Are these Gov moratoriums on evictions making you rethink REI?

Erie, PA · Member since 2018 · 413 posts · 348 votes

This isnt supposed to be a political debate...but reguardless of where you stand the fact of the matter is the government moved in rather quickly and just like that said your lease and laws dont matter with very little reguard for potential bigger picture fallout. In my state, the Gov and AG said no evictions until July 10-thats almost 5 months potentially without rent. This is a really slippery slope and not sure how much clearer it can be.

I think moving forward there obviously needs to be common sense applied, you know what they say about common sense-its not common.

What Im asking you, are these moratoriums on evictions giving pause to you and REI? If so, how are you adjusting? Thoughts? Actions being taken?

2 Reply

199 views

Most Popular Reply

Michael HaasBusiness Member

Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes

@Scott Passman - "Not even a little. Where else would you plan to invest your money where the government can't manipulate it..." Well, there's always Bitcoin :D.

Seriously though - as much as I hate the hair-brained and pandering policies Seattle City Council and other similar governing bodies, I think we as landlords tend to blow the eviction thing out of proportion. On a well managed rental with well screened tenants this should only rarely be an issue, and most tenants want to pay their rent and do not want to be evicted (even if the consequences of an eviction are becoming smaller).

So continue to invest in REI - I know I am. Take precautions - diversify your holdings geographically and by type (STR, LTR, ect) to mitigate your political risk. Just keep swimming.

[email protected]408-439-7873

HouseHack Seattle | Michael Haas & Team572 Reviews

Website View Page

5 Reply

See this reply in the discussion

35 Replies

Jump to latestLatest

Sort by

Scott Passman
Rental Property Investor · Batavia, IL · Member since 2018 · 452 posts · 672 votes
6y
Not even a little. Where else would you plan to invest your money where the government can't manipulate it...the stock market? While the government is passing unconstitutional bills in the wake of this pandemic, the fact still remains that real estate is one of the best and safest assets to invest in. People need homes and the government needs investors to help fill that need which is why the tax code is written to favor RE investors. Perhaps this will make me rethink investing in long standing liberal states and weigh that more heavily in my consideration, but I have no thoughts on abandoning RE altogether.
4 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Joe M.
This government reaction in part was to avoid a repeat of the 2008 crash. Although this is different as the government chose the self inflicted stop of the economy, it is temporary. How temporary it is no one knows. Unfortunately, the concern of the government was only to protect persons housing without regard to the impact of the landlord/owner of properties. The majority of owners of rental property are small. There definition of a small business under 500 people is ridiculous in this market. The majority of landlords have no employees or under 10. Small business in general are under 50 people. They left us unprotected. Many will lose there businesses.
As far as REI, this is a temporary setback. Hopefully most had reserves built for a correction we have been anticipating and discussing. This in essence is our correction. By all accounts the economy seems to be looking to open up. I believe this shutdown will be opened up. It will be tough for everyone. The world will definitely look different and operate differently. As we return to the economy opening up, the courts will also open and evictions will return. No more moratorium. We will go back to operating in a sense like we have.
Let’s keep our fingers crossed we can return to a more normal way of life. RE will continue and new opportunities will be available.
4 Reply
Nick Rutkowski
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Joe M.
I haven’t reconsidered real estate, just who I’m voting for next election. Then again there are loopholes to every rule if you’re smart enough to find one.
2 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
To be fair, how do you know these are tempory? In Seattle, the city voted 9-0 to extend no evictions for 6 months after things open back up...let the potential of that math sit in
1 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
You ain't seen nothing yet. If this has you spooked then you should get out before the fall. If anything, the serious REI should be reassessing their tenant screenings.
Winter is coming.
4 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
Originally posted by @Patrick M.:
You ain't seen nothing yet. If this has you spooked then you should get out before the fall. If anything, the serious REI should be reassessing their tenant screenings.
Winter is coming.

Does it have you spooked?
1 Reply
Account Closed
Lender · Palm Beach Gardens, FL · Member since 2016 · 9 posts · 10 votes
6y
The threat of government intervention has many alternative lenders concerned. If the government can step in and allow no legal action (payments due, evictions, foreclosures ) for 120 + days, lenders are very hesitant to deploy new capital. Many have put a temporary hold on lending. They have changed guidelines, lowered LTVs, and raised rates to try to account for the risk.

Lenders have a lot of capital on the sidelines because they cannot predict what future government action could do to their ability to legally collect on the loans that they are making. They have responded by becoming much more conservative.
3 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Joe M. I am adjusting. I am disgusted with the elected officials Telling tenants to cancel rent and changing laws to allow deposits to be used for rent.
I was initially worried- but my tenants proved me wrong to worry (so far).
I thrive in a state which many call "landlord unfriendly." So that helps.
I have assessed the situation and I believe the apocalypse will be this fall/winter. So right now I am hoarding cash.
Winter is coming
2 Reply
George W.
Investor · NJ · Member since 2018 · 869 posts · 921 votes
6y
Originally posted by @Patrick M.:
@Joe M. I am adjusting. I am disgusted with the elected officials Telling tenants to cancel rent and changing laws to allow deposits to be used for rent.
I was initially worried- but my tenants proved me wrong to worry (so far).
I thrive in a state which many call "landlord unfriendly." So that helps.
I have assessed the situation and I believe the apocalypse will be this fall/winter. So right now I am hoarding cash.
Winter is coming

Seriously this state is getting worse. The elected officials do not care about small businesses and investors at all. We are not in their intrest.

3 Reply
Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y
@Joe M., take a good look at what @Scott Passman wrote. In any logical "choice" scenario, it's not enough to simply find fault with choice A; you have to make the case that choice B is better. To date, there is no "better" choice B.

Government intervention will hurt all assets in the investment world. Cash and bonds are hurt by excessively loose fiscal policy. Stocks are hurt by uncertainty and economic shut down. Futures rely on market prediction, which is impossible at the moment as we have no past data from a similar incident upon which to base future predictions. Real estate is hurt by unemployment making it hard to pay rent. Commodities are all over the place as demand spikes in one area and craters in another. Bottom line: every asset class is taking a beating. Investments rely on individuals making their own decisions in their best self-interest using information available and trends in the market place without undue Govt interference except to keep both parties honest and bound by contacts. Today, Govt is doing the exact opposite of that.

My state has been fairly good about getting reopened quickly. "Non-essential" businesses are all open now, as long as they have fewer than 25 inside and adhere to distancing rules. I am hoping we don't see any surges, otherwise the panic mode in place now will lock everything back down again.

Here's the good news: people are resisting. Heard an article on NPR last week that Google analytics was tracking people using locator software on their phones, and from about April 1 - 15 everyone was distancing pretty well, but since then they've started going out more and grouping up more. Americans are historically a fairly unruly group, and if the rule doesn't make sense we tend to ignore it.

What does all that mean? I wish I knew for sure. My 2 cents: I think we'll be back in business 80% or better in 3 months or less. Real estate is a long-play game. You make your investment for 5+ years, or you go broke trying to time your exit during bad times, unless you're a flipper/wholesaler, in which case you're in a business, not an investor. If we can get a sensible plan in place for if/when the re-surge happens in the Fall, I don't think we'll slam the door shut again as severely. US citizens won't tolerate it They already proved they aren't the most compliant people on the face of planet Earth, even when "the science says." Just look at our fearless leaders and how they behave! (*grins)
1 Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
I am not rethinking REI at all. Land lording is the oldest profession; It is even older than that other one. I am shocked to see how eager some people are for a Nanny State and how prepared the many layers of government are to provide one. Some states and cities more so than others. This is just a prelude however; there is a lot more to come. REI is still good; it just takes more cash than many folks thought.
0 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
If this is making you reconsider real estate investing, then it probably wasn't for you to begin with.
One thing I know for sure: without a major reset in our country (and possibly around the globe), government will continue to increase regulation that favors the tenant and disfavors the Landlord. You've got to learn to obey the rules while ensuring your success. The same is true for any investment vehicle.
The DIY Landlord Book4.7243 Reviews
Website View Page
2 Reply
Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
It hasn't changed my thoughts on investing in RE, but it has increased my risk premium and some underwriting assumptions.
What we all need to keep in mind during this is our fundamental heuristic of loss aversion. Unless checked, we will over react to this new "bad" news and avoid risk altogether. These changes to government will only impact deals on the margins.
1 Reply
Daniel Haberkost
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
6y
@Joe M. For me it doesn’t make me rethink RE investing- it simply reinforces principles I already believed were important such as.
1.) Vetting your tenants properly. If your tenants are at all decent people and you have any rapport with them they won’t prefer to live in your house rent free (and they’ll realize the eviction moratorium won’t last forever). I had one tenant who was potentially going to have trouble paying so she contacted me weeks ahead of time and we talked through solutions. Now this probably isn’t applicable to people who have dozens and dozens of units but most BP members are small time landlords like myself. If you screen your tenants thoroughly then government intervention is less of an issue.
2.) Avoiding ultra-liberal markets. This doesn’t need much explanation- see Seattle
3.) Keep proper reserves. If you have proper cash reserves on hand then short term hardships like this don’t really matter in the long run.
As time goes on laws will continually become more and more tenant friendly and I don’t believe there is anything we can do about it. But real estate offers such attractive returns I just budget that reality into my planning.
1 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
Originally posted by @Nathan Gesner:
If this is making you reconsider real estate investing, then it probably wasn't for you to begin with.
One thing I know for sure: without a major reset in our country (and possibly around the globe), government will continue to increase regulation that favors the tenant and disfavors the Landlord. You've got to learn to obey the rules while ensuring your success. The same is true for any investment vehicle.

To be fair, I am in REI. But also, small time, part time
But my question to you, is how gov can tell a tenant they wont be evicted and you not to somehow be worried/pivot is also just as mind boggling

0 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Joe M.
Worry and pivoting are 2 hugely different things. One thing to remember is that there are certain principles we all follow- but we are all vastly different animals. For instance, there is a large group of investors who are not concerned with cashflow but instead appreciation of their property. They are not posting as much now... like the the arbitrage airbnbers... perhaps they pivoted?
For myself, and I know others, REI is a great wealth democratizer. We are extraordinarily grateful for the opportunity, even more so for those of us who have had others dictate our pay rate. We have listened to the drone of those old hardcore mentors ... "reserves, vetting, no BS"... and taken it to heart. Before people on this board started making gift baskets for new leasee's and calling them customers instead of tenants.
Pivot? Not on your life!
4 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
Originally posted by @Patrick M.:
@Joe M.
Worry and pivoting are 2 hugely different things. One thing to remember is that there are certain principles we all follow- but we are all vastly different animals. For instance, there is a large group of investors who are not concerned with cashflow but instead appreciation of their property. They are not posting as much now... like the the arbitrage airbnbers... perhaps they pivoted?
For myself, and I know others, REI is a great wealth democratizer. We are extraordinarily grateful for the opportunity, even more so for those of us who have had others dictate our pay rate. We have listened to the drone of those old hardcore mentors ... "reserves, vetting, no BS"... and taken it to heart. Before people on this board started making gift baskets for new leasee's and calling them customers instead of tenants.
Pivot? Not on your life!

Ok.

0 Reply
Jennifer T.Pro Member
Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
6y
I am re-thinking "buy and hold" real estate investing. There is so much I like about it. But now that I'm fairly knee-deep into it, I'm finding there are some key things I don't. And the total and utter disgust I've been feeling at politicians, organizations, and some of the general public being so flippant as to tell rental property owners they can't evict has just added another layer to the ugly cake for me.
It's galling that for years politicians have grossly undercut affordable housing programs, but suddenly expect us to become de-facto charities against our will. Pulling the rung out from under us by totally changing the rules. Or, for the stimulus payments, people had to prove they were in financial need to the government to get those. But a tenant doesn't have to prove anything like that to avoid an eviction. They just have to say they are. At least that is my understanding. For the government to expect businesses to take financial hits like that, that they are not willing to do themselves just goes beyond the pale for me. And has me questioning if this is an industry I want to stay in.
I live in and invest in one of the most fair landlord/tenant states, Louisiana. But even here there has been "talk" about extending no-evictions to July or August. They also don't even specify if that is all evictions or evictions for non-payment. They blah-blah that it's "for the people". But, if you read between the lines, it's more a worry that the courts are going to be "overwhelmed". Soooo...the better answer is to kick the can down the road, when it will be even worse?
For what it's worth, I don't currently have any one who owes me rent. Though one of my tenants was a struggle in May and they've also been on the line with excessive noise complaints. But it's the idea that the government can potentially handcuff me, when dealing with tenants who can't or won't fulfill the terms of our contract, that has me questioning.
At any rate, I don't plan to sell the rental properties I currently have based on all of this. But I'm debating if I want to expand my portfolio any further.
1 Reply
Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
6y
Rethink investing in real estate? Nope, REI is great. I buy something for 20% of cost and my tenants pay the balance off and once paid off, they continue to pay forever. ❤❤❤ I will rethink my strategy, investment areas, and adjust my rental standards based on what is happening, but I like REI.
The eviction moratorium is being way over blown. Yes, landlords got screwed, but it's not like we're bar owners and Prohibition put us out of business. Landlords need to adjust to this. It may end up being longer than before, but 6-to-12 months is not going to be the new normal for an eviction, not even in 99.9% of the liberal areas.
Landlords will do what they always do when government increases their risk. We'll raise our minimum standards, we'll require more of a security deposit, we'll screen harder, and we'll raise our rents to compensate for the risk. As always, the tenants will end up paying for our additional risk.
2 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Scott Passman:
Not even a little. Where else would you plan to invest your money where the government can't manipulate it...the stock market? While the government is passing unconstitutional bills in the wake of this pandemic, the fact still remains that real estate is one of the best and safest assets to invest in. People need homes and the government needs investors to help fill that need which is why the tax code is written to favor RE investors. Perhaps this will make me rethink investing in long standing liberal states and weigh that more heavily in my consideration, but I have no thoughts on abandoning RE altogether.

Scott nails it, not for an instant. This has always been part of the reality of doing what we do for us as low C-class landlords. Are the laws unfair? Have they ever been otherwise? The people I feel sorry for in this is the middle class. Make a six figure salary and spend it all to stimulate the economy? Pay your taxes on your W-2 income every two weeks? Assume a huge mortgage on a beautiful house in a nice area with outsized property taxes? Make Tesla and BMW rich by financing sharply depreciating new assets? Did your best to get your kids into pricey residential colleges? What are those people getting out of this crisis? They did all the things they were told were right and responsible and now they're completely screwed, and sorry, their kids are all going to glorified correspondence school.

3 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Bjorn Ahlblad:
I am not rethinking REI at all. Land lording is the oldest profession; It is even older than that other one. I am shocked to see how eager some people are for a Nanny State and how prepared the many layers of government are to provide one. Some states and cities more so than others. This is just a prelude however; there is a lot more to come. REI is still good; it just takes more cash than many folks thought.

And all of us who have been banging the drum for years on reserves and defenses in depth are suddenly prophets gifted with second sight. If you're not built to survive in this game, go buy bonds or precious metals or orange juice futures.

2 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
This is really facinating. I imagined more outrage.
0 Reply
Michael HaasBusiness Member
Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
6y
@Scott Passman - "Not even a little. Where else would you plan to invest your money where the government can't manipulate it..." Well, there's always Bitcoin :D.

Seriously though - as much as I hate the hair-brained and pandering policies Seattle City Council and other similar governing bodies, I think we as landlords tend to blow the eviction thing out of proportion. On a well managed rental with well screened tenants this should only rarely be an issue, and most tenants want to pay their rent and do not want to be evicted (even if the consequences of an eviction are becoming smaller).

So continue to invest in REI - I know I am. Take precautions - diversify your holdings geographically and by type (STR, LTR, ect) to mitigate your political risk. Just keep swimming.
[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
Website View Page
5 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Joe M.:
This is really facinating. I imagined more outrage.

I never saw a wild thing sorry for itself.

0 Reply
Joe M.
OP
Erie, PA · Member since 2018 · 413 posts · 348 votes
6y
Originally posted by @Jim K.:
Originally posted by @Joe M.:
This is really facinating. I imagined more outrage.

I never saw a wild thing sorry for itself.

Who is feeling sorry?

0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.