Landlords: How are you doing this year?

[AerialWombat]

With the pending "free rent" bills at state and fed level, I don't feel like adding more rentals.

What is this free rent bill? Nothing is free. Someone has to pay for it.

Free rent means landlord is not allowed to evict tenants as soon as they claim they are affected by covid19. No proof is required. Yes they still owe you rents and are payable at the end but good luck collecting them.

So the tenants pass the buck to us landlords. We pass the back to the bank. The banks pass the buck to the Fed. Do the hokey pokey and ya' turn yourself around...

[Beensabu]

Anyone know? Have they lifted the eviction ban in California

No. Extended to July 28th. No doom till August.

[AlphaLess]

Business as usual (mix of multi-family and SFH). Offered rent deferral in April to tenants who lost jobs or were otherwise suffering financial hardship. It was an honor system (i.e. we didn't require proof). Not a single person took us up on it.

This is very nice both ways: that you offered, and that no one took it.

[AlphaLess]

Anyone know? Have they lifted the eviction ban in California

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

[Beensabu]

Anyone know? Have they lifted the eviction ban in California

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

[smitcat]

25% of NY renters are not paying rent: https://www.bloombergquint.com/business ... king-point

This is going to hurt.

You mean in addition to those that have rentals at college towns, vacation spots ,and near any larger employer who is transitioning to more of an online workplace.

I'm not disagreeing with this statement as much as I'm making a distinction. College towns and vacation spot rentals are a near-term issue for property owners which will pass in 6-8 months when we are (hopefully) all vaccinated. I would think that a seismic shift by employers towards a permanent online work place would manifest as more of a slower long-term transition, if it ever materializes.

"College towns and vacation spot rentals are a near-term issue for property owners which will pass in 6-8 months when we are (hopefully) all vaccinated. I would think that a seismic shift by employers towards a permanent online work place would manifest as more of a slower long-term transition, if it ever materializes."
Opinions vary for sure. Where we are in the NE many companies are already making permanent changes to their office space and staff distribution. Similarly there are differing thoughts on college and vacation choices made in the future.

[Meg77]

Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?

The key is not buying in a HCOL area. I bought my first duplex in my early 20s for $120K in a suburb of Dallas. Then bought another duplex every 18-24 months for a bit. The next cost $220K, the one after that was $165K (bought on a short sale during the great recession), and the next was $205K. I also rented out my homestead condo after I moved for a few years, but it didn't cash flow well so I sold it later. These are all around Dallas, where I live. I wouldn't say I'm an expert on each neighborhood or suburb, but I'm certainly familiar with the area in general and own them all 100% myself. For 5-6 years I managed them all myself, but it was becoming a bit of a part time job so I hired a property management company 7 years ago. Best decision ever. I cash flow more now after paying for mgmt. than I ever did managing them myself. I was not a great landlord obviously.

The multifamily investments I referred to in my post above are much more passive. I've never even laid eyes on most of them. I'm about a 1-2% owner in those.

[fareastwarriors]

Hopefully not too off-topic, but I'm curious for those with 5+ properties how you ended up with that many? I'm assuming it's not previous places you've lived and decided to rent out. Are these properties in areas you're very familiar with and decided to purchase, or something invested in with others without much direct attachment?

I live in a HCOL area and finally purchased a small home last year, and could someday see renting it out when we buy a larger home. But I'm curious how you go from that to many properties? With that many is it more of your full-time job rather than some side income?

I'm speaking for California or specifically Bay Area here. You buy first, then you wait. With appreciation, you cash-out refinance and use the extra proceeds as source of downpayment for next place. Hopefully at the same time, your income is growing nicely as well. Then rinse and repeat.

It's much harder now since prices are so high and there is very little appreciation last 2 years or so... Also with single family homes, the rent is unlikely to cover all your expenses. However California is basically allowing ADU and Jr. ADU in single family zoning, so that's an option to grow rental income.

And of course you can't forget about all the issues of being a landlord here like local/state rent control rules and regulations and any potential tenant issues.

[Cycle]

One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.

Mine is going on the market today. Been renting a single family home for 8 year and I'm sick of it. I have 3 young kids and it's just too much.

Using the 1% investors rule of thumb, I get 3150 per month in rent, so my rental should be worth like $320k. The taxable value is $360k. Highest similar comp was $440k.

After two days on the market and 1 showing, I have an offer for $500k which we've accepted. It could fall through, but there's not a lot of inventory in most markets. We're paying the buyers agent 2.5%. Redfin agent 1%.

I'm really surprised, considering it's on an extremely busy street, a teenage girl was recently murdered a few houses down in a drive by, and George Floyd was murdered a mile from the property.

[flaccidsteele]

One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.

Mine is going on the market today. Been renting a single family home for 8 year and I'm sick of it. I have 3 young kids and it's just too much.

Using the 1% investors rule of thumb, I get 3150 per month in rent, so my rental should be worth like $320k. The taxable value is $360k. Highest similar comp was $440k.

After two days on the market and 1 showing, I have an offer for $500k which we've accepted. It could fall through, but there's not a lot of inventory in most markets. We're paying the buyers agent 2.5%. Redfin agent 1%.

I'm really surprised, considering it's on an extremely busy street, a teenage girl was recently murdered a few houses down in a drive by, and George Floyd was murdered a mile from the property.

MF is valued off NOI. SFH is based on comps. Apples to seaweed

[Cycle]

One property (2 units), lots of maintenance requests this year, for dumb stuff... E.g. tenant was turning key wrong way to unlock door, tenant closes window too hard and glass shatters, tenant reports garage door broken (replaced remote batteries). Have 2nd kid due in August and no longer want to do this stuff.

It goes live on the market on Friday... My landlord days may soon be over.

Mine is going on the market today. Been renting a single family home for 8 year and I'm sick of it. I have 3 young kids and it's just too much.

Using the 1% investors rule of thumb, I get 3150 per month in rent, so my rental should be worth like $320k. The taxable value is $360k. Highest similar comp was $440k.

After two days on the market and 1 showing, I have an offer for $500k which we've accepted. It could fall through, but there's not a lot of inventory in most markets. We're paying the buyers agent 2.5%. Redfin agent 1%.

I'm really surprised, considering it's on an extremely busy street, a teenage girl was recently murdered a few houses down in a drive by, and George Floyd was murdered a mile from the property.

MF is valued off NOI. SFH is based on comps. Apples to seaweed

The value is how much money you get when the MF is sold.

This is a duplex, 2 units. The buyers, assuming they don't back out, are going to owner occupy both units. Elderly parents in one unit, young family in other. So in this case it is selling for a price that makes no sense based on NOI, my annual NOI was like 26k excluding interest / principal payments / vacancy / misc.

Assuming a 4% loan and 10% down, $26k - (450k*3.5%) = $8k cashflow. But that doesn't include expenses for vacancy / misc / tax increase, so cashflow would more likely be 0.... but seems like buyers don't care, since they are planning to owner occupy both units.

It is still possible the appraisal comes in low, which i sort of expect.

[AlphaLess]

Anyone know? Have they lifted the eviction ban in California

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

[Beensabu]

Anyone know? Have they lifted the eviction ban in California

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

It's certainly a lot more than $200 * 4.3 = $860, though. And ~$3500/mo is a bit more than enough for most. That was the point. Give people who literally do not have the option to work enough money to pay their bills, cover essentials, and spend on other things or save a bit. Maintain the status quo. Most state unemployment benefits are a pittance for low wage workers. The maximum is already incredibly low, and that's for those who were getting paid well. That's not that many people, unfortunately. There are also a lot of low wage single income families out there, not just individuals. $200-300/week wasn't going to cut it. And it still won't. Thus the ability of many to pay will disappear soon. You'll see it start nationwide for August rents, and definitely for September. It'll hit California in October/November.

I'd imagine anyone who has collected unemployment but not paid rent during the eviction moratoriums either had their unemployment claim processing for a long time (simply didn't have the money) or is saving in anticipation of the extended benefit ending. It's a gamble that there will be enough empty rentals from evictions and enough people with recent evictions on their records that the vast majority of rental applicants look equally bad and they'll be able to find another place without too much trouble. A tenant with no job, an eviction on their record, and $9k in the bank is better than leaving it empty until your only options are applicants with no job, an eviction on their record, and $0 in the bank. You'll get 3-6 months out of them if you're lucky.

The recently unemployed who have paid thus far hopefully have been saving enough of the extra to stretch a few more months before they're evicted too, but they won't have anything left saved at that point so they will actually look like worse potential tenants to landlords than the ones that didn't bother trying to pay at all...

It's a tough situation all around. It's not a good time to be a landlord (unless you're high-end in a hideaway town or debt-free), and a lot of highly leveraged people are going to lose their properties over this. New decade, different impetus, same old story.

[tomtoms]

How is everyone doing so far? Tenants still paying rent? What is your prediction for the next 4 months?

[finite_difference]

How is everyone doing so far? Tenants still paying rent? What is your prediction for the next 4 months?

I’d be interested in an update, too.

[LeftCoast]

Here's an update for August from a landlord with 13 apartment units in the Los Angeles area. All the rents came in for August. One tenant is leaving, for a reason having nothing to do with the pandemic. I listed the unit online, and the listing contained lots of pictures and a video tour. I conducted several COVID-safe showings of the available unit, and rented it at market value. I'm pleasantly surprised. I've hear horror stories about tenants who stopped paying in April and haven't paid since.

[LittleMaggieMae]

My townhouse and SFH tenants are up to date with rents. I won't see August rents until the 10th and 15th (auto pays, dates were my concession to the renters and it's part of the leases). I know one tenant has been working from home since April. I've heard thru the grapevine that my other tenant (who is currently employed) may ask to break the lease (ends November 30th) in October. They have are pursuing a job opportunity with their employer in another State. I will accommodate/work with them if they ask to end the lease early.

My prediction for the future: I'm seeing a lot of quick sales of houses/townhouses/condos at market (or above) prices. There's a lot of people "moving on up" or "moving to other places". I'm not seeing houses sit empty waiting for a buyer (unless they are flips and have been empty for months). I expect my 2 rentals to remain rented even if both tenants leave. I don't think rents will drop - I think they will stay the same.

I'm not sure if people like me (bought properties during the Great Recession) are now selling off their properties or not. All of the properties I see selling/for sale are "primary home owner owned"... I wondered if with the tight housing market if people who dabbled in "rental properties" after the Great Recession would "cash in" and sell their properties.

[flaccidsteele]

How is everyone doing so far? Tenants still paying rent? What is your prediction for the next 4 months?

All tenants still paying rent. No delinquencies. No evictions.

Was surprising in March/April but now, not so much. Business as usual

Impossible to lose when I bought all my rentals during the credit crisis when property was effectively free

I’ve been investing since the 1990s, and when it comes to stocks and real estate, buying more during crashes has been the simplest way to build effortless wealth

The tech wreck, credit crisis and housing crash were amazing wealth boosters for me. The virus crisis would’ve been one as well if it wasn’t so short

[AerialWombat]

All paid, never late, no issues. Turned two units in June with only a few days vacancy. It’s business as usual, except that I’m not buying another one right now, which feels weird.

[bog007]

2 rentals. No problems

[oldfort]

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

Then, you need to know more people. The median weekly income for a full-time worker is $1002 a week. Men make a little more and women make a little less. Unemployment + $600/week means a lot of people were bringing in more money during COVID than when they were working.

[stoptothink]

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

Then, you need to know more people. The median weekly income for a full-time worker is $1002 a week. Men make a little more and women make a little less. Unemployment + $600/week means a lot of people were bringing in more money during COVID than when they were working.

The latest data showed that >2/3 on UE were earning more with $600/week supplement than they were working https://www.npr.org/2020/05/26/86190661 ... s%20income. The large majority of those laid-off since March were/are in low-skilled/low-pay industries (ie. retail and restaurants).

[Beensabu]

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

Then, you need to know more people. The median weekly income for a full-time worker is $1002 a week. Men make a little more and women make a little less. Unemployment + $600/week means a lot of people were bringing in more money during COVID than when they were working.

Sure they were, since half of all full-time workers make less than $1002/wk... But they weren't bringing in "a lot" more. If you don't make much normally, you're not exactly qualifying for the maximum state unemployment amount, are you? It varies by state obviously, but most low wage workers end up qualifying for ~$100-$300/wk in state unemployment. Let's just say $200. That's pretty normal. If you're used to taking home $500/wk while working ($15/hr @ 40 hrs after payroll deductions -- it's not even minimum wage, plenty of people make less), how are you supposed to live on $200/wk? And if you're used to taking home $500/wk while working and you lucked into getting $800/wk for a few months, you hopefully have ~$3k or so saved, so that'll get you through another 10 weeks on normal unemployment benefits. But what about the people who didn't lose their jobs until July or August? They didn't get much or any extra, so they just have to make $200/wk work from the get go. You can say that incentivizes them to get another job ASAP if you want to, but there's not much they can do if there's no jobs to be had... That's just cruel at that point. There's no point in talking about it anyway. It is what it is. It's not going to be pretty, and I can't convince anyone of that if they don't see it yet. You'll just have to watch it in real time.

[phxjcc]

VRBO owner.
summer is the off season

Booked all summer and through sept.

[oldfort]

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

Then, you need to know more people. The median weekly income for a full-time worker is $1002 a week. Men make a little more and women make a little less. Unemployment + $600/week means a lot of people were bringing in more money during COVID than when they were working.

Sure they were, since half of all full-time workers make less than $1002/wk... But they weren't bringing in "a lot" more. If you don't make much normally, you're not exactly qualifying for the maximum state unemployment amount, are you? It varies by state obviously, but most low wage workers end up qualifying for ~$100-$300/wk in state unemployment. Let's just say $200. That's pretty normal. If you're used to taking home $500/wk while working ($15/hr @ 40 hrs after payroll deductions -- it's not even minimum wage, plenty of people make less), how are you supposed to live on $200/wk? And if you're used to taking home $500/wk while working and you lucked into getting $800/wk for a few months, you hopefully have ~$3k or so saved, so that'll get you through another 10 weeks on normal unemployment benefits. But what about the people who didn't lose their jobs until July or August? They didn't get much or any extra, so they just have to make $200/wk work from the get go. You can say that incentivizes them to get another job ASAP if you want to, but there's not much they can do if there's no jobs to be had... That's just cruel at that point. There's no point in talking about it anyway. It is what it is. It's not going to be pretty, and I can't convince anyone of that if they don't see it yet. You'll just have to watch it in real time.

If you earn $15/hr full time, then your weekly unemployment should be $300, at least in California. If you add $600 to the base UI benefits, you would then be earning $900/week on unemployment vs $600/week working. If your income increases 50%, I would call that a heck of a lot.

[Beensabu]

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

Then, you need to know more people. The median weekly income for a full-time worker is $1002 a week. Men make a little more and women make a little less. Unemployment + $600/week means a lot of people were bringing in more money during COVID than when they were working.

Sure they were, since half of all full-time workers make less than $1002/wk... But they weren't bringing in "a lot" more. If you don't make much normally, you're not exactly qualifying for the maximum state unemployment amount, are you? It varies by state obviously, but most low wage workers end up qualifying for ~$100-$300/wk in state unemployment. Let's just say $200. That's pretty normal. If you're used to taking home $500/wk while working ($15/hr @ 40 hrs after payroll deductions -- it's not even minimum wage, plenty of people make less), how are you supposed to live on $200/wk? And if you're used to taking home $500/wk while working and you lucked into getting $800/wk for a few months, you hopefully have ~$3k or so saved, so that'll get you through another 10 weeks on normal unemployment benefits. But what about the people who didn't lose their jobs until July or August? They didn't get much or any extra, so they just have to make $200/wk work from the get go. You can say that incentivizes them to get another job ASAP if you want to, but there's not much they can do if there's no jobs to be had... That's just cruel at that point. There's no point in talking about it anyway. It is what it is. It's not going to be pretty, and I can't convince anyone of that if they don't see it yet. You'll just have to watch it in real time.

If you earn $15/hr full time, then your weekly unemployment should be $300, at least in California. If you add $600 to the base UI benefits, you would then be earning $900/week on unemployment vs $600/week working. If your income increases 50%, I would call that a heck of a lot.

I see. And if your income decreases 50%, what would you call that?

[tomtoms]

Home prices suddenly see biggest gains in 2 years

https://www.cnbc.com/2020/09/01/home-pr ... years.html

Enjoy the appreciation!

[sillysaver]

No problems in our 2 single family rentals. We did some repairs for one and kept the rent the same when it was up for renewal. Neither of our tenants have had their incomes affected. One is a pastor, the other is on government assistance.

The multifamily syndications I invested in stopped paying or haven't started paying when they should have. While they are experiencing some collection issues, it hasn't been as bad as anyone anticipated. Recently, a couple of them turned the distributions back on.

We're buying more rentals and won't be investing with syndicators going forward.

[Lextalionis]

moral dilemma question:

I have friends who can’t even a home and here I am buying one after another. Have you ever felt like you shouldn’t invest in rental properties because you are taking inventory off the housing market?

Practical dilemma, where can you buy good cash flowing properties these days? Or are you counting on appreciation in your business model?

The location I have been buying has pretty much dried up. Everyone is looking for single family homes right now. I would have to pay at least 12% more than I did just a couple of years ago which means it would no longer cash flow if I had put down the same down payment. If I want to keep on buying then I would have to look for a home in another neighborhood.

My business model is to buy single family homes in an up and coming neighborhood. So yes, I am betting on appreciation. However, appreciation is nice but not necessary. I also make money from:

1) Buying below market value which is not easy in a competitive market. I usually don’t offer the highest price but my finance is solid and I have waived mortgage and appraisal contingency to make my offer more attractive. I usually offer short 10 days inspection contingency. For sellers who want to sell fast and want a sure thing, my offer is attractive. I also look for homes that went back on the market because the buyer couldn’t perform. Those sellers tend to be more motivated and like my simple offer. Waiving contingency can be risky so you have to know how much risk you can handle.

2) I think about 20% of rent goes toward mortgage pay down by my tenants (after interest payment)

3) Extra rent money. I put away 20% of rent toward future repairs and vacancies. Anything that is left over is extra. So far, I have good tenants. You are going to find better tenants with single family homes than apartments/condos. They tend to be older, have a family and prefer not to move as much.

4) Tax benefits. I write off all my business expenses like property manager. I can also do 1031 exchange and pay zero tax.

I have this exact same problem with the lower interest rates. The inventory is low, the pricing is high, and the rents don't rise to stay cash flow positive. Even the reno houses are through the roof. On the bright side, my inventory has appreciated at about 12-15% - but I sure would like to add a few more homes.

[Panky]

How is everyone doing so far? Tenants still paying rent? What is your prediction for the next 4 months?

Tenants were late on rent for a bit (college age folks, property in a college town) but caught back up the next month, likely due to stimulus payments the fed put out.

Their lease is up soon and they are not renewing. Since we are in a college town market, we expected to see difficulties in filling the unit, so we are preparing to list it for sale in early October after some clean up and landscaping to help curb appeal.

Monthly rents are about 0.5% of anticipated sale price, less than the 1% rule of thumb, so it seems like a good time to sell in our market.

This is our first and only rental unit, and we bought a bit too far away from home to manage easily (~90 minute drive each way) so its time for us to sell and simplify, possibly doing a 1031 to leverage cash after sale to buy a higher cost property closer to home (time will tell).

Prediction - in our local market sale prices are going up, and inventory is low, so its a sellers market.
But very little rental activity is expected from the college market, so likely rents will be depressed, or more likely occupancy will be depressed.

[7eight9]

Those with non-paying tenants may have them a bit longer.

The federal government barred evictions through Dec. 31, citing the virus risk.
https://www.nytimes.com/live/2020/09/01 ... e=Homepage

[MindBogler]

I see. And if your income decreases 50%, what would you call that?

A heck of a lot?

[westcoast]

We just sold 6 we owned in a partnership with four other couples. Still own one of our own. So far all rents have come in on time.

[MissHavisham]

By the grace of God our two rental properties have been paying through this pandemic.

[arcticpineapplecorp.]

Those with non-paying tenants may have them a bit longer.

The federal government barred evictions through Dec. 31, citing the virus risk.
https://www.nytimes.com/live/2020/09/01 ... e=Homepage

think this link isn't correct (or it's an ever changing page).

Perhaps you're referring to "CDC Issues Sweeping Temporary Halt On Evictions Nationwide Amid Pandemic":

https://www.npr.org/sections/coronaviru ... nistration

[7eight9]

Those with non-paying tenants may have them a bit longer.

The federal government barred evictions through Dec. 31, citing the virus risk.
https://www.nytimes.com/live/2020/09/01 ... e=Homepage

think this link isn't correct (or it's an ever changing page).

Perhaps you're referring to "CDC Issues Sweeping Temporary Halt On Evictions Nationwide Amid Pandemic":

https://www.npr.org/sections/coronaviru ... nistration

Good call. The NYT page is changing. Your link is about the same issue.

[boogiehead]

In my area I've noticed a lot of multi-family units for sale currently. I'm assuming the owners are trying to cash in on the appreciation and some of them are probably dealing with renters that have stopped paying due to the extended eviction moratorium. Seems like the winners are people with SFH in the suburbs that rent to white collar professionals.

[earlywynnfan]

My one rental has been going well. Tenant was exposed, had to quarantine, then had a heck of a time getting tested to return to work, so she missed a large chunk of work. Through one of those programs, She got two months rent paid for. I had to fill out some mild paperwork and wait for a check, but it all worked out.

[tomtoms]

Seems like the winners are people with SFH in the suburbs that rent to white collar professionals.

Bingo! SFH rentals are hot right. You get to choose from quality tenants. Home appreciation makes it worth it.

[AlphaLess]

No. Extended to July 28th. No doom till August.

But you would expect the doom to come before, right?

As long as there is no eviction, there will be non-payment by some.

I was wrong It's been extended through September 30th.

https://www.gov.ca.gov/wp-content/uploa ... -71-20.pdf

There's plenty of doom to go around. It looks like most people have been paying. The ability of many to do so will decline soon.

I would think it's more tied to the $600 federal corona unemployment supplement.

$600 * 4.3 = $2.6K. That's a lot on top of unemployment insurance.

That's $31,200/year. I don't know anyone in this country who defines that as "a lot". Enough to get by? Sure.

It's what someone who makes $15/hr grosses, before payroll deductions.

It's certainly a lot more than $200 * 4.3 = $860, though. And ~$3500/mo is a bit more than enough for most. That was the point. Give people who literally do not have the option to work enough money to pay their bills, cover essentials, and spend on other things or save a bit. Maintain the status quo. Most state unemployment benefits are a pittance for low wage workers. The maximum is already incredibly low, and that's for those who were getting paid well. That's not that many people, unfortunately. There are also a lot of low wage single income families out there, not just individuals. $200-300/week wasn't going to cut it. And it still won't. Thus the ability of many to pay will disappear soon. You'll see it start nationwide for August rents, and definitely for September. It'll hit California in October/November.

I'd imagine anyone who has collected unemployment but not paid rent during the eviction moratoriums either had their unemployment claim processing for a long time (simply didn't have the money) or is saving in anticipation of the extended benefit ending. It's a gamble that there will be enough empty rentals from evictions and enough people with recent evictions on their records that the vast majority of rental applicants look equally bad and they'll be able to find another place without too much trouble. A tenant with no job, an eviction on their record, and $9k in the bank is better than leaving it empty until your only options are applicants with no job, an eviction on their record, and $0 in the bank. You'll get 3-6 months out of them if you're lucky.

The recently unemployed who have paid thus far hopefully have been saving enough of the extra to stretch a few more months before they're evicted too, but they won't have anything left saved at that point so they will actually look like worse potential tenants to landlords than the ones that didn't bother trying to pay at all...

It's a tough situation all around. It's not a good time to be a landlord (unless you're high-end in a hideaway town or debt-free), and a lot of highly leveraged people are going to lose their properties over this. New decade, different impetus, same old story.

It's a lot, considering the context:
- most people who have lost employment are in the bottom 40% of income,
- those people would be receiving unemployment in most reasonable states, equal to 50% of their pay,
- $600/w would be on top of it, or $2.58K / M,
- if their regular unemployment benefit amount is less than $600/w, then they are better off with both,
- if their regular unemployment benefit amount is more than $600/w, then they have an income of at least $62K a year.

When I say, $600/w is a lot, compare it to not getting anything. Which happened for a while, until the $300/w kicked in.

[tomtoms]

Case-Shiller: National House Price Index increased 4.8% year-over-year in July

https://www.calculatedriskblog.com/2020 ... x.html?m=1

The S&P 500 is flat this year while home prices keep on going up.

[kinless]

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points.

The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors would target but I’m willing to sacrifice a little return for lower-risk properties, especially my first time out. Much better than 0.6% returns sitting in a “high yield” savings! It is also estimated that the homes in this community will appreciate 5-6% by next year, although I plan on keeping this rental for a long time and have not factored home appreciation in any long-term plans.

If all goes well I may buy another one there in the next few years, followed by a place for myself later on, as that is where I plan to spend my later/retirement years.

[tomtoms]

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points.

The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors would target but I’m willing to sacrifice a little return for lower-risk properties, especially my first time out. Much better than 0.6% returns sitting in a “high yield” savings! It is also estimated that the homes in this community will appreciate 5-6% by next year, although I plan on keeping this rental for a long time and have not factored home appreciation in any long-term plans.

If all goes well I may buy another one there in the next few years, followed by a place for myself later on, as that is where I plan to spend my later/retirement years.

Congratulations on your first rental! Welcome to the club.

Yes, low interest rate environment has hurt “savers” but has benefited “debtors”.

Can you tell me what mortgage lender did you use to get 3.25%?

[rich126]

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points.

The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors would target but I’m willing to sacrifice a little return for lower-risk properties, especially my first time out. Much better than 0.6% returns sitting in a “high yield” savings! It is also estimated that the homes in this community will appreciate 5-6% by next year, although I plan on keeping this rental for a long time and have not factored home appreciation in any long-term plans.

If all goes well I may buy another one there in the next few years, followed by a place for myself later on, as that is where I plan to spend my later/retirement years.

Good luck. I just went from owning 2 SFHs with one being a rental to now being homeless in a few weeks. I just sold my AZ home because I think the market is too hot and will come down substantially once the virus issue is resolved or diminished. Right now the prices are hugely inflated due to almost no inventory of homes (around me it was 20 something days unlike the more typical 4-6 months) so I cashed in and will rent and decide what I will do once I retire in a few years.

Make sure you use a good property manager. They can save you from a ton of problems, especially for people new to the business.

[mrmass]

Has anyone heard of this?

1) Sell 5 of your rental properties at one time
2) Do a 1031 exchange and buy an expensive house
3) Rent out the expensive house for a couple of years
4) Finally, move into the expensive house and make it your primary residence

Is this a legal loophole to not pay taxes?

tomtoms, I think you are better off consulting, for starters, with a CPA, and then a tax attorney if you are really serious about this. There may be folks on BH who are in fact CPAs and tax attorneys. I don't know.
I think what you are proposing is permissable, but you'll really want to dot the "I"s and cross the "T"s on this one.
I do know that there have been a fair number of abuses involving 1031 exchanges, and they are scrutinized, though I don't think they are "listed transactions".
You'll definitely want to hire someone to be the 1031 "qualified intermediary" and handle the whole process regardless.
Here's an OK article but it's over 10 years old; it could be full of misinformation at this point:
https://www.expert1031.com/articles/200 ... 1-exchange
Take everything I have suggested with a grain of salt; I have never done a 1031, only done some reading.
Cheers

I have an interest in this topic too. I'm not a lawyer but from what I read, the basis doesn't step up to the new "expensive house". Again from what I read is that the basis is that of the property used to exchange. Multiple properties adds complexity that is beyond me.

[tomtoms]

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points.

The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors would target but I’m willing to sacrifice a little return for lower-risk properties, especially my first time out. Much better than 0.6% returns sitting in a “high yield” savings! It is also estimated that the homes in this community will appreciate 5-6% by next year, although I plan on keeping this rental for a long time and have not factored home appreciation in any long-term plans.

If all goes well I may buy another one there in the next few years, followed by a place for myself later on, as that is where I plan to spend my later/retirement years.

Good luck. I just went from owning 2 SFHs with one being a rental to now being homeless in a few weeks. I just sold my AZ home because I think the market is too hot and will come down substantially once the virus issue is resolved or diminished. Right now the prices are hugely inflated due to almost no inventory of homes (around me it was 20 something days unlike the more typical 4-6 months) so I cashed in and will rent and decide what I will do once I retire in a few years.

Make sure you use a good property manager. They can save you from a ton of problems, especially for people new to the business.

No one can predict the future but the Fed has already said they are keeping interest rate low for years to come.

People buy a home based mainly on the monthly payment, not price. As long as rent exceeds monthly payment, people will continue to buy.

A couple of other factors that will continue to drive the housing market especially single family homes: 1) millennials are getting older, having kids and they want a home with a nice backyard; 2) a home is becoming more than just a place to sleep.

That being said, you still have to put in the work and make sure you buy a rental property that would cash flow. Not every property is a good rental property. You have to do your homework.

[rich126]

I understand what you are saying but the prices aren't being driven by those things right now, they are being driven by the fact that exceptionally few homes are for sale so prices are way up. The interest rates are only a small part of the price increase. Literally my house went up over $100K in 6 months, that wasn't due to the interest rates but due to nothing on the market.

The other arguments are typical of what people say to justify lofty prices. I've been through this before will similar arguments. Buying right now, in many markets is buying high.

We'll see in a few years.

[whoshighpitch]

I'm doing great! Took advantage of the real estate boom and sold my single family rental house! Rolling the proceeds into Vanguard mutual funds and letting it ride. Couldn't be happier about it.

[FS51]

I'm doing great! Took advantage of the real estate boom and sold my single family rental house! Rolling the proceeds into Vanguard mutual funds and letting it ride. Couldn't be happier about it.

+1

[kinless]

Can you tell me what mortgage lender did you use to get 3.25%?

I went through a subsidiary of CrossCountry Mortgage. I've known the loan officer for a long time (he did the mortgage on my current CA residence 10 years ago), and my dad as a broker uses him as his preferred lender. I was able to get that rate due to 25% down, an 800+ credit score, and ridiculously lucky timing with the lock in late July. I believe cost is back up to 0.75 or 1.0 point for 3.25% now.

I just sold my AZ home because I think the market is too hot and will come down substantially once the virus issue is resolved or diminished. Right now the prices are hugely inflated due to almost no inventory of homes (around me it was 20 something days unlike the more typical 4-6 months) so I cashed in and will rent and decide what I will do once I retire in a few years.

If you are right, then that will just lower the overall cost basis when I buy the next one in a few years. As long as all rentals are cash flow positive, I'm not too worried about short-term moves in the real estate market. These rentals are meant to be kept for 20+ years, where inflation will rule the roost in that regard.

Make sure you use a good property manager. They can save you from a ton of problems, especially for people new to the business.

BlueFox Properties, based in that area, have all the certification boxes ticked and some of the highest reviews out of all the ones I researched. They are on the expensive side (10% + $195/yr if the tenant renews lease) but they're super efficient and they don't get paid unless the rental is occupied. Just the way they marketed the property was impressive enough that I'm likely to retain them for the duration of my rental adventures as long as they do a good job.