All Forum Posts by: Michael H.

I'm only reading and responding because it's you, John.

If you forgive Tenants of their responsibilities because they are out of work, then you have to forgive the restaurant owner, the hospital that had to furlough all their staff, the farmer that can't sell his apples, etc. 

There's no end to this.

What we really need are some leaders with cajones that understand how to conduct a basic cost:benefit analysis based on actual data, not unproven models and fear. Our government shut down the economy without a justifiable reason and the vast majority of us will suffer the consequences while the vast majority of them will become wealthy.

Start preparing because this is not the worst of it.

Thank you for the thought provoking post. The problem I see going on right now other than the pandemic itself is the massive sense of entitlement in this country. I worked my butt off to get scholarships to help with college and worked again to pay them off. Yet, people are crying everywhere about their student loans and how they were duped into getting them and demanding relief. I worked my butt off for years to build a rental portfolio. I did not take my family on vacation, we lived in a very uncomfortable home with our kids, and I can personally remodel a home from top to bottom (except for electrical, plumbing and foundations) because I spent 60+ hours a week getting stuff done. Now what I hear and see is a lot of people complaining and demanding free rent, which is food off of my children's table. 

The worst part is that they are demanding it when they've been laid off for two seconds and there are a lot of resources to help them. No people should not share in the suffering equally. I hated group projects in high school where I did all of the work and the jerks in my group shared the grade I earned. How is this any different? 

We have a moral obligation to care for those in need and I treat my tenants very well, but can I carry their burdens, no. If we just forgive student debts and rent payments while also preventing evictions, we are just enabling so many people to stop contributing to society. Where does the cycle stop? 

I have had the opportunity to find and work with some of the best property managers (after many years) for our current properties. Over the years we have gone from me just treating them like just a service I hired to us working together toward a common goal and reaching a place of trust. So a few of our managers have reached out to us regarding their interactions with our tenants regarding the COVID-19 situation. So here goes: 

Rent is still due. Why? 

1 - Tenants should also have saved 'reserves' in place - so if they are already missing their rent payment come April just a few weeks into this, they are selectively deciding not to pay for their shelter in hopes of rent forgiveness - which is no different than shoplifting or any other use of a service with the knowing intention not to pay - no one to blame but one person.

2 - There are options available to Tenants: They can always put it on a credit card, which really already has a payment plan set up for them with their terms... a tenant can quite literally just pay the minimum until they get back on their fee, not suggesting anyone just may the minimum on a CC but that is an option, just like it is an option to put food, utilities and anything else on a credit card, shelter is no different. 

3 - There are loans available to Tenant: Applying for temporary loans to make ends meet are available and even more so now - and before anyone says you won't qualify - there's only one person to blame for that and yes... a CC is a type of loan when used - so if you have a CC... you can access to borrowed funds with a re-payment system. 

4 - Why does a tenant have to live in the current rental? - As if there aren't options...So if a single lady is renting a 4 bedroom waterfront rental for $3,000/mo. and then says she cant afford rent but continues to remain in place i.e. selectively choosing not to move out and just stay - wouldn't her moving out to 4 bedroom non-waterfront for $1,600/mo. make more sense? or better yet... downsize,  that is... if the tenant did really want to make it right. - so again selectively choosing to pass on the debt to someone else without taking 'sacrifice' for you situation under your own wing... is a choice. 

5 - One of our managers was trying to work out a deal with a tenant for deferred rent and contacted the employer to verify the situation before approving the deferred rent plan... The employer:

 'Yes unfortunately we had to lay him off due to this pandemic, but it just important you take that into consideration because everyone needs shelter, you should certainly let him stay'

---- Couldn't agree more everyone does need shelter just like everyone does need food and water, the baffling question is... if the this employer is worried about the employees than why not just continue to pay them a salary during this entire thing?.... oh yeah... because they want to pass the buck... essentially saying 'No, I cant afford to continue paying them because we have no customers but you should offer to continue paying for the mortgage on their rental even though your customer (tenant) is not paying you' - hypocrisy at its best. 

Albeit most that request assistance as it stands RIGHT NOW... only a few weeks into this situation... are unwilling to take on the responsibility for themselves onto their shoulders and find it just easier to put it onto someone else... which is why we have instructed our PM's to 1) verify the tenant's unemployment with connection to COVID-19, 2) allow them to take advantage of the options above, deffer rent for only those that truly absolutely need it, and file for eviction for all the rest to be in place when courts start the process... because as mentioned above options remain in helping tenants make ends meet but not paying for a product you are currently consuming is never going to be an option, if it is... next time you go to the grocery store for food... a first level necessity... try to walkout with a cart full of it without paying and see if they'll absorb the cost - the audacity of the manager even trying to stop you! 

I believe the numbers you are looking at are maximums and they include utilities. Back out utilities if the tenant is paying them. HUD will pay "market rent" which might be less than the maximums they are showing on the FMR pages. I think I read somewhere their FMR maximum actually goes up to 10% over what they show. They also only authorize an amount the tenant can afford, which may also be less than the amount you are looking at. Check market rents for that type of property in that area.

Well... it could be a good deal.  Or it could be a disaster.  

Section 8 is a roll of the dice.  If you get a good tenant, it goes well.  If you get a bad one, it's a nightmare.  

One of the biggest problems I hear other Section 8 LLs report is moving in unauthorized people.  Mom and Dad apply, along with their 2 kids, for your 4-bed house.  2 weeks after getting the keys, Uncle Joe moves in.  He just got out of prison after 5 years for felony drug conviction. He just needs a place" for a little while" until he "gets back on his feet."

1 week later the cops are breaking down the door to seize his stash.  They found out he was selling out of your unit when the neighbors saw lots of strange people coming and going at all hours of the night and called the local TIP line.

Anyway, that's one possibility. 

Another risk with Section 8 is with a large nice house the damage deposit isn't enough if they fail to care for your property.  It's easy to rack up $10,000 or more in damages in a short time with a large, nicer property.  Problem is, they have no money to pay.  Your $2,000 - $3,000 deposit doesn't even cover half, and they have no money so no judgment you get will ever be paid unless they turn their lives around down the road.

Then there's the "guaranteed rent."  Ah yes.  Our Govt never fails to hold to its promises.  Except when the Govt shuts down due to partisan bickering.  Google "Section 8 government shut down" and read the stories from several years ago.

Another good search is "Section 8 haircut".  Read about the time the Govt FORCED Section 8 land lords to take a 10% rent pay cut in some markets.  

Anyway, some folks do it and make out very well.  It takes a special kind of land lord, I think, to deal with Section 8.  If you go that route, I would advise you learn the laws of public housing inside and out.  Make sure your lease is iron clad and not in conflict with the Section 8 lease, because it always prevails over yours.  Keep a close eye on the property.  I recommend only accepting people who are employed in some capacity, because otherwise they're just hanging around the house all day, and the old saying, "Idle hands are the Devil's workshop" exists for a reason.  Too, it indicates  level of self-reliance that should keep them from calling you incessantly with every minor issue like a burnt out light bulb.  Although, if you're going over there every 1-2 weeks to fix stuff, at least you'll get inside and see what the place looks like.  So there is a side benefit to needy tenants....sort of.

Last thought: drive thru the Section 8 neighborhoods in your town and take a good look.  That's what you're getting into.

Good luck!