The Government Nationalized My Rental Portfolio

[Rich Lennon]

I am still at a loss to understand how the government has gotten away with Nationalizing my SFH rental portfolio in the blink of an eye. When Donald Trump announced that there would be no evictions on any federally backed loans, he essentially took my assets. Yes, only a third of the mortgages are federally backed, but it empowered local government to follow suit. All local governments in Richmond Va will not take eviction cases. By virtue of doing nothing I cannot remove a tenant from my property. As a landlord I have no recourse. Effectively seeding the asset to the Federal Government.

Now I want to make something REALLY clear.  If you throw out a tenant during a pandemic because they lost their jobs, you are not a good person.  Landlords have a responsibility to be good citizens.  They are business people and had better have planned for tough times.  I have a large portfolio and my collections are at 96%.  Why?  Because we communicate with the tenants, and generally speaking ,most people want to do the right thing on their own.  They don't need the government to regulate it for them. 

Tip:  We bought six rolls of toilet paper for each of our tenants and delivered it to their homes in a gift bag with the hand written message "We are all in this together, if there is anything we can do to help let us know".  We had an AMAZING response!!  People before profit!!

What if I want to sell my asset though?  What if I believe that the real estate market today is the highest it will be for 8 years?  What if my kids need to go to college during those years?  Or I want to retire and cash out?  I cannot remove any of the tenants as there leases expire for what will likely be 6-9 months.  In that time the world will have changed.  No one can be certain what the world will look like at that time, although my guess is not better.  The government stepped in VERY QUICKLY and took control over millions of dollars of assets that I am still responsible for.  

If in times of crisis the government is willing to take this asset class under it's own control, that risk has to be accounted for moving forward in this industry.  Why work ten years to build a portfolio if it won't be there for you when you need it the most?  I fear this impulsive political decision will have a long lasting impact on the landlord industry.  The cycle I built my portfolio during (post 2008) the old grey hairs urged young investors to watch out for the banks.  Be weary of debt (good advice).  The next cycle, old grey hairs such as myself, will warn young investors that rentals have a new risk previously unimagined.  The government can Nationalize your portfolio over night, and there is nothing you can do about it.