Predictions for when moratorium ENDS!

10 Replies

Hey BP team,

I need some expert advice, has anyone experienced a nation wide moratorium before??

If so what happened afterwards? Let me guess evictions and foreclosures right??

I am ready to jump in this game but I figure I wait for after the moratorium ends. For us in Ca moratorium was extended to Feb 2021.

What are your thoughts? What’s your game plan?

It won't end until the damage is done--i.e., all of the real estate that is owned by small landlords/moms and pops is safely in the hands of the government, the banks and the real estate sharks.

And no, I'm not being snarky, either. I've been predicting since the Spring that these eviction moratoriums would keep getting extended over and over again. Unless there's some earth-shattering event that completely forces the hands of officials, I see this lasting all the way through to next year.

Hi @Alex B. , welcome to BP!

I'm guessing you are relatively new to this game.... there has NEVER been a nationwide eviction moratorium.  Ever.  

These are uncharted waters, so do not believe anyone telling you what is going to happen. They don't know.  Neither do I.  There isn't even a way to make an "educated guess" at this point.  So my 2-cents are "anything goes" is the future of residential real estate investing for the near and possibly long term.

To give yourself the best chance to survive in such an environment involves the following:

1) Buy only when you can steal, meaning you can resell it right away for 20%+ profit margin "as is" with nothing else done to the property.

2) Have deep pocket cash reserves. You may be paying that mortgage for 6-24 months without any income.

3) Have a clearly defined exit strategy that can take place with a non-paying tenant in residence.

Even with all of that, there is no telling if you'll survive.  I don't want to sound pessimistic, but 6 months ago who would have predicted where we are today?  "The Rona" has given Govt official and bureaucrats an unlimited ego/power trip, and they are going to do whatever they want for as long as they want and "sue me if you like" is their attitude.

Honestly, at this point, I would not get into residential real estate unless you like to play slot machines in Vegas.

Commercial real estate may be a better alternative.  My self-storage facility isn't covered by an eviction moratorium, and in my state at least I do not have to go to court, so I can kick non-payers out after mailing the proper notices.  So (for now) my investment is still "Bullet proof" in terms of the moratorium.

Originally posted by @Erik W. :

Hi @Alex B. , welcome to BP!

I'm guessing you are relatively new to this game.... there has NEVER been a nationwide eviction moratorium.  Ever.  

These are uncharted waters, so do not believe anyone telling you what is going to happen. They don't know.  Neither do I.  

If you know who Robert Moses is and if you know the backgrounds of the politicians who are signing off on "canceling rent" and "eviction bans" (Trump, de Blasio, Cuomo), then you do know what is going to happen, and you know that these are not uncharted waters. 

Eviction moratoriums may be unprecedented on a nationwide scale, but they're indicative of power plays in real estate and urban development that have been around for decades on a limited scale, especially in NYC.

So, I would tell the OP to not listen to anyone who doesn't have enough historical background about Robert Moses and the New York politicians who were not only influenced by him, but have been going by his playbook for years now. If they don't have any intimate familiarity with NYC-style manipulation when it comes to real estate and urban planning, how can they argue that no one knows what will happen? What is it about these guys using the same tactics on a national scale as opposed to just in NYC for decades makes a nationwide eviction moratorium unprecedented and therefore unable to predict? Nothing. 

I do believe there will be a lot of evictions and foreclosures in the future. However, I do not know if there will be a price drop in the housing market. I believe it was said in a one of the BP podcast, the government has printed SO MUCH MONEY that the housing price may not drop due to inflation. The only thing I can see changing eventually is houses will not sell as fast as they are now. My personal opinion about why houses are selling so well where I live is because people want to move out of the city because nothing is open. They are moving to bigger suburbs city (like mine) because they want more space to work from home and a bigger place to relax (i.e. bigger backyard, pool, etc).

I know this sounds like a doomsday scenario but I see one trend as a possible result of the Covid madness. People are escaping big cities, looking for space and more quality of life in the suburbs. They buy land and properties in rural areas since there work can be done remotely. But what happens if 

a) they lose their job or 

b) their employer realizes that they can now pick any available worker in the country who works remotely. 

I see a huge shift in the job market where remote workers HAVE TO but also CAN compete for jobs nationwide. This will result in a drop in income and ultimately impact real estate prices. 

Why would company A care about Peter and his $120k salary and $2,500 mortgage in New Jersey when Greg in Tennessee offers to do the same remote job for $80k.

Ultimately, you could then ask, why company A would even look for candidates in the US.

I understand that this is really a doomsday scenario but IMO, many people moving to the countryside haven't realized that their future job market might be highly competitive and paired with a drop in salary expectations.

My 2 cents for Friday.

Stay positive :D

Martin "Dr. Doom"  

And here it starts
https://www.businessinsider.co...

Originally posted by @Martin Michael:

I know this sounds like a doomsday scenario but I see one trend as a possible result of the Covid madness. People are escaping big cities, looking for space and more quality of life in the suburbs. They buy land and properties in rural areas since there work can be done remotely. But what happens if 

a) they lose their job or 

b) their employer realizes that they can now pick any available worker in the country who works remotely. 

I see a huge shift in the job market where remote workers HAVE TO but also CAN compete for jobs nationwide. This will result in a drop in income and ultimately impact real estate prices. 

Why would company A care about Peter and his $120k salary and $2,500 mortgage in New Jersey when Greg in Tennessee offers to do the same remote job for $80k.

Ultimately, you could then ask, why company A would even look for candidates in the US.

I understand that this is really a doomsday scenario but IMO, many people moving to the countryside haven't realized that their future job market might be highly competitive and paired with a drop in salary expectations.

My 2 cents for Friday.

Stay positive :D

Martin "Dr. Doom"