Covid bail out, who is bailing the landlords out?

43 Replies

I'm a landlord with 6 properties, 3 of long term tenants have decided to cover themselves with this covid blanket. He's about 6500 past due. I'm in Georgia and counties aren't hearing any cases. I understand the CDC has extended the cares act until 12/20. I think it's a gross reach into my pocket. How are they bailing people out on my dime? When this virus happened back in March, I didn't stop making my payments on my mortgage. Why do I have to ruin my credit and accumulate mortgage payments because the government wants to bail people out of paying their rents. Especially when these people are working and getting a paycheck.

Why doesn’t the government say that people can take groceries from the grocery store and not pay? What would happen if somebody filled up their cart with food from the grocery store and rushed out the door screaming Covid? It appears the government legalized Thievery. 

When you think about it, it's going to really leave the mortgage lenders holding the bag. How many landlords are going to just go ahead and foreclose!? Hopefully there will be something in the relief package to head that off at the pass, and keep us little guys afloat.

Originally posted by @Maricela Chavez :

I'm a landlord with 6 properties, 3 of long term tenants have decided to cover themselves with this covid blanket. He's about 6500 past due. I'm in Georgia and counties aren't hearing any cases. I understand the CDC has extended the cares act until 12/20. I think it's a gross reach into my pocket. How are they bailing people out on my dime? When this virus happened back in March, I didn't stop making my payments on my mortgage. Why do I have to ruin my credit and accumulate mortgage payments because the government wants to bail people out of paying their rents. Especially when these people are working and getting a paycheck.

I know on owner occ loans there are forbearance that don't affect your credit supposedly.  Have you checked for investor loans. I have to think ( but I dont know)  that banks  lenders and investors who end up with your loans dont want a repeat of 08.. I think if you were in the ATL area you saw first hand how when credit froze values dropped 50% or more ..

I think though court of public opinion is that investors are in it for profit not a roof over their head.. although landlords are providing a roof over tenants heads.. and if investors start losing their rentals tenants are going to be out on the street..

Lesson learned at this point is that being a landlord and not having SIGNIFICANT reserves for a black swan event creates a lot of risk.. the government just is not going to bail every single business out.. 

But I would start with your loan servicer right away and see what options you have for a payment deferral and add it to the back of the loan..

 

I hear you, and I had a terrible situation w/ a few of my tenants as well.  The worst was a tenant that skipped rent in Feb (before anything got too bad) and then rode out the moratorium on evictions and the Covid excuse for the next 3 months!

Mom & Pop SFR are definitely being left holding the bag.

If it helps, banks were allowing for mortgage forbearances.  If it helps - there was the EIDL/grant, PPP loan for self-employed, State grant money.  I qualified for some grants and took advantage (and in an odd way, kinda "came out ahead" if you could say that).

I DO share in your frustration.

Talk to your representative (not sure what the local govt representative is called in the US, in Canada, it is your MP) and see what they say.  The more landlords that speak out and let them know this is not okay, the better.  I get tenants who have lost jobs are in a bad place, but they get help from the govt and most I am sure can manage partial payments.  I am not talking about those who blatantly abuse the system.  

I'm in Canada and I was able to evict one of my tenants for non-payment, but had to wait til Sept when evictions were allowed, so I lost 2 months' rent, had one month vacancy and a ton of stuff to deal with as they left it in poor condition. I have another tenant who is breaking their lease due to family issues. They gave 2 months' notice, but it will be tough to find a new tenant for that place as it is geared more to students and everything is online this year.

I completely agree. Government intervention and reoccurring stimulus package seem like a good idea in the short term, but this is ultimately destroying our economy and real estate market.

If the government would let the market be, there maybe would've been some missed payments for the first month or two, but by-and-large, the market would've naturally worked this out and set us up for longterm success. 

The continuous government bailouts are hurting Americans significantly. 

Thoughts?


Hi @Maricela Chavez ,

I'm sorry to hear you're going through this.  We are feeling the hit on some of our properties as well and it's really quite frustrating knowing that people are taking full advantage of the system while we as landlords are still expected to pay the mortgage, insurance, repairs, etc.

I know it's a bit of a long shot, but are you sure that your properties fall under the CARES Act? We have a couple properties that are portfolio loans with our local bank, so they weren't ever sold off to Fannie/Freddie and therefore aren't government backed loans and don't have to follow the rules of the CARES Act. We had 2 tenants that took complete advantage of COVID and didn't pay for 6 months or more. Once our deadline hit for the moratorium, our property manager was able to post notices and start the eviction process. Even if the courts aren't hearing cases, there may be ways that you can start the process in hopes that your tenant gets scared and moves on on their own. If not, maybe it'll help you get your claim into the court system earlier than others so it's addressed sooner rather than later.

Good luck!

I believe there could be a massive conspiracy afoot to defraud the working middle class (not just Americans) of their wealth and freedom.  Anyone who thinks that more government is better is deceived.  Perhaps they have not seen first hand (like I have) how government rarely do anything efficiently (except spend money).  I have worked as a contractor on 50 to 100 projects for the government.    In my experience, the lazy and incompetent vastly outnumber the "good ones"  Contrary to the news and history taught in public schools (heavily promoted wishfull thinking) every "solution" the government implements causes more problems.  

I think it is important to note that Warren Buffet has started buying and selling single family homes. Blackstone is huge and actively bidding on any foreclosures that show up. China and Japan own a lot of land on the West coast of North America. It might be noteworthy that President Trump is a real estate investor. Home loans interest rates are artificially low because the US is using home loans to inflate the money supply ( the FED is buying billions of dollars of home loans because it is cheaper and easier than printing money -- study fractional reserve banking and fiat money if you don't believe me)

Without the artificially low interest rates, demand for homes would drip (and so would home prices). I think investors are continuing to buy real estate as an inflation hedge. US real estate is risky since we are seemingly teetering on the verge of socialism (just another name for Communism). Communists and similar forms of government do not respect private property. We can only hope and pray that our investments benefit us and our children rather than being forcibly donated to powers that be.

It is easy for the media to vilify landlords and perpetuate the stereotypical uncaring scrooge.  But imagine renting  housing from an organization like the SSA, DMV, or Honolulu's permitting department?   

So assuming we don't go Communist, I envision bunch of real estate going into foreclosure in the next two years. It may take the courts a year or two to catch up with the backlog after being shut down for so long. (The process wasn't fast before and having a bunch of desperate litigants in backlog won't make the process any faster -- similar to the line at a tire shop the first day of snow) Banks will be reluctant to write down the losses so they may list them as overpriced REO's -- hoping to capture a gain justified by inflated prices (caused by artificially low interest rates) Institutions with money like Berkshire Hathaway and Blackstone will likely negotiate directly with the banks to buy portfolios of bad loans and foreclosed properties. I expect institutions to buy most of the foreclosures so the public won't see much on the open market. The relative lack of publicly listed foreclosures combined with artificially low interest rates may prop up housing prices (and by extension: prop up the stock market, large bureaucratic businesses, and inefficient governments)

The unit I speak of is a Duplex. So I have continued to pay the mortgage since March. I know the CDC does not want homeless people making covid worst but then why not pay the rent for them? I mean I’m paying right now out of my Pocket. I can also afford to continue to pay because I’m working but essentially I’m losing income each month and with the one tenant paying I am able to not come out of pocket. I think it’s a gross government over reach. This person is definitely abusing the system, and he has been a terrible tenant from the beginning. I did call the mortgage company and told them what was going on, they said they could postpone payments for 6 months and that it would not affect my credit. That’s my biggest worry, that at 6 months the CDC will extend the date past the 12/20 date. It really makes me sick to my stomach. 

@Maricela Chavez I am glad you are able to cover your mortgage payment. I think this is one of those times when people that overleveraged are going to get crushed. Since I have joined Biggerpockets I keep reading about people that are buying SFR that only make $40-$50/mo, but are excited about a 8-10% CoCr. Then they sound like they do not have any money set aside for contingencies, because they are putting everything into getting that first deal. To me that is such a risky move. All these "deals" are great until they are not. You have to estimate stuff with conservative numbers and not assume that appreciation or some massive rent increase is going to save your butt.
A big example that someone wrote up as a closed deal was he bought a house built in 1890 in NJ for $300,000 and said he is going to let the house appreciate over the year and then sell it to buy a four plex. During this time he is going to LOSE MONEY EVERY MONTH!!!!. Lets put aside the fact that you are losing money monthly if the property appreciates 10% in a year his house is worth $330,000. Closing costs is going to be around 8% so he would only make $3,600 even if it appreciated that much. Thats not investing thats gambling.

Example 2: Lets say the building makes $50/mo, $600/yr, even if you have a great tenant that moves out, just from that one missed month of rent it eliminates your year of income. We are not even adding in when they move out you are going to want to clean the property up, which will cost more money.

I know/hope most of our biggerpocket members are not overleveraged and made purchases that are based on cash flow and not on appreciation or rent increases.  *Disclaimer buying a property and renovating it to market rents is different than assuming rents are going up 5%/yr. in a random town in North Dakota.*

@Maricela Chavez Unless your state has additional protections (for non-payment), you ought to be able to go ahead and follow the eviction process and then file for eviction, the case just won't be heard until the moratorium is lifted. Many tenants will act (pay) to prevent an eviction filing since even a dismissed eviction can hurt your credit and make it difficult to rent another apartment. The other thing I might try would be filing a lawsuit to get a judgement for money owed in small claims court if the tenant still has an income source and is just choosing not to pay.

Originally posted by @Joel Florian :

I believe there could be a massive conspiracy afoot to defraud the working middle class (not just Americans) of their wealth and freedom.  Anyone who thinks that more government is better is deceived.  Perhaps they have not seen first hand (like I have) how government rarely do anything efficiently (except spend money).  I have worked as a contractor on 50 to 100 projects for the government.    In my experience, the lazy and incompetent vastly outnumber the "good ones"  Contrary to the news and history taught in public schools (heavily promoted wishfull thinking) every "solution" the government implements causes more problems.  

I think it is important to note that Warren Buffet has started buying and selling single family homes. Blackstone is huge and actively bidding on any foreclosures that show up. China and Japan own a lot of land on the West coast of North America. It might be noteworthy that President Trump is a real estate investor. Home loans interest rates are artificially low because the US is using home loans to inflate the money supply ( the FED is buying billions of dollars of home loans because it is cheaper and easier than printing money -- study fractional reserve banking and fiat money if you don't believe me)

Without the artificially low interest rates, demand for homes would drip (and so would home prices). I think investors are continuing to buy real estate as an inflation hedge. US real estate is risky since we are seemingly teetering on the verge of socialism (just another name for Communism). Communists and similar forms of government do not respect private property. We can only hope and pray that our investments benefit us and our children rather than being forcibly donated to powers that be.

It is easy for the media to vilify landlords and perpetuate the stereotypical uncaring scrooge.  But imagine renting  housing from an organization like the SSA, DMV, or Honolulu's permitting department?   

So assuming we don't go Communist, I envision bunch of real estate going into foreclosure in the next two years. It may take the courts a year or two to catch up with the backlog after being shut down for so long. (The process wasn't fast before and having a bunch of desperate litigants in backlog won't make the process any faster -- similar to the line at a tire shop the first day of snow) Banks will be reluctant to write down the losses so they may list them as overpriced REO's -- hoping to capture a gain justified by inflated prices (caused by artificially low interest rates) Institutions with money like Berkshire Hathaway and Blackstone will likely negotiate directly with the banks to buy portfolios of bad loans and foreclosed properties. I expect institutions to buy most of the foreclosures so the public won't see much on the open market. The relative lack of publicly listed foreclosures combined with artificially low interest rates may prop up housing prices (and by extension: prop up the stock market, large bureaucratic businesses, and inefficient governments)

If those big funds and investors want to buy property, they will be the first ones interested in prices dropping, not on holding the market.

There have been voices both at the FED and the ECB saying that artificially low interest rates are creating a massive bubble, and this will not end well. Saying that there is no inflation to try to justify low rates is just a blatant lie, since everyone knows there is indeed inflation, so central banks should raise the interest rates.

Hey @Joel Florian , love your comment! I agree, this whole economy is a house of cards just waiting for a gentle breeze! The only reason we get away with so much in this country is that every barrel of oil is sold with the American dollar. Once that changes, people are bound to notice, "the emperor has no clothes!" 

Originally posted by @Maricela Chavez :

Walt Philip, if they add it to the back of the loan, then I’m the one getting the screws, since I’m the one paying the mortgage.

there is risk in being a landlord many different kinds of risk.. but no one was prepared for the government stopping evictions.

I mean those that work in tough to evict states know it up front.. or rent control they know what they are getting into up front.

those that work in states were over half the state rents  those are the ones with quick eviction time lines.. and investors never really needing to have big reserves since they know in 90 days they will get their unit back if not sooner.