, or the 3 day pay or quit notice is invalid. Does this mean landlords should just allow the tenant to live free till September or until (heaven only knows) when they are able to evict? Does letting a tenant free load till September seem like a good idea?
  3. Most landlords would agree that tenants who get behind really land themselves in a circle of debt they can't climb out of anyway. Thinking a repayment plan with landlords can work is basically fiction. AKA nonsense.
  4. How long till landlords start getting stretched too thin and start taking matters into their own hands? Anything is possible, Violence, fake insurance claims etc? That is a scary outcome that I don't want to even think about. (Please nobody do this)
  5. How long till landlords get fed up and say screw it and just let the bank have the property back?
  6. How long till word gets out about how landlords are being treated and many future (would be landlords) say, no thank you? How many current landlords will just get out of the game. (never want to take that risk again)

TL:DR; This is a disaster and I don't even know what to do anymore.

PS: I do have abusive tenants who are purposely leveraging the situation and not paying simply because they don't have to.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @David J.:

@Jay Hinrichs Simply because it's not a problem for you or 90% of others does not mean it's not a valid problem. Landlords are being denied their civil liberties and property rights. The implications of this are huge! 
Also restaurants and hotels all each have their own arguments to wage but it's apples to oranges. At least restaurants can do take out, and hotels can claim insurance or sell their space to the government as a make shift hospital. But I maintain this is out of scope for my point. Regardless, how unfair it is for them, it doesn't suddenly make this fair for landlords. Landlords should NOT be denied their rights!

@Amer Mallah I agree about not making projections. Only casting some perspective. We have a whole lot of fear and irrational thinking taking place. I sure hope we see some changes. We need solutions that protect tenants without allowing landlords to be helpless victims themselves. That's just trading one problem for another. 
I also agree that the screening process is going to get much more intense. Also, I wouldn't be surprised if rents go up to compensate for the whole new level of risk landlords were just made aware of. 

these are once in a lifetime issues ..  I mean just think of all the small business's that were forced to close.. who is going to rescue them

if anything landlords to my way of thinking have gotten massive help.. their tenants got 1200 bucks ( at least most) and increased unemployment.. then you have section 8.. If the tenants choose to pocket the money and not give it to the landlord that's not the govmits fault..  it just is what it is everyone is suffering..  I mean there is no bail out for us homebuilder developers  !!!  Or real estate agents who cant show houses  it goes on and on.. so like I said to me landlords have gotten huge help far more than many.. Not to mention mortgage forbearances etc..

If the landlord for whatever reason gets in financial difficulty because tenant misses one a few rent payments.. then I think landlord needs to revisit their reserves policies.

See this reply in the discussion

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y

    One thing I will tell you is I made a post about a month or so ago asking the landlords on this site 

    given the potential for non pay because of loss of job etc.. what would you do.

    the MAJORITY answered that no pay no Stay they would evict its not their problem the tenants don't have reserves  .. we have to pay our mortgages etc etc..  

    So this is just a small sampling on BP... 

    And now at least as it relates to April..  I made another post  who has gotten APRIL rents.. 97% of those responded said they got ALL of their rents or at least 90% of them which is better than in normal times.. so for April its a non event.. 

    Of course if you have a bad tenant right now.. and need them out your screwed.

    But things are bad enough to then have landlords start doing evictions in mass.. but I just don't see that happening based on the response.. I don't think non pay is going to be as bad as people are thinking ????  

    its no different than a restaurant being forced to close or a hotel .. right ?  actually small landlords have it better than most from what I can see

  • Monkton, MD · Member since 2014 · 32 posts · 15 votes
    6y

    I agree with a lot of what you have to say. I think we will all re-evaluate our tenant screening processes if we survive this. Like with anything, there are people trying to take advantage of the situation maliciously as well as people who were fine before and have their whole lives turned upside down.

    There is more work to do in the state and federal governments, and I'm sure we haven't heard the last of the changes. I suggest you reach out to your elected representatives and let them know how you feel. It does have an effect, especially at the more local levels.

    PS, not to take away from your point, but it only took 2 weeks for the # of cases to quadruple and for the number of deaths to go to 10x. We should leave all the projections to the epidemiologists, the way viruses spread is complex and a moving target as we learn stuff about it all the time.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Jay Hinrichs Simply because it's not a problem for you or 90% of others does not mean it's not a valid problem. Landlords are being denied their civil liberties and property rights. The implications of this are huge! 
    Also restaurants and hotels all each have their own arguments to wage but it's apples to oranges. At least restaurants can do take out, and hotels can claim insurance or sell their space to the government as a make shift hospital. But I maintain this is out of scope for my point. Regardless, how unfair it is for them, it doesn't suddenly make this fair for landlords. Landlords should NOT be denied their rights!

    @Amer Mallah I agree about not making projections. Only casting some perspective. We have a whole lot of fear and irrational thinking taking place. I sure hope we see some changes. We need solutions that protect tenants without allowing landlords to be helpless victims themselves. That's just trading one problem for another. 
    I also agree that the screening process is going to get much more intense. Also, I wouldn't be surprised if rents go up to compensate for the whole new level of risk landlords were just made aware of. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @David J.:

    @Jay Hinrichs Simply because it's not a problem for you or 90% of others does not mean it's not a valid problem. Landlords are being denied their civil liberties and property rights. The implications of this are huge! 
    Also restaurants and hotels all each have their own arguments to wage but it's apples to oranges. At least restaurants can do take out, and hotels can claim insurance or sell their space to the government as a make shift hospital. But I maintain this is out of scope for my point. Regardless, how unfair it is for them, it doesn't suddenly make this fair for landlords. Landlords should NOT be denied their rights!

    @Amer Mallah I agree about not making projections. Only casting some perspective. We have a whole lot of fear and irrational thinking taking place. I sure hope we see some changes. We need solutions that protect tenants without allowing landlords to be helpless victims themselves. That's just trading one problem for another. 
    I also agree that the screening process is going to get much more intense. Also, I wouldn't be surprised if rents go up to compensate for the whole new level of risk landlords were just made aware of. 

    these are once in a lifetime issues ..  I mean just think of all the small business's that were forced to close.. who is going to rescue them

    if anything landlords to my way of thinking have gotten massive help.. their tenants got 1200 bucks ( at least most) and increased unemployment.. then you have section 8.. If the tenants choose to pocket the money and not give it to the landlord that's not the govmits fault..  it just is what it is everyone is suffering..  I mean there is no bail out for us homebuilder developers  !!!  Or real estate agents who cant show houses  it goes on and on.. so like I said to me landlords have gotten huge help far more than many.. Not to mention mortgage forbearances etc..

    If the landlord for whatever reason gets in financial difficulty because tenant misses one a few rent payments.. then I think landlord needs to revisit their reserves policies.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Jay Hinrichs It seems your argument boils down to "bad things are happening to lots of people therefore it's ok if bad things happen to you".

    While I must agree that the situation is truly unique and wholly unprecedented, I DO NOT agree that removing the rights of private citizens who own property is ok.

    To further suggest that "I" revisit my reserve policy is incredibly myopic and totally missing the point. I could easily counter and suggest that tenants who miss their rent payment at the first sign of trouble should revisit their emergency fund strategy. But the point I am making is not about going tit for tat and casting blame. Truly none of us in this equation are to blame for this horrible pandemic.

    The point is that we can do better. We need to protect tenants from abusive landlords while ALSO protecting landlords from abusive tenants. We ought not trade one problem for another. Even if I have a large reserve saved, I don't want the government to force me to use it to provide free housing for a tenant who chooses to take advantage of me. I want to use it to house and feed MY FAMILY during the same pandemic.

    Please try to consider for a moment that the government has created another problem on top of an existing one. We must defend liberty! We can and should do better. 

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Jay Hinrichs I ask, what good are rights if when needed they are stripped away? Are they even rights at all in this case? Or just a feel good slogan? 

  • San Diego, CA · Member since 2011 · 85 posts · 67 votes
    6y

    @David J. I agree with the initial post. First, the logic behind the shutdown is crazy. Thank god we have Sweden to provide the control group. Check out the Gangelt, Germany numbers. Read Alex Berenson's twitter.

    But...and I'm not a conspiracy theorist, promise. That said, who benefits from the current situation. The super rich obviously: they will be buying at a discount soon. The poor seem to be doing better or at least as good ever. Government workers-their salaries are secure as they virtue signal to us about the need to shut it down. Who's hurt? the middle class workers, who don't work for the government. 

    It's the same old story:  The top and bottom against the middle. And it makes sense if you think about it. Imagine you're the coach of the #1 college football team in the country. You're watching the #7 team play the #25 team. Who are you rooting for?

    So as far as the renting situation. The Government/rich are obviously the #1 team. The landlords are #7 and the renters #25.

  • Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    6y

    "Landlords should NOT be denied their rights!"


    --No one "should be" denied their rights given by definition they should be their rights.  But in very unusual/specific cases, the benefit to society in denying that right may significantly outweigh the cost.  In this case, given we have massive unemployment the levels of which we have never seen before, it might just make sense to put programs in place to let people delay or defer rent payments (residential and commercial), mortgage payments, and other costs for the time being.  Given the other option is massive evictions, foreclosures, and a ton of friction to the system, if you do believe the economy may bounce back quickly, the cost of these concessions is likely to outweigh the social cost of evicting and foreclosing en mass.

    Sometimes one's individual rights being trampled are a sacrifice for a greater good.  It's important that doesn't happen as a matter of normal course.  But in highly unique and unusual circumstances, the tradeoff may just be there.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @John D. I completely understand where you are coming from. I also agree with a lot of what you said here. My only objection is the idea that we are trading one issue for another issue.

    To be clear, I am not advocating for business as usual. I am advocating for landlord rights to defend their property from abusive tenants. At the moment landlords have ZERO rights' to our own property while still maintaining all the risk. Why does the buck stop with me? How about I tell the bank "Welp, my tenant refuses to pay rent, so you pay it"... No chance. And forbearance is a joke. In 3 months I have a balloon payment. Unlikely tenants will have caught up to cover this.

    I 100% want to support my tenants with a valid hardship. I do not want to pay a free ride for tenants who think this is a "chance in a lifetime" to get free rent. Something has to give!

  • Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
    6y

    @David J., I’m not saying that I like having rights taken away, and I agree landlords are not being treated the same way as other businesses during this. BUT, I’ve always had the underlying opinion that owning real estate means you are participating in a regulated industry. And “ownership” is more like having a lifetime lease from the government. I’m sure people will disagree with this perspective, but perhaps it would benefit more investors if they got into this business knowing that the rules can change at any time through government intervention. Understanding the rules of the game are important in any business and best not to be naive about all the possible outcomes and how best to strategize. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @John D.:

    "Landlords should NOT be denied their rights!"


    --No one "should be" denied their rights given by definition they should be their rights.  But in very unusual/specific cases, the benefit to society in denying that right may significantly outweigh the cost.  In this case, given we have massive unemployment the levels of which we have never seen before, it might just make sense to put programs in place to let people delay or defer rent payments (residential and commercial), mortgage payments, and other costs for the time being.  Given the other option is massive evictions, foreclosures, and a ton of friction to the system, if you do believe the economy may bounce back quickly, the cost of these concessions is likely to outweigh the social cost of evicting and foreclosing en mass.

    Sometimes one's individual rights being trampled are a sacrifice for a greater good.  It's important that doesn't happen as a matter of normal course.  But in highly unique and unusual circumstances, the tradeoff may just be there.

    and if you evict in mass who is going to rent your vacant unit.. ?? its the same renter pool ..  bottom line is any business has risk. And being a landlord is business.. just like when everyone gets on her and says they are not running a charity they are running a business.. well there you go protect your business.. cant have it both ways.

    land lording no different.. as a property owner or landlord its incumbent on that owner to plan for how they are going to maneuver through tough times.  tough times don't last tough people do.. 

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Standard underwriting requires 6 months of reserves per property.  So your reserves should be able to help you get through this.

    Landlords with conventional loans are able to get a forbearance, just like the tenants are getting.  This seems to me to not be as one sided as you are making it out to be. Call your loan servicers and get your next several months of payments delayed if your tenants are not paying.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Robert C. I agree with you 100%. It's always important to plan even for the most unthinkable of situations. However, even if one could have foreseen this with perfect accuracy and is fiscally ready, I don't think it means we should roll over and capitulate to unfair treatment and a complete dissolution of our rights.

    There is no excuse for leaving landlords with ZERO recourse whatever. It doesn't have to be like this! I KNOW we can do better. It's not unreasonable to expect policy that has a bit more balance built into it.

    The current policy is a disservice to all, tenants and landlords alike. A more balanced approach could see us through these dark times with minimized loss to society. But the current policy is a ticking time bomb. 

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Russell Brazil forbearance is a joke. In 3 months I have a balloon payment. Unlikely tenants will have caught up to cover this. To your second point. It doesn't matter if landlords have reserves they should not be compelled by law to spend those reserves to provide free housing for abusive tenants with false hardships. While some tenants have REAL hardships, I am not talking about that. I am talking about a system that requires landlords to unfairly spend their own money to support extortion. Remember landlords are trying to survive the same pandemic and have their own families to feed. I hope we can get passed the cliche talk I am seeing in this thread and get down to the facts that something is wrong here with this policy.

  • Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    6y

    "At the moment landlords have ZERO rights' to our own property while still maintaining all the risk."If we had more time and attention at the matter, the policy would be more nuanced, and help prevent bad tenant actors.  But that would take a lot of time from those that write the rules, and they are stretched super thin dealing with the fact the _everything_ has just changed.  Also, a more nuanced policy would require a lot more oversight and a legal process through the courts -- and we don't have the resources at present for either.  Courts are in many cases closed or operating in a very limited basis, and it's just not clear how a modified version of the existing situation to provide a "balanced approach" would be structured, mediated, litigated, etc. given the shortage of resources.



  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @David J.:

    @Russell Brazil forbearance is a joke. In 3 months I have a balloon payment. Unlikely tenants will have caught up to cover this. To your second point. It doesn't matter if landlords have reserves they should not be compelled by law to spend those reserves to provide free housing for abusive tenants with false hardships. While some tenants have REAL hardships, I am not talking about that. I am talking about a system that requires landlords to unfairly spend their own money to support extortion. Remember landlords are trying to survive the same pandemic and have their own families to feed. I hope we can get passed the cliche talk I am seeing in this thread and get down to the facts that something is wrong here with this policy.

     When you invest in real estate, you deploy capital to get an expected return based on the underlying risk of the asset and market.  To achieve higher rent collections during uncertain times, consider taking on less riskier assets.  Those in higher risk assets, will be most exposed to the current situation.  That is part of the risk of those assets.  Those in less riskier assets, are going to better positioned.  Investing isnt risk free. Thats why there is a return, because of the risk the investor takes on. Not comfortable with the risk, thats fine....reduce your risk levels.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @John D. All fair points.

    I would suggest starting with something simple. How about requiring tenants to work closely with their landlords to prove hardship via financial statement. A form 433-F could be used. (here). If the tenant is unable to prove hardship and still refuses to pay, then eviction is back on the table in this case.

    I mean it's off the top of my head and I am sure you can punch a few holes in it... but there's a start. 

    The current system cannot work if landlords have ZERO recourse whatever. I personally already have a tenant who is abusing me. I have a hunch many in this thread don't know what that feels like. It's only a matter of time. As I said, the current policy is a ticking time bomb. 

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    @Russell Brazil with all due respect, risk has nothing to do with my point. I understand risk vs reward quite well but it's moot. 

  • Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
    6y

    Tenants can submit a hardship statement to the landlord, sure.  Without the resources of the courts to decide if the hardship is valid or not, or the courts to provide penalties to those that just straight up lie on the statement, or to prevent landlords for unreasonably denying valid applications, I'm not sure how this dog can hunt in the short-term.

    If this is a long-running issue/policy this all can be done.  If this is a 3-6 month thing, I can't see the above getting done.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    Unfortunately summing this up to landlords should "take one for the team" or "that's the risk you take" does not fix broken policy. 

    The existing broken and unfair policy is throwing a GIANT wrench into the market place that will cause landlords and tenants alike to both lose.

    It's not unreasonable to expect foreclosures if landlords can't collect rent and have no recourse to correct. 

    We cannot fix one problem by creating a second problem. 

  • Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    6y

    Can you hear that noise? It's the sound of the Founding Fathers rolling over in their graves. 

  • San Diego, CA · Member since 2011 · 85 posts · 67 votes
    6y

    One of the problems is that landlords are not a politically powerful group. They are also not sympathetic like certain disenfranchised groups who tend to have their causes strongly taken up by the media.

    Additionally you have groups representing you like this one that decided to strategically not oppose rent control in CA:
    https://www.lamag.com/citythin...

    And then I guess there is a basic market principle that landlords are not really a group that would unite, since one landlord going bust is good for other landlords. 

    Basically the only thing that would help an individual landlord is a fair system with of laws where property owners rights were respected, even if the majority and the woke opposed them. 

    So actions have consequences and if this is the direction the system is prepared to go, landlords will bite their lip, devise a plan and it will be priced into the sytem. 

  • Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    6y

    What is the ratio of tenants  VS  Landlords ?  Votes matter . 

    Now there will be some bigger landlords suing the government when this is done based on the 5 th amendment .   



    First, it states that a person may not be deprived of property by the government without “due process of law,” or fair procedures.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Robert C.:

    @David J., I’m not saying that I like having rights taken away, and I agree landlords are not being treated the same way as other businesses during this. BUT, I’ve always had the underlying opinion that owning real estate means you are participating in a regulated industry. And “ownership” is more like having a lifetime lease from the government. I’m sure people will disagree with this perspective, but perhaps it would benefit more investors if they got into this business knowing that the rules can change at any time through government intervention. Understanding the rules of the game are important in any business and best not to be naive about all the possible outcomes and how best to strategize.

    Robert,

    Totally,   just think about Zoning.. I have a 110 acre parcel I optioned up in Portland get brought into the urban reserves.. then there was a law suit by thousand fiends of Oregon and state buckled and did what is known as the Grand bargain and my property was moved to Rural reserve.. the devaluation was 30 million plus.. and two decade delay.. My grandchildren and great grand children are going to be very happy when it finally comes in as thats who will get the benefit..  Then Had a  Property in Rohnert Park  next to the Graton Casino.. i bought in 95 for 27k bare land 4 acres.. city grew out to us brought us in .. upzoned us. ( keep in mind I spent ZERO on this other than 350 a year in prop taxs.) and we sold in January for 1.9 mil to a local developer..  so your absolutely correct.. there are many ways government affects your values for good and for bad.. To me not being able to evict in this crisis for a few months while not good of course.. pales in comparison to other risks that are related to real estate.. If you want a guarantee don't buy real estate at all.  right ?  Other wise just learn how to deal with it and be prepared for when things are not going your way.

  • Investor · shawnee oklahoma · Member since 2017 · 194 posts · 148 votes
    6y

    “Sometimes things are fair and sometimes they are not” is a non sequitur fallacy. Regardless If things tend to be fair sometimes and other times not, it doesn’t mean a bad policy shouldn’t be fixed. 


    I maintain that government should not be allowing rampant tenant abuse with no landlord recourse. 

    Apathy is not a solution!

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