New Administration Hostile Towards Landlords?

Question

The Biden administration has me a little nervous. I have great tenants. It appears that there are some radical ideas being tossed around by some members of congress such as complete rent forbearance and forgiveness along with radical ideas attached to acceptance of federal rent assistance- such as being forced to accepting tenants I would normally pass on ie. poor credit, felons, regardless of offense etc.

I’m not here to argue politics. I’m not going to change anyone’s mind nor will anyone change mine. I rely pretty heavily on my rents. I’m a small landlord with only a few sfr rentals. I own them outright and as such have a considerable amount of money wrapped up in them. I’m kind of looking for alternative ideas for generating income from the money if I were to sell them. I have one lease ending in March and the thought of collecting zero rent on even one property doesn’t sit well with me.

Anyone else thinking along these lines? Definitely fishing for ideas.

Happy New Year

Brian Garlington · Answer

@Brandon DeVega is absolutely correct. Sometimes people are so close to the forest they can't see the trees. This is literally happening....Landlord; "I'm stressed out, I'm worried about getting my rental income and don't know what to do. The last two tenants I had stopped paying rent and bailed from the property in the middle of the night!"Local Government; "If you'd like, we can help,....the money is guaranteed, even if the person loses their job....you simply need to be willing to take a tenant that has a Section 8 Housing Choice Voucher. As an FYI, you can screen them just like other tenants. The experienced landlords will advertise FOR FREE on GoSection8 and get lot's and lot's of inquiries. You can make it clear in the advertisement that you do not allow any dangerous breed animals at the property, a max of one animal period, no smoking of any kind, no drug use allowed. As part of your screening you can ask the applicant how many people will be living at the property....If there are applicants that say just her and 2 kids and you have other applicants that say her and her 4 kids and their two puppies and maybe her man.....then common sense tells you who to continue the dialogue with because you know which families will be less wear and tear on your property. Generally speaking a google search of the person's name and checking out their facebook page will tell you a lot about them and if a records search that you initiate ON YOUR OWN helps you determine they have a record that you are not comfortable with then NOBODY can force you to take that particular applicant, especially if you do find a different Section 8 applicant that does not have an eviction or felony on their record which is pretty easy since MOST applicants with a section 8 voucher actually do NOT have an eviction or felony on their record." Landlord; (Silently thinking) "Honestly, what it really comes down to is I simply just don't want to rent to those people (whatever that means)."Same Landlord; (What they do say out loud) "But if the property does not pass a Section 8 Inspection then you can't make me take a Section 8 tenant, right? Perfect. I refuse to let the property pass a Section 8 inspection, now I've won! Yipee!Same Landlord later on in 2021; "I'm stressed out, I'm worried about getting my rental income and don't know what to do. My latest tenants either lost their job and they can't pay me or they simply have refused to continue paying me because they know I can't do anything about it. I can't evict them because the latest eviction moratorium won't let me. Nevermind that the eviction moratorium was initially started by the previous administration and also extended by that same previous administration, I just wish somehow I could get some good people in my property and know that I am always going to get my rental money guaranteed each month!" Sometimes people are so close to the forest they can't see the trees.

Ronald Starusnak · Answer

In NY we are already required to accept Section 8, we can't turn away for previous evictions and bunch of other junk. For the section 8 stuff, we just don't give people a reason as to why they were rejected. We don't respond after they have filled out an application. You can also refuse to fix certain things in a property and section 8 won't allow the tenants to live there, egress window size, handrail spindle distance, etc. Really small stuff can kill the ability of a tenant with section 8 to live in your property. A good friend of mine has his applicants submit a current power bill that must show the bill is current and not past due. If you can't pay your power bill, you're not going to pay your rent.

Brandon DeVega · Answer

You should definitely accept the rental assistance. It pays guaranteed, and there is usually no issues. Things do happen, but 9 out if 10 times always the rent is always paid, and there is no issues. Depending on the state your in, depends on the type of rental assistance programs they offer. But section 8 is always good in any state, they are just a little strict on meeting the guidelines for inspections. Thats really it. All the other horror stories people claim or tell bout section 8 almost is never true, and just hearsay. One person just repeating what they heard, from what another person told them. Alot of people be misinformed. Im not saying no issues ever occur. But as I said, it’s extremely rare. That would be my only suggestion. Just use your one rental that is about to be available to test it out. Accept one section 8 voucher, and see how it goes. And just screen which person with section 8 you like best for the rental. Do a full interview with a few prospects. You just might find someone you really like, that’s worth you renting to. Just something to consider. @Phil LoCicero

Account Closed · Answer

I will also add, EVERYONE is hostile to landlords now. I have been targeted by a couple hostile weirdos on social media only because they recognized my name as an area landlord. Small time landlords out in the community like me are easily scapegoated and don't have the resources the big anonymous hedge fund landlords do. I have been considering selling into something less politically charged while we still have 1031.... maybe self storage or whatever.

Account Closed · Answer

The reason I don't want to rent to section 8 is that (apparently) if the tenant violates the rules or doesn't pay their share and loses their section 8 voucher, you still are stuck with a judgement-proof tenant that has no ability to pay. I also remember sitting down and reading a list of the required lease terms for section 8, and in the current environment I would very uncomfortable with some of the terms, such as mandatory 1 year minimum lease term. In my county they are still allowing evictions for overstaying a M2M lease, which is the only tool we have at the moment to protect ourselves against unjust possession. Please feel free to correct any misunderstandings I may have about section 8. I honestly don't think the Biden administration is as reactive and extreme as Ilhan Omar and OAC, but I have been sitting on a couple vacancies waiting to see what happens..... After all, successful landlording is partially just risk management, and if they are removing my ability to manage risk, then I may just have to cash out and find another business for a while.

Brian Simpson · Answer

@Phil LoCicero I have to agree I have heard some of the rumors and its very scary to me as an investor.

Patrick Britton · Answer

@Phil LoCicero "It appears that there are some radical ideas being tossed around by some members of congress such as complete rent forbearance and forgiveness along with radical ideas attached to acceptance of federal rent assistance- such as being forced to accepting tenants I would normally pass on ie. poor credit, felons, regardless of offense etc."what's your source of these "ideas?" I have heard none of what you're referring to and referencing a legit source would be very interesting.

Eric Bilderback · Answer

Every time they do something it seems to have little or no effect of what they are trying to do. I am a republican all the way. But as much as I am against the rent control we have here in Oregon on principle I haven't seen any impact. That being said I background check everyone, and I am not the kind of guy that would pull rents up on someone that effect them in a material way. If you rent to good people and treat them fairly you should be fine. Even if they push for more regulation, which I imagine they will.

Andrew Rosenberg · Answer

@Phil LoCicero Good questions you ask. In my local market too many Mom and Pops are gonna go under. Hawaii is extremely tourist dependent and very tenant friendly. It's sad that small-time landlords are sometimes made out to be the bad guy. The problem is where else are you gonna put your money? Most people are scared of a stock market crash and this administration raising both capital gains and dividend taxes. Bond yields are really low. People are scared of municipal bonds, valid concerns about solvency of many state/city governments and their fiscal mismanagement (both pre and post covid). Personally I'm lowering my cap rate target in favor of higher credit quality tenants - it's more than laziness, I can't afford excess vacancy and turnover. I would argue that you have more control in REI than in the stock market and bond market. Regardless, I sympathize personally with your unease as a fellow investor.

Phil LoCicero · Answer

Ok. So far I’ve heard section 8- not happening. I don’t want any government entity regardless of party affiliation in my business. I appreciate the thought but no thanks. Also heard self storage. That’s more like it. Like I said, I’m not here to argue politics. Everybody’s mind is already made up on that front. I’d sure like to hear more suggestions. @Nicky Reader, I agree- hostility towards landlords is very real and seems very acceptable to some- including both political parties.