Author Topic: County issued full stop on evictions, thoughts?  (Read 2036 times)

sammybiker

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County issued full stop on evictions, thoughts?
« on: March 18, 2020, 07:58:59 AM »
My property manager called me yesterday, notifying me that our county issued a full stop on any evictions for the time being given the economic impacts to folks dealing with COVID-19.  I also understand that the local utility companies will not shut anyone off for the foreseeable future. 

Ethics aside, even if I could evict, I wouldn't, given the circumstances and the likelihood that the property would sit vacant and be at higher risk.  My tenants are all paid through March and this portfolio is mostly upper-end blue collar and low-mid end white collar tenants that pay on time.  My biggest concern is the following:

1) Tenants taking advantage of the no eviction ruling to stop paying, even if they suffer no loss of income.

2) What will banks do?  My cash reserves are in good position and my overall leverage vs  is ~45% but is it reasonable to expect banks to offer delayed financing/what did folks see during 2008?

Interesting times!

Bettersafe

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Re: County issued full stop on evictions, thoughts?
« Reply #1 on: March 18, 2020, 09:46:01 AM »
I would never have thought about option 1! Shocking to realize some might though....

waltworks

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Re: County issued full stop on evictions, thoughts?
« Reply #2 on: March 18, 2020, 12:04:31 PM »
I would sit down and figure out your bottom line breakeven number to keep the places, and what you need in rent.

Then I would approach the tenants and proactively lower their rent by some significant amount (hopefully still an amount where you make a little money), to try to get them on your side so that when times get harder, they'll try to keep paying because they see you as an ally, rather than just a landlord.

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NonprofitER

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Re: County issued full stop on evictions, thoughts?
« Reply #3 on: March 18, 2020, 12:37:22 PM »
I've been following this info too. We only have 3 units (not nearly as many as you, @sammybiker).  We live in a different area than our rentals, and our city is currently more "shut down" than where our rentals are, but its only a matter of time.... I've been reluctant to proactively reach out to the tenants about it because I don't want to react too soon or make rash decisions on a quickly evolving situation.

Like you, we're in a reasonable cash position and have ~35% equity in each property, so I'm not *too* concerned. We could lower rents if the market required us to do so.  One of our rentals is a VA program unit (similar to Sec 8) and the state pays 95% of the total rent, so that likely helps.
The other two are mid-to-high B+ or A- (for that market) units, though currently occupied by upwardly mobile (med/law) grad students. So its a bit of a question mark for me as to how to proceed. I planned to look on Bigger Pockets later today to see what other landlords are doing.  I think this is likely to be a medium to longer term situation, so I'm thinking carefully before I act.

bacchi

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Re: County issued full stop on evictions, thoughts?
« Reply #4 on: March 18, 2020, 07:29:29 PM »
What are the details? Does the unpaid rent keep accumulating?

Bloop Bloop

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Re: County issued full stop on evictions, thoughts?
« Reply #5 on: March 18, 2020, 09:54:58 PM »
Pretty ridiculous. If I walked into a supermarket and asked for a free roll of toilet paper or a car dealership and I asked for a free car I bet they wouldn't oblige.

Omy

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Re: County issued full stop on evictions, thoughts?
« Reply #6 on: March 18, 2020, 10:23:12 PM »
I'm sweating this a bit since I have 2 rentals. Fortunately one tenant has a pretty secure job but who knows. The other is a bit scarier since they are high risk if they get sick and they might have challenges paying the rent. I'm hoping that because they are paying month to month (and I just need to give 2 months notice to end the rental agreement), that they will keep paying. I will try to work with them if they can't afford the full amount as long as they are making an effort.

theoverlook

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Re: County issued full stop on evictions, thoughts?
« Reply #7 on: March 19, 2020, 07:59:03 AM »
These are "interesting times" as a landlord, to be sure. I'm 100% commercial but have had one tenant already approach us asking to spread one or two months rent out over the next year if they end up shut down. I told them we would work it out; they've been in our building for over 30 years at this point. The others haven't said anything yet; we'll see what happens come April 1st. We have zero debt and have a sizable cash reserve so are able to weather anything that comes. But I feel for anyone that isn't in the same boat.

GuitarStv

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Re: County issued full stop on evictions, thoughts?
« Reply #8 on: March 19, 2020, 08:02:48 AM »
Is there a glut of folks out there looking for new apartments right now . . . or would the apartment just likely sit empty if you evicted the guy who isn't paying?

rulesofacquisition

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Re: County issued full stop on evictions, thoughts?
« Reply #9 on: March 19, 2020, 10:02:48 AM »
I have a duplex and a single family I just bought 14-15 months ago. One tenant in the duplex has has her work close down. She hasn't approached me yet. She has been there over a year, never paid late, keeps house nice, and is generally very easy to work with. So I guess I'm in the same boat wondering whether to reach out to her. I'm not FI but have about 6 months of reserves if I'm careful. Good luck and take care everybody!

Another Reader

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Re: County issued full stop on evictions, thoughts?
« Reply #10 on: March 19, 2020, 10:20:49 AM »
My property manager called me yesterday, notifying me that our county issued a full stop on any evictions for the time being given the economic impacts to folks dealing with COVID-19.  I also understand that the local utility companies will not shut anyone off for the foreseeable future. 

Ethics aside, even if I could evict, I wouldn't, given the circumstances and the likelihood that the property would sit vacant and be at higher risk.  My tenants are all paid through March and this portfolio is mostly upper-end blue collar and low-mid end white collar tenants that pay on time.  My biggest concern is the following:

1) Tenants taking advantage of the no eviction ruling to stop paying, even if they suffer no loss of income.

2) What will banks do?  My cash reserves are in good position and my overall leverage vs  is ~45% but is it reasonable to expect banks to offer delayed financing/what did folks see during 2008?

Interesting times!

Nobody saw anything in 2008-2013. Usually one person got laid off and the house they owned was short sold or foreclosed.  The remaining income was enough to pay rent somewhere else.  Occupancy and rents went up in this time period.

This time will be different.  Unemployment will be very high, especially in the short term.  Local and state governments are talking about rent moratoriums.  I expect significant vacancy and collection loss.  Fortunately, most of my rentals are free and clear and I have a large cash reserve.

I expect the fed-controlled entities (Fannie, Freddie, FHA, etc) to offer some relief to homeowners.  Landlords?  I kind of doubt it. 

DadJokes

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Re: County issued full stop on evictions, thoughts?
« Reply #11 on: March 19, 2020, 12:17:41 PM »
I'd definitely look into the details of the change. Are you allowed to accumulate unpaid rent to be paid back later? What will the county do if lost revenue results in the property being repossessed? Can the county stop a bank from evicting in the event of repossession?

waltworks

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Re: County issued full stop on evictions, thoughts?
« Reply #12 on: March 19, 2020, 12:26:33 PM »
The goal in the short/medium (say, 2 years) term is basically not to lose your properties, I'd say. If you actually make some money in the process that's a bonus. Biggish landlord here in town (couple hundred units) just unilaterally cut rent 50% for all their tenants - currently they are saying that's just for April, but I'd assume they'll extend indefinitely unless the crisis winds down.

-W
« Last Edit: March 19, 2020, 12:32:54 PM by waltworks »

srad

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Re: County issued full stop on evictions, thoughts?
« Reply #13 on: March 19, 2020, 01:00:57 PM »
I was just telling my wife that as well.  All we need to do is survive for the next XX months(years).  I know a few of my tenants will be affected as they are in the service industry and those lines of work are closing up fast.  We were talking about what kind of discount we'd offer.  Interesting to see some companies already moving it down to 50%.  50% is way better than 0.   So looks like for 2020 lots of us won't be reporting much income on our properties.

This is a good reminder for us, if you want to own rentals you need to have a large reserve fund. 

As to foreclosures.  You have to be at least 90 days down before your loan gets referred to FC. And by referred it means starting the process.  The process before all of this happened was 4 months to years long depending on what state you are in (NY and HI are by far the longest states to FC in, we are talking years).  And right now, most courts won't hear a FC case, shoot, most courts are temporarily closed, some for months.  My day job is in the non performing loan world.  We just got a spreadsheet from our FC attorny's and every state has districts with courts being cancelled for the near future.  So you are a long way from loosing your property to FC.  Plus if this gets bad enough, the government will step in and put a moratorium on FCs very similar to ones put on when there's a natural disaster.  The disaster moratoriums were for investor owned properties as well as owner occupied.  We will all still owe the money, but at least you will have some time to make it up.  As a side note for how long you may be able to stretch this out, the company i work for still has some loans that were affected by hurricane Sandy and they still can't be FC'd on...  and they haven't made a payment in years (Sandy was in 2012). 

waltworks

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Re: County issued full stop on evictions, thoughts?
« Reply #14 on: March 19, 2020, 01:05:44 PM »
I agree that you're unlikely as a small time landlord to be foreclosed on.

You *could*, however, dig yourself quite a deep legal/financial hole that would suck to get out of when the crisis has passed.

If I still had any rentals, I'd be reaching out immediately to tenants I knew to be potentially losing jobs to offer rent reductions. If they know you're on their team and trying to help, they will try to stay/pay. Otherwise they may not.

-W

srad

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Re: County issued full stop on evictions, thoughts?
« Reply #15 on: March 19, 2020, 01:27:59 PM »
I agree that you're unlikely as a small time landlord to be foreclosed on.

You *could*, however, dig yourself quite a deep legal/financial hole that would suck to get out of when the crisis has passed.

If I still had any rentals, I'd be reaching out immediately to tenants I knew to be potentially losing jobs to offer rent reductions. If they know you're on their team and trying to help, they will try to stay/pay. Otherwise they may not.

-W

Yes, i'm very curious to see how deep a hole some are going to find themselves in.  If you go 8k down but only make 250 a month for that unit, that's a lot of years in the red. 

Hey the good new is, if it gets deep enough, old Walkworks might just be back in the rental game by 2023!


waltworks

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Re: County issued full stop on evictions, thoughts?
« Reply #16 on: March 19, 2020, 06:38:10 PM »
I have plenty of cash to deploy for that if it comes to it, but I sincerely hope things stabilize fast and I never get the chance.

-W

Systems101

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Re: County issued full stop on evictions, thoughts?
« Reply #17 on: March 19, 2020, 09:55:37 PM »
Speaking from the renter's side, this is not only a concern for you. 

There are plenty of intermediate states to your questions, and massive numbers of open questions if leases and notification dates are approaching... and I'm fearful I'll be caught in the middle. I'm rapidly approaching both a house closing and the last day to notify of end lease vs extension (two days after scheduled closing). I plan to move 4 days after closing.

I just see it as highly likely we end up in something like a mandatory quarantine (or shutdown of non-essential businesses) for a while...

Then what happens? 
  • Can I stay in and thus delay a future tenant that has rights to the apartment?
  • If I'm "forced" to do that (no moving company operating), then how much time will exist after moves are legal and how much time will I have before a sheriff shows up to empty the apartment? (and all the impacts of saying "Yes, I've been evicted.")... Or will I be taking a hack saw to furniture so it fits in a dumpster and moving all the small stuff myself?
  • What happens if the city with my apartment is under different rules than the city where the house is? (because they are in different counties)
  • Will the landlord in my apartment be able to charge whatever rent they want if I'm forced to renew a lease?  Can they force me to renew the lease?  Can they double or triple the "break fee" if I then want to leave before that lease is up?
  • What will my finances look like carrying an empty home and still having to pay for the apartment? (not much different than a landlord not getting rent, except both of my numbers are in a city bordering on HCOL, so it would be a significant financial drain)

I realize we can't expect the authorities to deal with ever corner case in their proclamations, but that doesn't make it any easier on people who are caught in those cracks.

Thankfully my down payment was in CDs (mostly maturing this week), so that part isn't a worry, and hopefully I'll keep my job for a while (maybe even long enough to get the yearly bonus [shifted fiscal year]).

Interesting, but not fun times (for me anyway).  I could do without this additional stress.

former player

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Re: County issued full stop on evictions, thoughts?
« Reply #18 on: March 20, 2020, 04:16:02 AM »
Speaking from the renter's side, this is not only a concern for you. 

There are plenty of intermediate states to your questions, and massive numbers of open questions if leases and notification dates are approaching... and I'm fearful I'll be caught in the middle. I'm rapidly approaching both a house closing and the last day to notify of end lease vs extension (two days after scheduled closing). I plan to move 4 days after closing.

I just see it as highly likely we end up in something like a mandatory quarantine (or shutdown of non-essential businesses) for a while...

Then what happens? 
  • Can I stay in and thus delay a future tenant that has rights to the apartment?
  • If I'm "forced" to do that (no moving company operating), then how much time will exist after moves are legal and how much time will I have before a sheriff shows up to empty the apartment? (and all the impacts of saying "Yes, I've been evicted.")... Or will I be taking a hack saw to furniture so it fits in a dumpster and moving all the small stuff myself?
  • What happens if the city with my apartment is under different rules than the city where the house is? (because they are in different counties)
  • Will the landlord in my apartment be able to charge whatever rent they want if I'm forced to renew a lease?  Can they force me to renew the lease?  Can they double or triple the "break fee" if I then want to leave before that lease is up?
  • What will my finances look like carrying an empty home and still having to pay for the apartment? (not much different than a landlord not getting rent, except both of my numbers are in a city bordering on HCOL, so it would be a significant financial drain)

I realize we can't expect the authorities to deal with ever corner case in their proclamations, but that doesn't make it any easier on people who are caught in those cracks.

Thankfully my down payment was in CDs (mostly maturing this week), so that part isn't a worry, and hopefully I'll keep my job for a while (maybe even long enough to get the yearly bonus [shifted fiscal year]).

Interesting, but not fun times (for me anyway).  I could do without this additional stress.

You sound as though you still want to go through with the purchase, but just in case I think you should game out the option of pulling out.  Assuming you still want to go ahead -

1.  You should only need to worry about quarantine if you have symptoms or have been in contact with someone who is diagnosed or has symptoms.  Otherwise there is self-isolation or social distancing as appropriate and possible.

2.  It is possible that a legally enforceable "no movement" order is put into effect, but that would need legislative provision from federal, state or local government.  So far there have been requests but no legally enforceable orders, as far as I know.  Keep on top of what both counties and your state are saying about potential restrictions.  As long as there is nothing legally enforceable it is up to you to make responsible decisions.  If there is a legally enforceable order you can either choose to obey it or consider the chances of being caught and consequences of being caught if you don't.

3.  Talk to your current landlord.  If they don't have a tenant lined up to move immediately they may be happy for you to leave larger furniture in place for a while, particularly if you cam make the apartment look more "staged".  You may have to offer to pay a small amount to allow this.  If necessary you could offer to rent the furniture to a new tenant - presumably if you can't move it out a new tenant couldn't move theirs in either.  Remember that you are not the only person caught up in this: the landlord and any potential new tenant are also caught up in it.
 

sammybiker

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Re: County issued full stop on evictions, thoughts?
« Reply #19 on: March 22, 2020, 07:51:18 AM »
Thanks all for the comments, some good points and discussion topics.

I'll be running through my full reserves, available credit and have another call with my property manager to see what feedback he's getting. 

I'll put together a couple of scenarios based on no rents for XX months/years and see how it plays out.  I'm good for about 12mo based on current cash reserves.  I could add another 12mo to that with a fire sale of toys and a property.  And I could add another 12mo to that with a fire sale of another property (or more if it came to that).

And @waltworks  I sure hope this market doesn't get bad enough to where you're buying again!  :D


Another Reader

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Re: County issued full stop on evictions, thoughts?
« Reply #20 on: March 22, 2020, 08:08:15 AM »
Thanks all for the comments, some good points and discussion topics.

I'll be running through my full reserves, available credit and have another call with my property manager to see what feedback he's getting. 

I'll put together a couple of scenarios based on no rents for XX months/years and see how it plays out.  I'm good for about 12mo based on current cash reserves.  I could add another 12mo to that with a fire sale of toys and a property.  And I could add another 12mo to that with a fire sale of another property (or more if it came to that).

And @waltworks  I sure hope this market doesn't get bad enough to where you're buying again!  :D

Leverage is a great idea - until it's not.  That's why I have been focused on mortgage payoff for the last few years.  That and cash reserves.  I have other streams of income that are secure unless government fails altogether.  My debt service coverage ratio is pretty damn high.  You youngsters have a long runway and plenty of time to recover, so higher risk is warranted.

Le Poisson

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Re: County issued full stop on evictions, thoughts?
« Reply #21 on: March 23, 2020, 02:37:53 PM »
Replying mostly to @GuitarStv - we're in Ontario same as you, currently have one unit vacant and ready to rent, 2 units vacant under renos and one unit occupied.

The occupied unit is international students working PT jobs - very high risk since they are no longer in school and their work is drying up. We thought we were in good space wrapping up renos in time for spring move-ins, but now are afraid to show/rent because...

1. No evictions means that less scrupulous renters could be looking for a chance to move up and not pay rent for a few months/years until the gov't reverses positions on evictions... then force a Landlord Tenant board hearing that could be another year to process.
2. Doing showings means higher exposure to COVID - how do we sanitize between each showing?
3. People who are a good risk may not have a job next week and could become a bona-fide risk very quickly.
4. A vacant unit does not risk being quarantined/stigmatized the same as "the place where that guy died of COVID" could be. Similarly, where we have multiple units, if one tenant gets sick, I would expect the rest to need to be informed - If I were sharing a house (and heat system) with a sick person, I'd be looking to GTFO.

Anyhow, at this point we are super nervous about what taking on tenants means and the risks are pretty big to us. We have a property manager/handyman doing odd jobs to make sure squatters keep out, but I think we'll wait a few weeks to 2 months before getting excited about placing tenants. In the meantime, we pay for utilities taxes etc.

BicycleB

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Re: County issued full stop on evictions, thoughts?
« Reply #22 on: March 24, 2020, 01:01:50 PM »
Why is the first thought rent reductions instead of accepting payment delays? Isn't payment delay and forgiveness of late fees cheaper than a rent reduction?

I don't have the experience level of the bigger landlords, and my situation's different - 20 years of renting out rooms in my house, that's it.  Still, because I communicate face to face, what I hear from tenants so far is:

1. Worry about gaps in pay, not permanently losing pay
2. Each one wants to stay
3. In past situations, the one who is sometimes late is happy to pay late fees in exchange for acceptance of being 1 to 2 weeks late

I figured that:
4. Everyone's going to converge on "you can't kick people out right now", so the issue is simply how to frame it
5. I'd rather have stability and good relations than turnover
6. Renters don't want to leave either
7. Accepting late payment and waiving late fees until they have capacity to pay preserves the ability to eventually be paid, without rancor or legal difficulties

In the event:
8. All 3 renters have obtained payment flows sufficient to cover rent in full within a couple of weeks
9. All 3 have several months' worth of credible income, one guy just has that 2 week gap before his cash arrives
10. I'm pretty sure that after 2-3 months, their regular income will resume enough to pay rent (1 renter is WFH, 2 are in restaurant work)
11. A long slow $100 or $200 per month catch-up on rent just means stable income for me during the next year
12. I offered the slow payer late waiver up front and said if he would catch up later, I'd work with him; that's when he explained he had cash coming in 2 weeks, just nothing at all right now
13. I said no problem
14. Then I went into my bedroom, came back with $200 cash and handed it to him saying, "If you need money for groceries and stuff, use this. Pay me back when you have enough coming in."
15. He was thrilled. I'm guessing no rent reductions will be necessary.

PS. Maybe a bigger landlord could just contact each tenant and ask "How is this coronavirus era going?" Then respond from a menu of basic options such as "I'm glad you're doing all right, I value you as a person not just a tenant" and "I understand it's hard right now. I am willing to accept late payment AND waive late fees if you tell me what a fair payment plan is. As long as you meet your new commitments, we will consider you in good standing." Admittedly the wording might have to be tweaked if your tenant group includes scammers/deadbeats, but you get the picture. Would this type of thing be better than a rent reduction, which after all implies future rent raising or losses? Or is the late-payment approach fatally flawed?
« Last Edit: March 24, 2020, 01:09:36 PM by BicycleB »

Omy

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Re: County issued full stop on evictions, thoughts?
« Reply #23 on: March 24, 2020, 04:38:28 PM »
As a landlord, I think this is a great approach.

srad

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Re: County issued full stop on evictions, thoughts?
« Reply #24 on: March 25, 2020, 08:48:24 AM »
Why is the first thought rent reductions instead of accepting payment delays? Isn't payment delay and forgiveness of late fees cheaper than a rent reduction?


I'm far from a "Bigger" landlord but here's where i'm at.

Because i still have a mortgage to pay and the less money have to spend out of my reserve fund right now the better.  As the rent relief is showing up across our country, the tenants will still owe the rent.  They will be placed on a 6 to 12 month forbearance plan after this is all over. This will be my discussion with the tenant, the more you can pay now, the less your rent will be over the next year.  My goal for a tenant who can't pay in full will be to collect half of the rent.  I'm fully prepared for collecting a $0, but anything will be helpful. 

If mortgage relief comes and I'm allowed to postpone my mortgage for 3 months, i'm not planning on taking it.  I have the reserves so i'm going to keep my loans as current as possible.  I'll revisit this plan as the crisis goes on and more and more of my tenants stop paying.


Dicey

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Re: County issued full stop on evictions, thoughts?
« Reply #25 on: March 25, 2020, 04:21:11 PM »
During the 2008 Recession, renters were losing their homes because landlords were collecting rents but not making house payments. The tenants were oblivious until the sheriff turned up at their door. At the time, I had a single rental in a senior community. My darling tenant was terminally ill, had lost a shitload of money in the stock market and was worried about losing his home. I used to call him every month to let him know that I'd made the mortgage payment. We had the best conversations and he lived for another year or so. RIP, Jack.

This time around, we have three houses in the same community. We have contacted all three tenants to make sure they're okay and to reassure them that we are, too. One of them just asked if we would renew their lease for three years. Um, yeah, sure we will. Done. He's also the guy who voluntarily raised his rent $100 bucks a month, as I have mentioned elsewhere.

My advice is to treat your tenants like people you give a rip about. If they were good tenants before, they will probably continue to be. Turnover is expensive, so taking a few easy steps to avoid it is cheap insurance.