Eviction moratorium hurts the little guy

[Nathan Gesner]

https://www.seattletimes.com/b...

This is an excellent example of how the eviction moratorium hurts the little guy. Immigrants, minorities, women . . . These people are trying to make a better life for themselves in the land of opportunity while improving our communities and cities. And what do they get in return? The government that claims to be looking out for the little guy instead creates policies that favor the takers and punishes the producers.

Do you feel sorry for this tenant? Sure, he lost his job and had to struggle for a bit. But I would love to see how much money he made from the stimulus checks and increased unemployment benefits. This guy has money to drink beer, smoke cigarettes, and watch his flat screen TV, but he doesn't have the time or respect for his neighbors to pick up his own trash? Why isn't he out looking for a job? 

You could drop me in that town on a Sunday morning with $1 in my pocket and I guarantee I could have a full-time job or two lined up within a week. It literally took me one minute to find there are entry-level jobs paying $14 or more and hiring right now. 

Parasites like this turn my stomach.

[Jim K.]

@Nathan Gesner

I hear what you're saying, and I'm going through some of it myself with some inherited tenants right now, but let's look at some of the way the landlord here, Romeo Budhoo, SCREWED UP. I've looked carefully at the article, and this is a sob story we're getting. Here's my breakdown.

Budhoo was charging $950 to a tenant who is described as having bounced around in lots of jobs and at the time the rental contract was made, was working as "a cook making $700/week." That gives this guy a monthly income (it's probably NOT his take-home) of $3033/month. That's barely enough to satisfy 3x income-to-rent We also have the nature of the job as well -- guy's a cook, hardly the most secure employment. Did anybody twist Budhoo's arm to place this tenant?

Let's look at 1042 Cutler, the property in question. It's obviously a converted single-family turned into a duplex by some creative remodeling. 120 years old. The tenant, Alfonzo Hill, lives on the lower level. The upper level most likely rents for the same (or more, given that it's bigger). That $1900/month rent roll with this place. Now here's the kicker, Zillow values this property at $85K. Which means if this property was for sale, it's beating the 2% rule. Zillow also gives us some more information about 1040-1042 Cutler. Budhoo bought the place in 2014 for $18,500.

This is obviously D-class, high-cash-flow, zero-appreciation upstate NY housing. You don't need a microscope to see it. But go on Google Maps to check out the neighborhood and it's staring at you.

How does Budhoo drive up on 1040-1042 Cutler Street? In his 2015 Krautmobile. Slumlords can't drive Mercedes, that's the first rule of slumlording. That's just the way it is. No wonder his tenant thinks what he thinks of him.

Yeah, yeah, yeah, Budhoo pulled himself up by his own bootstraps, up from poverty, Horatio-Alger style, poor-immigrant-makes-good...I've worked for a lot less than $8/hour in my time. If Budhoo's whole 20-strong portfolio looks like this, he didn't do much for his financial security with his money. If what looks most likely here is true, he's bought himself a high-profit garbage portfolio. Look at the frequent evictions mentioned, relying on the legal system to cover his butt. Can't get insurance on these properties, can't unload them for what you're making on them, they all have major structural deficiencies, it's a whole big house of cards waiting for a match and a push.

Did the pandemic screw Budhoo? Sure. Did the tenant, Alfonzo Hill, screw Budhoo? Sure. But DID BUDHOO START FROM A POSITION OF STRENGTH? No. The article talks about him maxing out his credit cards and taking out a SECOND LOAN on his Krautmobile. The article talks about his threatening letters. That's not how you communicate successfully with D-class tenants. The bare minimum is done in writing. A slumlord is on the phone or belly-to-belly if he knows what's good for him. D-class tenants don't respect anyone who's just too busy to talk to them and weakly threaten them in writing or shake their fist at them out of the window of their Krautmobile.

Based on this behavior, does Budhoo have the faintest clue about how to protect himself financially when hard times come? Hell, no. He should have been divesting himself of weak assets like 1040-1042 Cutler and taking his losses on the chin from the beginning of the pandemic.

Back in December, I had to sell a property Zillow initially valued at $220K for 120K. You see me pissing and moaning about it here? No, because I 1030ed my money into a much better, sounder property, and decided not to cry over $100K of fantasy money. I bought the place for $100K in 2013. I did well enough.

My point is, this is not how to make it from nothing down in these property classes. You have to be a lot more savage (to use @James Wise's term) and careful than this to be a local operator working in this kind of urban environment. That's why so many would-be D-class property barons fail. Budhoo's business model was flawed to begin with. You have to admit he did plenty to put his own neck in the noose.

I wouldn't have bought this property. I wouldn't have placed Alfonzo Hill in it. I wouldn't have nurtured the kind of relationship that Hill and Budhoo have. I wouldn't drive up in a Mercedes to hit my tenants up for money. I've never sent a threatening letter. I wouldn't have held on to these properties and chosen to go into credit card debt. Where's Budhoo's W2 job? Oh, no job to turn to if things go south on the property empire? Doesn't he have any skills to sell? Is there a Plan B?

And where's Budhoo's wife in all this? No mention? Is Budhoo trying to do this alone at this stage, just him and his garbage portfolio? Enquiring minds want to know!

Look at it, Nathan. You know the game and the score. This is a sob story. Is it sad? Sure. I'm sure Budhoo, in filing those frequent evictions mentioned pre-pandemic in the article, heard a lot of sob stories, too many to be fobbing one off on everyone else now. When you've put people on the sidewalk, you had better be prepared to take responsibility for your own damned mistakes and not go crying to the papers about your awful soul-wrenching pandemic blues and how unfair and "disrespectful" life, the gubmint, and your tenants are.

Moaning about tenants to a reporter while he's picking up garbage...seriously, Nathan, does Budhoo sound like he's built for this life to you?