All Forum Posts by: Michael Gansberg

@Robin Hines - sorry for your difficulties. These guys generally run Ponzi(Madoff?) schemes, it sounds like that's what he's done. I saw this happen to a friend of mine in NY- the FBI got involved(I advised him against making the investment, as did all of his friends/family. He said, "I want something that's too good to be true." Well, he got that!)

My friend eventually(and with much hard work) received his principal back(no luck on the 100% interest payment after 4 months that he was promised, c'est la vie.) The FBI guy was speechless when he found out my friend was paid in full. Apparently, that's a very rare outcome in these circumstances. My recommendation is to hammer him with your lawyer(and follow Jay Hinrich's rec about involving the appropriate authorities.) You should steel yourself for a total loss, but if you can inflict sufficient pain on the scam artist, it may cause him to change his ways. Don't do it for yourself- do it for the next guy.

Isn't in funny that politicians who bang the table loudly for a higher minimum wage with one hand simultaneously write legislation with their other hand which prevents landlords from profiting off their capital and labor? For example- an eviction moratorium has forced many landlords to work for free- or worse, work for negative dollars. They can't exactly quit- maintaining housing stock is a legal requirement, and if a landlord just said "Forget this!" he or she could literally be imprisoned for the failure to maintain safe housing. Of course they could sell...but with vindictive non-rent paying tenants who can prevent showings due to Covid rules, that isn't always the easiest thing.

But while so many lament the plight of the minimum wage worker, so few lament the plight of another group whose livelihood has been taken from them. The government has never said to the minimum wage worker, "You can't better yourself and you must earn minimum wage for the rest of your life!" That would be cruel and ludicrous and the outcry would be justifiably immense. But when government caps the income for property investors who often invest their time and capital, the most common response is "it's all good!"

I wish I could explain these apparent paradoxes. Maybe, as a property investor, I'm too close to the issue and can't see it clearly. 

@Carl Mathis - thank you for your reply. I didn't write that I had it all figured out. The intent of my post was a simple message- government shouldn't interfere in housing in the way they've been interfering(for example- making evictions impossible for over a year in many places.) 

Many of my residents haven't paid rent in a year(or more,) and the NY State legislature(a state in which I unfortunately invest in) just passed a law extending the moratorium until the end of August. I view that as a law which effects a transfer of wealth from me(the landlord) to the tenant. I also believe that the politicians who voted for such don't have much inkling of why they're voting that way- it can't be to protect health(vaccines are available,) it can't be to respect contract law(obviously,) it can't be to bolster the housing market, so I'm left with the thought that it is some subconscious way for politicians to transfer wealth to people they feel deserve that wealth. 

Also, I've never taken a class in economics, so I'm sure I'm at a disadvantage to your wealth of knowledge on the subject, but I come here to learn. From my readings of economics textbooks, the impact of stimulus money must be to raise the reserve wage of those receiving it. The larger the stimulus, the greater the impact on the reserve wage, which will of course reduce the availability of labor. Further, though I don't recall reading this in my textbook on labor economics, I expect a reduction in people's living expenses by removing the necessity of rental payments(by passing an eviction moratorium, for example) would have a similar impact, but I'm just hypothesizing here. The twin impacts of rent reduction and stimulus- in my mind, anyway- are likely contributing to a labor shortage while simultaneously promulgating a higher unemployment rate. For the record, I find it quite bizarre that we can have unemployment above 6%(with apparently a 'real' unemployment number well above that) and also widespread reports of labor shortages. My prior understanding of the dogma was that labor shortages tended to be seen when unemployment fell below 5%. It causes me to wonder if maybe the stimulus is distorting the market somehow in a negative way.

You seem to feel that I'm dead wrong- I hope you'll enlighten me.

The eviction moratorium is the other part of this. People think, "I don't have to pay rent, so why would I have to work?" And contractors experience the same effect- they don't have to pay rent, so they think, "I don't have to bid competitively for that roof job with free rent and free government money, so why don't I just double my rate and see if the poor sucker bites?" 

And poor people think, "This is wonderful, I don't have to do anything and I'm sticking it to the man as a bonus!" 

And politicians think, "This is wonderful, we can transfer money from rich landlords to tenants who've been struggling to pay rent! This will be the greatest wealth transfer in a generation!"

And rich people know the truth. Inflation will eat into those wage gains, asset values have been on the hottest streak since - ever? And for all the efforts of the politicians, the rich have gotten way richer, and the poor won't benefit in the short, medium, or long run. And everyone's taxes will rise(except the rich, of course, because their accountants will tell them where to put their assets to keep the government's paws off 'em, so really everyone will pay for this except the rich.)

The craziest thing is that the solution to this is easy peasy. The government should just get out of the way, do nothing, and let markets do what markets do. Anyone who wants a vaccine can get one- so the health of the population is no longer at issue.

@Scott Wolf - I know. It's literally pointless to try to achieve reason or rational behavior from our NY State legislature. In December, the vote on the moratorium from our legislature was 99-47 to extend it; this week, it was 89-59 to extend it. So several people who lost their minds have found them, but I'm sure the legislature will extend it again at the end of August, unless 15 switch from the 'yea' to the 'nay' column. 

The craziest thing is that the NY economy would soar if people had to pay rent again- they may start looking for jobs instead of playing X-Box and smoking herb. If you needed a new roof, for instance, you'd get a fair quote instead of the nutball quotes out there right now. The craziest thing is that more people entering the labor force might actually tamp down inflation. Insane.

And the mountain of rent owed will only grow. So at the end of each protection period, the Legislature will just add a "really" to their "reasoning." "The rent owed is now twice what it was at the last protection period, now we REALLY can't let evictions proceed." "The rent owed is now blah blah blah, now we REALLY REALLY can't let evictions proceed." Etc.

@Jacquelyn First - you're in a competition against the other local property investors. You want the best tenants- they do too. Not only should you get a fridge, but get a stainless steel one. I've seen my competition and their apartments with those cheap white fridges. They look cheap, and prospective tenants see that too. For another couple hundred bucks, your kitchen can look better. Ditto with ovens. My kitchens cost several hundred dollars more than my competitors' do, and as a result, prospects prefer my apartments.

Isn't it worth a few hundred dollars to be able to choose your tenants, rather than having them choose you?

I just spoke to Assemblyman John McDonald from District 108. He called me at 9:45 PM- that is one hardworking guy. What a nice and reasonable guy- if we had more politicians like him, NY would not be such a mess right now.

@Ariel Jeidel - the emails I've sent have been a little "strongly worded." I don't know if assemblymen can handle too many of those emails. But I'll write a tamer version below, please modify or use as you see fit.

Dear Assemblyman,

I'm writing regarding the upcoming eviction moratorium vote to extend the moratorium until late August. I'm a local landlord and have put my money, time, and effort into providing safe and affordable housing for many years. The moratorium threatens what I've worked hard for, and also threatens the safety of the residents who are paying full rent and are not getting what they signed up for. 

Some of my tenants are partying into all hours of the night, bringing strangers into the building and not following masking procedures. They also haven't paid rent in about 6 months in some cases, or up to a year in other cases. When the stimulus funds came, they didn't use a cent of them towards paying rent. Further, the funds that NY State is allocating to pay for tenants who are behind will never be used for that purpose- as long as tenants can't be removed for non-payment, they will never spend hours filling out onerous paperwork to benefit their landlord. So when the end of August rolls around, the Assemblymen will wonder how the amount of rent owed has grown even larger than it was just months before, why none of the money has been spent as it was intended, and they'll say, "Well, now we really can't let evictions proceed!" And the can will be kicked down the road until nobody in their right mind would invest in NY State.

The shortfall in rent has caused me to choose between things like paying property taxes, the mortgage, remediating lead paint, and fixing roofs. With approximately 20% of my tenants on rent strike, I can't do all of these. If I stop paying the mortgage, the bank will foreclose and oddly, they are the only ones who can evict tenants, so your protections will amount to naught. So by extending the moratorium, the Assembly of NY State is forcing the degradation of the housing stock in their own state, and making housing less safe for everyone. Allowing people to use their rent money to throw parties and buy big-screen TVs does not make anyone better off or safer, it in fact accomplishes the opposite of what is intended.  

Thank you @Matt O'Rourke and @Santiago Marquez. @Wesley W. - have you tried John McDonald? He's the assemblyman in your neck of the woods. I called and emailed him. No response yet(and I'm not holding my breath.)

The NY State Assembly could make the law fairer in a pretty simple way. If you're 3 months behind on rent(or more,) the protections don't apply to you. Or something like that to prevent the freeloaders I'm dealing with! I have people who've lived for a year, rent-free, and one of them threatened to sue me yesterday because she has some black mold! You'd think after $10,000 of free rent she could go buy a $3 bottle of bleach, but I guess that's asking too much.

Listen up BP. NY State is voting Monday(yes, May 3rd!) to extend the eviction moratorium until August 31st. Don't kid yourself- at the end of August, they'll find a reason to extend it to sometime between now and never(and my money is on 'never.') 

I have listed the Assemblymen and women below. It's a steep hill to climb, but I recommend calling and emailing as many of them as you can to tell them how the eviction moratorium is affecting you. I am doing so. I doubt BP will want me to publish emails and phone numbers, so google the Assemblyperson's name and their contact info should pop up.

Members of the New York State Assembly

Membership of the Assembly represented by an equal-area projection since the 2018 election