Brandon Turner Nails it on the COVID-19 Rent Due Advice

[Matthew McNeil]

Brandon provides excellent advice in his video “Are Your Tenants Unable To Pay Rent Due To Coronavirus? Here's What To Do!” https://www.youtube.com/watch?v=1CLa0UJCn3w

In particular, his Emergency Rent Deferral Plan provides an excellent framework in preparation to guide our tenants through this difficult time. The 4 options he discusses are well presented. Brandon admits we’re navigating new territory which affects everyone.

QUESTION: Does anyone have thoughts regarding allowing a tenant to take in a border and use the money to help alleviate their financial stress. Granted, I realize that raises some legitimate concerns, but it might be an idea worth fleshing out.

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Yea...I watched it. I told Brandon to F-off more than once as I did. I will also say there were many very good points made, so he got a couple "right-ons" from me too. (I like Brandon a lot) And before I write some harsh criticism, I'd like to open with the fact that Brandon is showing and advising compassion, and I say Bravo in a big way for that.

Sigh. I know I have a very different take on all of this than most everyone else. I get that.

What is most disappointing about the video to me, is that Brandon Turner and Bigger Pockets have much influence over the decisions of others. This was an opportunity that could have been used to offer the right solution, and instead it was used as a self-serving one. The first F-You came when he asked people to Subscribe to his channel. A few more came along the way during the meat of the content, and a big one at the end when he used the opportunity to pitch his book. The thing that makes me the most mad about that, and mind you I generally have zero ill-will against anyone who is self-serving for their own gain, I am 100% pro-entrepreneur, is that this is the time when people of influence ought to be doing the right thing for everyone, not just themselves. No half measures, no self-serving BS wrapped in Lets help the world clothing. Brandon's true colors and level of analytical intellect have shown themselves to me. What can I say, it rubbed me the wrong way. But I dunno - who am I, a guy with 4 doors. I aint no Bill Gates or Warren Buffet. I aint written no best selling books lately, or ever. I'm probably just a fool of the world.

But let me back up that incredibly harsh criticism.

These are unprecedented times. Should probably say that twice. Maybe ten times. There is zero history that can be resourced that will spell out exactly what we are in for. There is much history that can be resourced to piece it together, yet no amount of piecing it together (absent of blind analytical luck) will predict what is coming accurately. In other words, none of us know what's coming, no matter how much we like to believe we might. I also suspect the outcome is variable, another lesson from history.

There is no way that shutting down the world will not have a profound affect on the global economy, that much is a clear and sound prediction.

What does that mean? What does that look like this time? What do we do? What is the best action for ourselves? What are the best actions for everyone? Is it possible that certain actions we take for ourselves might also be the best actions for everyone? Is it possible that actions we take could make the world better? Make us recover faster? Avoid certain fates even? Can the same go the other way? Can certain actions we take now make things worse?

I say the answer to those last questions is yes.

Let's think this through a second. The rental market is going to collapse. There will be moratoriums on evictions. There will be vacancies as people move in together. This thing is going to spiral down and feed off itself before it finally bottoms and starts going up again. That's what we're looking at here, in the best case scenario. The government intervention and assistance that might come is unknown. Further, there is only so much the government can do. This will happen whether or not banks offer grace, which they hopefully will. I think those of you who think this is all going to blow over and return to normal in a few months are dead wrong.

Brandon says he will offer deferments. A noble and compassionate idea - bravo. It's also of course an act of self-preservation. I hope everyone at least considers doing it too. But how is that really going to play out? Then everyone is playing catch-up, and for how long? Brandon's idea essentially equals an increase in rent, some might call that inflation. How well is that going to work when what we are looking at is an economic downturn? How are people going to have more money to pay rent when they will have less money over-all? That doesn't really add up, and what people are going to find out, which is one of the main economic principles we must never forget, is that the market dictates prices. (Gasoline dropped from about $2.50 to $1.50 in the last two weeks.) Does anyone really suppose higher rents are going to happen as vacancies increase? Do you expect to tell your tenants they must rent from you and no other??? LOL. I don't think Brandon's plan is going to shake out like he hopes it does. And, I hope it does shake out like he hopes, to be fair about this whole critique. I hope I'm the dummy, but I don't think I am. I think Brandon's plan of rent deferment via future rent increase is going to be like trying to plug a sinking ship with lots of holes with too few fingers. I think he puts too much faith in a lease agreement and peoples value of their own credit in tough times.

What the entire country needs right now is stimulus. Not next week, right now. The longer we wait to provide it, the more the economy will suffer. The sooner we provide it, the less the adverse affect. Again, a lesson we can look back on history and source conclusions from.

I know my conclusions are debatable and my solutions are highly idealistic. I know the course of action I suggest will in fact not be taken by most, or is even possible to take for some. But what I think the landlords of the world need to do is offer April rent as a gift. Not a deferment, a gift. Imagine for a second if it was possible, and everyone did it, all at the same time. I'm not talking about providing free housing for all of eternity - of course not. But what about right now, this moment in time, just for now? Just this month, and maybe the next? What if those with mortgages were able and willing to just put their profit projections back for one or two months meaning, that property of yours will take one or two months more to pay off so, 30 years and two months for example. Is that really not a feasible possibility? And, is that really anything different than suffering a vacancy?

I like Brandon, he's great. I love Bigger Pockets. It's the greatest thing ever for all that is REI. I think everyone knows that. That's why it's as big as it is. That's why I think Bigger Pockets has influence and could, if they chose to do so, be a force to help the world in a massive way. I think the opposite is true as well, BP has the power to steer everyone wrong. I also hope I can still write a criticism/commentary like I am on this platform and not be censored for saying it - lol. Which brings about an even scarier sort of thought now doesn't it?

These are unprecedented times. I'm not sure how many times that can be said. This is not the shutdown of 09, or the Great Depression. This is a global, world-wide event. This has never happened in the history of the world. You can't compare what is happening now to the Spanish Flu or Bubonic Plague or even the most similar of outbreaks, Sars from a couple years ago. The difference is what we are doing, globally, to fight the outbreak. It's a concoction, perfect storm, call it a Witches Brew if you're cynical like me, as we have never gone through ever. Can we really apply solutions of the past to this unique problem of today and expect a similar outcome? I say the answer is the solutions of the past will only be as effective today as they are relevant to today's circumstance. 

And to be fair with this critique, I don't for a second think I have all the answers either. And so therefore, I'm not going to post a podcast, using confidence tricks to get my point across, telling people what I'm doing and inferring they might be wise to do the same. Instead I am going to offer the only solution that makes a lick of sense to me today, to help nip this thing in the bud for tomorrow, which is that the impact of offering a months grace is a good thing that will have good consequences. I already did it for my tenants for April. No deferment, no raise in rent, April is free. I've had time to reflect on that action and as every minute goes by, I'm more confident my decision was the right one. For me, for my tenants, for my financial future, for their financial future, for the love of humanity and for goodness sake.

If the rest of you want to go another route, I don't blame you and I don't judge you either. This is my opinion and for now, everyone is free to have one.