How a Backlog of Evictions in 2021 will impact Rental Properties

[Jerry Peng]

One of the biggest struggles that I'm sure many landlords and investors are facing during COVID-19 is the ability of our tenants to pay rent on time in the same manner they did prior to the pandemic. While many of us resent working on payment plans with our tenants, the government's stance on evictions has forced many of us to comply and work on payment plans or offer cash for keys to our tenants with varying degrees of success.

Some landlords (not all but some) are operating with the mindset that come January 01, 2021 all of these tenants with late rent/unpaid rent will finally be evicted and they can find new better and great tenants again. I really doubt this is likely to occur. I don't think the market has properly adjusted for just how long all these eviction cases will take the process. Beyond just the shear number of cases that have been backlogged over any 9 months, the past 9 months are particularly heavy in eviction processing due to the loss of jobs in many investor friendly Mid-Western and Southern markets. 

I think that come February, a lot of these landlords who aren't seeing their tenants evicted yet, will become distressed sellers and be great targets to finding excellent off-market deals. I would recommend that anyone you find that has filed an eviction notice in Q4 of 2020 to keep track of their names in late Q1 2020. They will likely not have their eviction hearing until a significantly later time since most courts work in first come first serve processes.

I'd love to hear people's thoughts on this theory. I'm obviously new to market trend analysis, but I can't help but do the math in my head and have it play out this way. Obviously this is assuming the government doesn't extend the eviction moratorium past Jan 01, 2021.