All Forum Posts by: Robert Johnson

No one has mentioned the obvious and that's the government seizure of every rental property in America with the CDC moratorium followed by state and local moratoriums.  The federal moratorium is set to expire March 31, 2021.  Oddly enough, it hasn't been extended yet.  Landlords are being unfairly portrayed as the bad guys.  If the March 31st deadline isn't extended, look for many evictions to take place.  In many blue states the governors and mayor's have already extended the moratoriums through the summer months.  It was an artful moratorium because it was worded in such a manner as to make it look like landlords were not losing anything since it stated the rental were still due but most will never be paid.  Do not underestimate the mindset against simply seizing your property without just compensation which the Constitution states is prohibited.   This is precisely what has happened and your property rights have been diminished as a result.   This appears obvious yet several federal courts have stated the CDC has the power to do this and the missing rents are no big deal.  Several other courts have stated the CDC directive is unconstitutional but no mention of the Fifth Amendment. Don't underestimate this even if you don't think it's affected you.    Without you knowing it you have moved to Venezuela where social justice for the community trumps your property rights.  It was a horrible policy and it will affect the rental markets for years to come in many ways.  

I predict that initially many small players will exit leaving the market to the pros.  They will learn to weed out the losers with sophisticated software and that is already happening.   Many tenants who took advantage of the moratorium will find it difficult to find their next rental.  Landlords will want more upfront further locking out the bottom of the market.  The government may decide to intervene again.  A second intervention would be disastrous but politicians don't care about market forces only political theater.  This stage play has a long way to go.  If the federal moratorium is extended by March 31st, the results will be disastrous as many smaller players are barely hanging in now.  How is Covid 19 changing real estate?  It has led to the greatest seizure of wealth in human history and closely resembles the destruction of the kulaks in Russia after the Communist revolution.  Stay tuned.   If the federal moratorium is extended the rental market will erupt in more turmoil than you can can imagine with potentially millions of foreclosures looming just over the horizon. Landlords can't keep going without rental payments.  The 50 billion passed for relief isn't even a fraction of what is needed.   The CDC announced March 19th that they are fighting for an extension of the moratorium.   Even if  it isn't extended, there  are many wannabe dictators who will extend moratoriums at the state and local levels who are only too happy to make themselves look good buying votes with your money.  You're up against social justice.  Play accordingly. 

I'm asking tenants for a year in advance now.  The reaction to that is a pretty good screening moment.  Amazingly the first one I asked paid.  They moved in March 1st.  Of course, they wanted to see the unit first.  I think it's odd that people would rent without seeing the unit.  I always shoe the unit.  I get to see their cars and size them up.   I've actually passed over potential tenants who were rude or made idiotic remarks during the showing.  Showings are good.  It's a one on one business in the end. 

I wouldn't send out a lease with a signature. They could take that lease and sign it and show up and get a locksmith and move in. I've had people try all sorts of stunts over the years. I had this one potential tenant who went through a complicated process required by the HOA. After she was approved she showed up to move in. I had not provided her with a signed copy of the lease at that point. I take cash only for the first month and security deposit. Or a check 21 days in advance. She wanted the keys but said her mother was paying so I contacted the mother. The mother stated that since I had advertised on Craigslist there was some doubt as to whether I owned the unit or not. I asked her why she hadn't checked the property records but she stated that wasn't enough. She wanted me to let her daughter move in as a sign of good faith and I simply hung up at that point because she was obviously a scammer. The daughter then called me back and started screaming about me hanging up on her mother and I hung up on her also. Two weeks later I rented it to someone else who ended up staying for 3 years. Always get the funds up front. If they have a signing issue they can sign and overnight the docs at their expense. Without secured funds and especially now, you're screwed. Don't take a check without proper clearance times.

They could use the photos to attempt a sublet.  But if you try to evict them they could use photoshop or some editing program to trash you and your property by claiming there's mold, etc.  on multiple social media sites.   Yeah, it would all be false but you could end up having to  explain the facts to multiple government officials and you don't want that ever.  Besides that,  if they post photos of the property and let others know they are leaving town, it could be vandalized.   

It's a business and if you find happiness in it that's a plus.  Don't underestimate your eternal foe, the government.  The federal government is in the hands  of people who couldn't pass a college course on basic economics.  They think they can create wealth by printing money.  Don't underestimate their belief that they can seize your properties again.  Plan accordingly and you will remain happy.   Out of 7 properties I've got one tenant  behind for about 5 months.  She texted me yesterday about extending her lease.  No, that's not going to happen.  All but one of my rentals is paid for so I can easily handle some downside.   I wonder where she will go next because she knows not to ask for a reference.  References will become tantamount to a passport equivalent for those landlords who know what they are doing.  So stay alert and stay happy.  Don't think the various governments won't be back for more.  

I strongly suspect there is mire litigation to come.  The government seized properties without compensation.   That is specifically prohibited by the Constitution.   Some states now have programs asking landlords to accept a smaller percentage of the rental payments.   Landlords should learn from this experience.  I am going to what I call a monthly rollover lease.  If tenants do not pay the next month rent by the 25th of the month before the lease can not roll over.  I also seize their security deposit the next day.  Only landlords were asked to sacrifice.   I predict many bad outcomes to come for tenants  including higher rents, higher deposits and more thorough references and a move towards higher credit ratings for tenants.  They may think they got a free ride but once evicted they may wish they had paid.  Unless they find a sucker.

I do not allow photos of my properties or copies of the lease agreement to be posted on the internet without my written permission.   Also, make sure you get a substantial security deposit up front.  I am currently demanding 2 months upfront in addition to the first month's payment.  Any leases of 6 month's or less, 100% payable up front.  

What state are you in?  Normally, the W-9 is requested by landlords when they are segregating your security deposit into a separate account and they need that info for that.  Some states require it.  Almost no landlords do it. 

Contrary to what everyone else is telling you, I would advise caution.  I made my first real-estate investment when I was 26 so I admire your gumption.  That was in 1976. This eviction moratorium is very concerning and if the government can simply seize your property without due process I wouldn't advise entering the market right now until the legality of that CDC directive is determined.  I speak as someone who had multiple properties in Maryland and South Carolina.   I sold all the properties in Maryland because tenants can stretch out evictions forever and even if they don't the local sheriff's have 6 month waiting lists to show up to evict  someone.  You have to have 8 people standing there even if nothing is left in the unit or they won't even stop.  I only ever had to file for one eviction and then I offered them $2400 to get out the next day.  They took it. I have 7 rental units in SC and I'm selling all but two over this CDC directive.  This is a risk you can't plan for but is now a reality.  I strongly suggest you save and save and save.  One day the perfect opportunity will appear.  Be patient and your patience will be rewarded.  Now is the time to be cautious and read the tea leaves. 

I applaud the effort put forth to take action but allow me to be cynical.   If the politicians cared why would they allow this to incur?