Help for Landlords in the Stimulus Bills?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
KyleAAA
Posts: 8586
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: Help for Landlords in the Stimulus Bills?

Post by KyleAAA »

barberakb wrote: Sun Apr 05, 2020 2:56 am
JonnyB wrote: Sat Apr 04, 2020 12:57 pm
JGoneRiding wrote: Sat Apr 04, 2020 11:33 am Totally legal if he is picking old people because their income is guaranteed. Illegal if he is discriminating against old people. But there is literally NOTHING in any code that makes it illegal to discriminate against YOUNG people because they are young. Ie they are not a protected class.
This is not correct. You are confusing labor law and housing law.

Under labor law, discrimination is illegal for those age 40 and older. But under housing law, discrimination by age is not limited. It is illegal to discriminate by any age. Although the Fair Housing Act does not mention age specifically, the courts have interpreted the protected class of Family Status to include age discrimination.

Under the Housing for Older Persons Act of 1995 (HOPA) certain facilities can be operated for those 55 and older. However there are explicit restrictions on these communities. In particular:
May an owner of single family houses that are dispersed throughout a geographical area, and who is not otherwise exempt under the Fair Housing Act, qualify as a "housing community or facility" and claim the exemption? Answer No. ... One single family dwelling or a duplex would not qualify as a "housing community or facility.
https://www.hud.gov/sites/documents/DOC_7769.PDF
He is NOT discriminating by age, he is discriminating by ability to pay their rent which is LEGAL...
In this case, it would appear there isn't a functional difference. Often times, the intent doesn't matter as much as the effect.
FoolStreet
Posts: 1066
Joined: Fri Sep 07, 2012 12:18 am

Re: Help for Landlords in the Stimulus Bills?

Post by FoolStreet »

SimpleMan68 wrote: Mon Mar 30, 2020 9:59 am
Oddball wrote: Mon Mar 30, 2020 9:43 am "Today, to keep renters in multifamily properties in their home and to support multifamily property owners during the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) is announcing that Fannie Mae and Freddie Mac (the Enterprises) will offer multifamily property owners mortgage forbearance with the condition that they suspend all evictions for renters unable to pay rent due to the impact of coronavirus."

https://www.fhfa.gov/Media/PublicAffair ... rties.aspx
Thanks Oddball. This applies to landlords with government-backed mortgages. It appears that those with another type of mortgage or no mortgage are expected to "eat it" , at least for now.
How can we determine whether our mortgage is government-backed or not?
kjvmartin
Posts: 1461
Joined: Wed Jan 21, 2015 8:57 am

Re: Help for Landlords in the Stimulus Bills?

Post by kjvmartin »

knpstr wrote: Mon Mar 30, 2020 1:21 pm
HEDGEFUNDIE wrote: Mon Mar 30, 2020 10:46 am I have proactively forgiven my tenant's rent for three months.

Not his fault I chose to leverage up my investment property with a mortgage.
Nor is it your fault that this coronavirus situation happened.

All of my renters are lower income so if they are working, they can pay. If they are laid off they will likely be "making" more money per week with this new UI plan (normal benefits + $600 per week) on top of that $1,200 is coming in a few weeks.

That being said if they choose not to pay, I have no recourse, at this time.
The unemployment system in Michigan isn't even setup yet, much less paying benefits. That's if you can get through the quagmire of applying.

They are "waiting on guidance" from the feds. The website has been in limbo for days.
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

Has anyone try applying for an EIDL, Economic injury Disaster Loan, as a landlord?
User avatar
knpstr
Posts: 2890
Joined: Thu Nov 20, 2014 8:57 pm
Location: Michigan

Re: Help for Landlords in the Stimulus Bills?

Post by knpstr »

kjvmartin wrote: Mon Apr 06, 2020 5:30 pm The unemployment system in Michigan isn't even setup yet, much less paying benefits. That's if you can get through the quagmire of applying.

They are "waiting on guidance" from the feds. The website has been in limbo for days.
That's a shame.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
User avatar
AerialWombat
Posts: 1785
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Help for Landlords in the Stimulus Bills?

Post by AerialWombat »

SimpleMan68 wrote: Sat Apr 04, 2020 1:07 pm
Stormbringer wrote: Sat Apr 04, 2020 12:43 pm
SimpleMan68 wrote: Mon Mar 30, 2020 7:29 am I have read that many jurisdictions have put a moratorium on evictions, except in exceptional cases. This would have the effect of a landlord being forced to subsidize a nonpaying tenant. Is anyone aware of anything in the stimulus bills that have passed that would help landlords deal with this situation? I am interested in the small, local landlord who might be operating as an LLC or Sole Proprietor.

[*]Up to 12 months forbearance on government-backed mortgages.[/list]
Of course, your third point would only apply to landlords who are carrying a mortgage.
Landlords can also receive SBA disaster loan assistance specifically for covering lost rents.
User avatar
AerialWombat
Posts: 1785
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Help for Landlords in the Stimulus Bills?

Post by AerialWombat »

fareastwarriors wrote: Mon Apr 06, 2020 5:49 pm Has anyone try applying for an EIDL, Economic injury Disaster Loan, as a landlord?
I never have personally for past disaster declarations, and so far don’t need to for this one, but this is a specifically stated additional purpose of the SBA 7(b)(2) program (EIDL).
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

AerialWombat wrote: Mon Apr 06, 2020 5:57 pm
SimpleMan68 wrote: Sat Apr 04, 2020 1:07 pm
Stormbringer wrote: Sat Apr 04, 2020 12:43 pm
SimpleMan68 wrote: Mon Mar 30, 2020 7:29 am I have read that many jurisdictions have put a moratorium on evictions, except in exceptional cases. This would have the effect of a landlord being forced to subsidize a nonpaying tenant. Is anyone aware of anything in the stimulus bills that have passed that would help landlords deal with this situation? I am interested in the small, local landlord who might be operating as an LLC or Sole Proprietor.

[*]Up to 12 months forbearance on government-backed mortgages.[/list]
Of course, your third point would only apply to landlords who are carrying a mortgage.
Landlords can also receive SBA disaster loan assistance specifically for covering lost rents.
Are you referring to the Economic injury Disaster Loan? Any experience with it?
User avatar
AerialWombat
Posts: 1785
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Help for Landlords in the Stimulus Bills?

Post by AerialWombat »

fareastwarriors wrote: Mon Apr 06, 2020 6:59 pm Are you referring to the Economic injury Disaster Loan? Any experience with it?
Yes, the EIDL. It’s been around for decades — they are not a new thing created because of coronavirus.

No personal experience with them as a landlord, no. But knee-deep in them now with clients for some unknown reason. :)
michaeljc70
Posts: 7106
Joined: Thu Oct 15, 2015 3:53 pm

Re: Help for Landlords in the Stimulus Bills?

Post by michaeljc70 »

https://www.wsj.com/articles/nearly-a-t ... 1586340000

"Nearly a Third of U.S. Apartment Renters Didn’t Pay April Rent"

It is behind a paywall.
Stormbringer
Posts: 1004
Joined: Sun Jun 14, 2015 7:07 am

Re: Help for Landlords in the Stimulus Bills?

Post by Stormbringer »

fareastwarriors wrote: Mon Apr 06, 2020 5:49 pm Has anyone try applying for an EIDL, Economic injury Disaster Loan, as a landlord?
I just submitted applications for two of my LLCs. I have some vacancies that are basically impossible to fill at the moment. We'll see what happens.

I can't find any guidance on how to properly use this program. My best guess (and it isn't much more than that) is that you can apply once per entity, including yourself if you are a sole proprietor. That creates some weird and unfair scenarios. One landlord might own 10 properties in his name and get $10K. Another landlord might own 10 properties titled to 10 different LLCs. Does he get $100K? I have no idea, and neither does anyone else it seems.

Also, it isn't at all clear what "up to $10,000" means, or how that is determined. The application requires you enter in your lost rent, but I have no idea who will pay rent over the next 3 months.

Part of me thinks this is just Congress opening the fire hose and spraying $100 bills at everyone, hoping that some good comes of it.
"Compound interest is the most powerful force in the universe." - Albert Einstein
User avatar
willthrill81
Posts: 20957
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Help for Landlords in the Stimulus Bills?

Post by willthrill81 »

I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

Stormbringer wrote: Wed Apr 08, 2020 12:51 pm
fareastwarriors wrote: Mon Apr 06, 2020 5:49 pm Has anyone try applying for an EIDL, Economic injury Disaster Loan, as a landlord?
I just submitted applications for two of my LLCs. I have some vacancies that are basically impossible to fill at the moment. We'll see what happens.

I can't find any guidance on how to properly use this program. My best guess (and it isn't much more than that) is that you can apply once per entity, including yourself if you are a sole proprietor. That creates some weird and unfair scenarios. One landlord might own 10 properties in his name and get $10K. Another landlord might own 10 properties titled to 10 different LLCs. Does he get $100K? I have no idea, and neither does anyone else it seems.

Also, it isn't at all clear what "up to $10,000" means, or how that is determined. The application requires you enter in your lost rent, but I have no idea who will pay rent over the next 3 months.

Part of me thinks this is just Congress opening the fire hose and spraying $100 bills at everyone, hoping that some good comes of it.

Is anyone asking for more than 10k? Yes the 10k "grant" is nice but a bigger amount at a very reasonable interest is very useful. I don't want to violate any rules but legally what is the maximum I can ask for?
dave_k
Posts: 401
Joined: Sat Dec 26, 2015 8:25 pm

Re: Help for Landlords in the Stimulus Bills?

Post by dave_k »

fareastwarriors wrote: Wed Apr 08, 2020 3:35 pm Is anyone asking for more than 10k? Yes the 10k "grant" is nice but a bigger amount at a very reasonable interest is very useful. I don't want to violate any rules but legally what is the maximum I can ask for?
Is it really a "grant" of up to 10k? Not a loan? Any idea if this can apply to lost vacation rental bookings?
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

dave_k wrote: Wed Apr 08, 2020 3:41 pm
fareastwarriors wrote: Wed Apr 08, 2020 3:35 pm Is anyone asking for more than 10k? Yes the 10k "grant" is nice but a bigger amount at a very reasonable interest is very useful. I don't want to violate any rules but legally what is the maximum I can ask for?
Is it really a "grant" of up to 10k? Not a loan? Any idea if this can apply to lost vacation rental bookings?

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.


https://www.sba.gov/funding-programs/lo ... cy-advance
dave_k
Posts: 401
Joined: Sat Dec 26, 2015 8:25 pm

Re: Help for Landlords in the Stimulus Bills?

Post by dave_k »

Thanks, I'll look into it. I thought those were just loans. Calling it a "loan advance" that doesn't have to be repaid is confusing.
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

dave_k wrote: Wed Apr 08, 2020 4:02 pm Thanks, I'll look into it. I thought those were just loans. Calling it a "loan advance" that doesn't have to be repaid is confusing.

I'm so confused myself... It's like the wild wild west right now.

Still have look into PPP...
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

For EIDL, gross revenue = total rent collected?
What should I put down as Cost of Goods Sold? All expenses?
Turbo29
Posts: 868
Joined: Tue May 01, 2018 7:12 am

Re: Help for Landlords in the Stimulus Bills?

Post by Turbo29 »

willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
There is always political risk in any investment. I don't know why property owners ever thought they were exempt from this.
It is by the goodness of God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them. --M. Twain
User avatar
willthrill81
Posts: 20957
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Help for Landlords in the Stimulus Bills?

Post by willthrill81 »

Turbo29 wrote: Thu Apr 09, 2020 1:26 pm
willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
There is always political risk in any investment. I don't know why property owners ever thought they were exempt from this.
That's true, though it seems safe to say that certain entities, such as landlords, are subject to greater political risk than others, such as tenants. I can't say more than that without potentially running afoul of the forum's rules though.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
chw
Posts: 841
Joined: Thu May 24, 2012 4:22 pm

Re: Help for Landlords in the Stimulus Bills?

Post by chw »

SimpleMan68 wrote: Mon Mar 30, 2020 8:51 am
billthecat wrote: Mon Mar 30, 2020 8:39 am Does your landlord insurance cover missed rent?
That is a great question and something I had not thought of. Consulting my insurance policy it seems "loss of rents" only kicks in when the structure is unfit to live in.
Usually rent loss insurance only kicks in if the building is impacted in some way where the tenant is unable to live in the building- think fire, flood, etc. A pandemic probably not, as it does not I,pact the liveability of the building.
User avatar
AerialWombat
Posts: 1785
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Help for Landlords in the Stimulus Bills?

Post by AerialWombat »

willthrill81 wrote: Thu Apr 09, 2020 1:50 pm
Turbo29 wrote: Thu Apr 09, 2020 1:26 pm
willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
There is always political risk in any investment. I don't know why property owners ever thought they were exempt from this.
That's true, though it seems safe to say that certain entities, such as landlords, are subject to greater political risk than others, such as tenants. I can't say more than that without potentially running afoul of the forum's rules though.
The thing that gets ignored by most over on BiggerPockets, compared to here, is that owning rental properties is a business. I own, in full or in part, four different companies. One of them happens to be the business of being a landlord. There are political risks (rent control legsislation and the like), interest rate risks, leverage risks, tenant risks, etc. It's part of being in this business.

Out of my four companies, my real estate business is by far the most exciting. It's the closest thick to a "brick and mortar" business that I have. I get giddy about deal analysis. I love running my hands over a brand new range or dishwasher. I love the consistency of rent checks, and the gamble on appreciation. I love it all.

But I would be foolish to think that this business doesn't have risks similar to other physical businesses. I think other landlords are fools for not having set aside adequate reserves to whether a short-term storm like this. And yes, I realize I could lose it all, again, just like I did in 2007-08. Last time I lost my real estate, I lived in a car for a year. This time, I have a trailer to tow behind the car. Yeah, baby!

There is risk in any business venture. If other landlords want to ignore those risks, that's on them.
User avatar
willthrill81
Posts: 20957
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Help for Landlords in the Stimulus Bills?

Post by willthrill81 »

AerialWombat wrote: Thu Apr 09, 2020 3:59 pmI think other landlords are fools for not having set aside adequate reserves to whether a short-term storm like this.
I agree entirely with your post and the above in particular. When I've heard about landlords potentially getting into trouble due to a portion of their tenants failing to make rent payments for a couple of months, the first thing that comes to my mind is 'They're doing something very wrong.' I've heard from several who invest in rental properties that healthy 'emergency funds', cash reserves, or whatever you want to call it are an absolute must. No landlord should be 1-2 monthly rents from financial hardship of any kind, IMHO.

If I were to become a landlord (which I would consider except my DW wants to stay far from it), I would keep a minimum of six months of total rent in cash or near equivalents at all times.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
renue74
Posts: 1873
Joined: Tue Apr 07, 2015 7:24 pm

Re: Help for Landlords in the Stimulus Bills?

Post by renue74 »

AerialWombat wrote: Thu Apr 09, 2020 3:59 pm
willthrill81 wrote: Thu Apr 09, 2020 1:50 pm
Turbo29 wrote: Thu Apr 09, 2020 1:26 pm
willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
There is always political risk in any investment. I don't know why property owners ever thought they were exempt from this.
That's true, though it seems safe to say that certain entities, such as landlords, are subject to greater political risk than others, such as tenants. I can't say more than that without potentially running afoul of the forum's rules though.
The thing that gets ignored by most over on BiggerPockets, compared to here, is that owning rental properties is a business. I own, in full or in part, four different companies. One of them happens to be the business of being a landlord. There are political risks (rent control legsislation and the like), interest rate risks, leverage risks, tenant risks, etc. It's part of being in this business.

Out of my four companies, my real estate business is by far the most exciting. It's the closest thick to a "brick and mortar" business that I have. I get giddy about deal analysis. I love running my hands over a brand new range or dishwasher. I love the consistency of rent checks, and the gamble on appreciation. I love it all.

But I would be foolish to think that this business doesn't have risks similar to other physical businesses. I think other landlords are fools for not having set aside adequate reserves to whether a short-term storm like this. And yes, I realize I could lose it all, again, just like I did in 2007-08. Last time I lost my real estate, I lived in a car for a year. This time, I have a trailer to tow behind the car. Yeah, baby!

There is risk in any business venture. If other landlords want to ignore those risks, that's on them.
+1. I have 10 rentals and all my properties are fully paid off. No leverage. I also have plenty of emergency funds for any rental expenses.

I've only had one tenant not pay for 1/2 of their rent in April. The others paid fine. It's the cost of doing business and the tenant has paid on time for the last 2 years. We'll discuss a payment plan to make this whole in the future.

It is a business and if your customers don't pay...you have to take that into account. As a landlord with no "government backed loans," I don't have any printed extra money being thrown my way. No bailout for renue74.

In my state, rental property is charged at a much higher percentage than personal/primary homes. The "bailout" would be to help with those expenses...as property taxes are my highest expense annually....but I'm pretty sure my state legislators aren't talking about that.

It'll all workout. It always does.
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

AerialWombat wrote: Mon Apr 06, 2020 7:14 pm
fareastwarriors wrote: Mon Apr 06, 2020 6:59 pm Are you referring to the Economic injury Disaster Loan? Any experience with it?
Yes, the EIDL. It’s been around for decades — they are not a new thing created because of coronavirus.

No personal experience with them as a landlord, no. But knee-deep in them now with clients for some unknown reason. :)
Hey AerialWombat. Thank you again for all your useful information here and in other threads.

What is considered Cost of Goods Sold? All my expenses? Does it include depreciation?
student
Posts: 5161
Joined: Fri Apr 03, 2015 6:58 am

Re: Help for Landlords in the Stimulus Bills?

Post by student »

PBS has a good segment about this issue. https://www.youtube.com/watch?v=UvyazdooRgA
User avatar
AerialWombat
Posts: 1785
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Help for Landlords in the Stimulus Bills?

Post by AerialWombat »

fareastwarriors wrote: Thu Apr 09, 2020 7:44 pm
AerialWombat wrote: Mon Apr 06, 2020 7:14 pm
fareastwarriors wrote: Mon Apr 06, 2020 6:59 pm Are you referring to the Economic injury Disaster Loan? Any experience with it?
Yes, the EIDL. It’s been around for decades — they are not a new thing created because of coronavirus.

No personal experience with them as a landlord, no. But knee-deep in them now with clients for some unknown reason. :)
Hey AerialWombat. Thank you again for all your useful information here and in other threads.

What is considered Cost of Goods Sold? All my expenses? Does it include depreciation?
No, it is neither of the things you listed. I would highly encourage you to discuss this with your CPA. Also, Google IRS Form 1125-A. That is the tax form for calculating COGS.
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

AerialWombat wrote: Thu Apr 09, 2020 9:29 pm
fareastwarriors wrote: Thu Apr 09, 2020 7:44 pm
AerialWombat wrote: Mon Apr 06, 2020 7:14 pm
fareastwarriors wrote: Mon Apr 06, 2020 6:59 pm Are you referring to the Economic injury Disaster Loan? Any experience with it?
Yes, the EIDL. It’s been around for decades — they are not a new thing created because of coronavirus.

No personal experience with them as a landlord, no. But knee-deep in them now with clients for some unknown reason. :)
Hey AerialWombat. Thank you again for all your useful information here and in other threads.

What is considered Cost of Goods Sold? All my expenses? Does it include depreciation?
No, it is neither of the things you listed. I would highly encourage you to discuss this with your CPA. Also, Google IRS Form 1125-A. That is the tax form for calculating COGS.
Yikes... I don't have a CPA and have doing my taxes on my own...
I never thought about COGS as a landlord but thanks I'll look into it more!
basspond
Posts: 1352
Joined: Wed Nov 27, 2013 4:01 am

Re: Help for Landlords in the Stimulus Bills?

Post by basspond »

I have a relative who was notified by the tenant they lost their job. Nobody is going to get out of this unscathed. My relative reduced the rent and the tenants were very appreciative. Will probably offer reduced rents for at least 3 months.
rascott
Posts: 2349
Joined: Wed Apr 15, 2015 10:53 am

Re: Help for Landlords in the Stimulus Bills?

Post by rascott »

willthrill81 wrote: Thu Apr 09, 2020 1:50 pm
Turbo29 wrote: Thu Apr 09, 2020 1:26 pm
willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
There is always political risk in any investment. I don't know why property owners ever thought they were exempt from this.
That's true, though it seems safe to say that certain entities, such as landlords, are subject to greater political risk than others, such as tenants. I can't say more than that without potentially running afoul of the forum's rules though.
All potential landlords should do intensive analysis on their subject property when investing, fully estimate true costs. ... and understand all the risks, and be compensated accordingly

I've setup a hurdle rate of 15% ROI for rental properties. This accounts for all the time commitments, concentrated risk, illiquidity, e.t.c.
User avatar
LadyGeek
Site Admin
Posts: 66422
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Help for Landlords in the Stimulus Bills?

Post by LadyGeek »

A number of posts discussing the morality of being a landlord have been removed. The thread was derailed.

Please stay on-topic, which is the financial aspects.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

dave_k wrote: Wed Apr 08, 2020 4:02 pm Thanks, I'll look into it. I thought those were just loans. Calling it a "loan advance" that doesn't have to be repaid is confusing.
Did you apply for EIDL?
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Help for Landlords in the Stimulus Bills?

Post by AlphaLess »

basspond wrote: Fri Apr 10, 2020 5:10 am I have a relative who was notified by the tenant they lost their job. Nobody is going to get out of this unscathed. My relative reduced the rent and the tenants were very appreciative. Will probably offer reduced rents for at least 3 months.
What was the rent reduction?
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Help for Landlords in the Stimulus Bills?

Post by AlphaLess »

renue74 wrote: Thu Apr 09, 2020 5:58 pm +1. I have 10 rentals and all my properties are fully paid off. No leverage. I also have plenty of emergency funds for any rental expenses.
I've only had one tenant not pay for 1/2 of their rent in April. The others paid fine. It's the cost of doing business and the tenant has paid on time for the last 2 years. We'll discuss a payment plan to make this whole in the future.
It is a business and if your customers don't pay...you have to take that into account. As a landlord with no "government backed loans," I don't have any printed extra money being thrown my way. No bailout for renue74.
In my state, rental property is charged at a much higher percentage than personal/primary homes. The "bailout" would be to help with those expenses...as property taxes are my highest expense annually....but I'm pretty sure my state legislators aren't talking about that.
It'll all workout. It always does.
Solid plan. I am amazed by the amount of bailing out going on. You would think this is the end of the world. It is just going to be a bad recession. Like they happen: every 10 or 20 years. Or maybe every 100.

Would be curious to know about your payment percentages in May.

TIA
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Help for Landlords in the Stimulus Bills?

Post by AlphaLess »

willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
Makes total sense. Care to quantify?
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
User avatar
willthrill81
Posts: 20957
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Help for Landlords in the Stimulus Bills?

Post by willthrill81 »

AlphaLess wrote: Fri Apr 10, 2020 8:58 pm
willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
Makes total sense. Care to quantify?
Like many other risks, it's very difficult, perhaps impossible, to quantify by my reckoning at least. That doesn't make it less real than otherwise though.

If the reward were great enough, I would still be willing to pursue that investment path, but it's just not in our area unless you're willing to be a slumlord, and I don't have an interest in being a landlord at a distance, though that certainly can work and many are willing to do so.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
basspond
Posts: 1352
Joined: Wed Nov 27, 2013 4:01 am

Re: Help for Landlords in the Stimulus Bills?

Post by basspond »

AlphaLess wrote: Fri Apr 10, 2020 8:48 pm
basspond wrote: Fri Apr 10, 2020 5:10 am I have a relative who was notified by the tenant they lost their job. Nobody is going to get out of this unscathed. My relative reduced the rent and the tenants were very appreciative. Will probably offer reduced rents for at least 3 months.
What was the rent reduction?
About 25%.
JBTX
Posts: 6983
Joined: Wed Jul 26, 2017 12:46 pm

Re: Help for Landlords in the Stimulus Bills?

Post by JBTX »

DD lives in an apartment complex but I pay the rent. Got an email saying there would be a drawing and monetary prize of several hundred dollars for anybody who paid May in advance. Normally I don't bother with such gimmicks but I actually did it betting that not many renters would be able to pay that far in advance. We shall see if it pays off.

It did strike me as a clever way to help manage cash flow.
JackoC
Posts: 1738
Joined: Sun Aug 12, 2018 11:14 am

Re: Help for Landlords in the Stimulus Bills?

Post by JackoC »

fareastwarriors wrote: Thu Apr 09, 2020 1:24 pm For EIDL, gross revenue = total rent collected?
What should I put down as Cost of Goods Sold? All expenses?
I just entered the same number for 'gross revenue' as 'revenue from all sources' I entered in our LLC's Form 1065 tax return (it has significant income from REIT ETF it owns besides rental income). I took all cash expenses of the LLC (IOW not including depreciation) as 'Cost of Goods Sold'.

However, reading various places including other threads on this forum about the 'up to $10k advance', it seems to be $1k per employee up to $10k. Our LLC has just the owners managing the properties and I don't interpret that as 'employees'. So I put zero employees and expect to be turned down for the advance, we'll see if/when they answer (put it in a week ago tomorrow). A loan at 3.75% is of no use to us, especially since I believe you have to promise not to use it for expansion (ie buying more properties). The LLC has ample reserves to cover expenses with no rental inflow for quite awhile, and we're getting a few rents. Our problem is rent we're unlikely to ever get back, whether NY officially declares that at some point, or de facto the chances Housing Court would ever kick out a tenant based on never having paid Mar-whatever 2020 rent though paid monthly subsequently: very unlikely IMO. If we could get some of that back from the fed govt that would be better than not getting it, if we can't, oh well.

And contrary to what you'd think reading most rental property threads here, direct real estate investing v stocks is not a binary choice. Last I looked we'd lost a truckload more $ in the stock market than lost rent. :(
fareastwarriors
Posts: 1264
Joined: Tue Feb 14, 2012 12:31 pm

Re: Help for Landlords in the Stimulus Bills?

Post by fareastwarriors »

JackoC wrote: Sun Apr 12, 2020 1:56 pm
fareastwarriors wrote: Thu Apr 09, 2020 1:24 pm For EIDL, gross revenue = total rent collected?
What should I put down as Cost of Goods Sold? All expenses?
I just entered the same number for 'gross revenue' as 'revenue from all sources' I entered in our LLC's Form 1065 tax return (it has significant income from REIT ETF it owns besides rental income). I took all cash expenses of the LLC (IOW not including depreciation) as 'Cost of Goods Sold'.

However, reading various places including other threads on this forum about the 'up to $10k advance', it seems to be $1k per employee up to $10k. Our LLC has just the owners managing the properties and I don't interpret that as 'employees'. So I put zero employees and expect to be turned down for the advance, we'll see if/when they answer (put it in a week ago tomorrow). A loan at 3.75% is of no use to us, especially since I believe you have to promise not to use it for expansion (ie buying more properties). The LLC has ample reserves to cover expenses with no rental inflow for quite awhile, and we're getting a few rents. Our problem is rent we're unlikely to ever get back, whether NY officially declares that at some point, or de facto the chances Housing Court would ever kick out a tenant based on never having paid Mar-whatever 2020 rent though paid monthly subsequently: very unlikely IMO. If we could get some of that back from the fed govt that would be better than not getting it, if we can't, oh well.

And contrary to what you'd think reading most rental property threads here, direct real estate investing v stocks is not a binary choice. Last I looked we'd lost a truckload more $ in the stock market than lost rent. :(
Thank you. I haven't applied yet still but additional information is helpful.

Even if you only get $1000 waived, why wouldn't a qualified person apply? The form doesn't seem too onerous for most people.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Help for Landlords in the Stimulus Bills?

Post by AlphaLess »

basspond wrote: Sun Apr 12, 2020 7:34 am
AlphaLess wrote: Fri Apr 10, 2020 8:48 pm
basspond wrote: Fri Apr 10, 2020 5:10 am I have a relative who was notified by the tenant they lost their job. Nobody is going to get out of this unscathed. My relative reduced the rent and the tenants were very appreciative. Will probably offer reduced rents for at least 3 months.
What was the rent reduction?
About 25%.
Not a bad compromise.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
SandysDad
Posts: 221
Joined: Wed Dec 06, 2017 7:27 am

Re: Help for Landlords in the Stimulus Bills?

Post by SandysDad »

I come at this from a landlord both for vacation rentals and for apartments.

Everyone is being effected by this situation. Everyone (including landlords) are getting some help. Everyone seems to want to be made whole and wants govt or someone else to bear the costs.

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. And if your loan is federally backed chances are those for rates payments may not be due until the end of your amortization period. That sounds a lot like what renters are getting. They can skip monthly rent in many cases but they still own the money.

All my tenants have good credit or they cannot move in. If I have a tenant who was taking advantage of this to skip rent when they did not lose their job or have some significant issue. I would put it on their credit report (the late payment). Most tenants with good credit when they realize that would just pay up.

For vacation rentals where the local government has banned them. It pretty much sucks. The insurance providers don’t cover this and the local governments seem to not care about second home owners because we don’t vote. I don’t expect this to last they peak season though. The governments do care about their voting business owners like restaurants cleaning crews etc. if they miss a whole season they are screwed and likely fold. So I expect this to open up sometime in the spring.

Mostly people need to understand that everyone is taking a hit and roll with it. Some things are more important than ones wallet.
cs412a
Posts: 111
Joined: Sun Dec 17, 2017 1:37 pm

Re: Help for Landlords in the Stimulus Bills?

Post by cs412a »

SandysDad wrote: Mon Apr 13, 2020 7:07 am ...

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. . . .

...
This is what I plan to suggest to my sister (a landlord) if tenants can't pay. I can't imagine there are any mortgage servicers that want to be saddled with real estate at this time.
Kennedy
Posts: 589
Joined: Mon Nov 10, 2014 2:47 pm

Re: Help for Landlords in the Stimulus Bills?

Post by Kennedy »

SandysDad wrote: Mon Apr 13, 2020 7:07 am

Everyone is being effected by this situation. Everyone (including landlords) are getting some help. Everyone seems to want to be made whole and wants govt or someone else to bear the costs.

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. And if your loan is federally backed chances are those for rates payments may not be due until the end of your amortization period. That sounds a lot like what renters are getting. They can skip monthly rent in many cases but they still own the money.

But here's the thing. There are lots of landlords who have paid off the mortgages for their rentals and who count on the monthly rents for their livelihood. You know, for buying food, health insurance, gas, etc. In other words, they don't have another job for which they can claim unemployment, and they don't have employees to keep on staff to qualify for the small business bail-out.

So for this group, a forbearance on a non-existing mortgage doesn't help them out at all. If the tenant is receiving unemployment PLUS the extra $600/week and is not passing along the rent portion to their landlord, the landlord is the one being shafted. Everyone else gets a bailout, except for the small mom and pop group who have paid off their mortgages and who count on the rent for their income.
Topic Author
SimpleMan68
Posts: 31
Joined: Tue Mar 10, 2020 10:19 am
Location: Michigan

Re: Help for Landlords in the Stimulus Bills?

Post by SimpleMan68 »

Kennedy wrote: Mon Apr 13, 2020 10:49 am
SandysDad wrote: Mon Apr 13, 2020 7:07 am

Everyone is being effected by this situation. Everyone (including landlords) are getting some help. Everyone seems to want to be made whole and wants govt or someone else to bear the costs.

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. And if your loan is federally backed chances are those for rates payments may not be due until the end of your amortization period. That sounds a lot like what renters are getting. They can skip monthly rent in many cases but they still own the money.

But here's the thing. There are lots of landlords who have paid off the mortgages for their rentals and who count on the monthly rents for their livelihood. You know, for buying food, health insurance, gas, etc. In other words, they don't have another job for which they can claim unemployment, and they don't have employees to keep on staff to qualify for the small business bail-out.

So for this group, a forbearance on a non-existing mortgage doesn't help them out at all. If the tenant is receiving unemployment PLUS the extra $600/week and is not passing along the rent portion to their landlord, the landlord is the one being shafted. Everyone else gets a bailout, except for the small mom and pop group who have paid off their mortgages and who count on the rent for their income.
+1. Excellent point. As I mentioned earlier in this thread, the blanket moratorium on evictions is what created the problem for this group of landlords. Without it, tenants would not feel empowered (entitled?) to not pay their rent.
SimpleMan68 | We are what we repeatedly do. Excellence, then, is not an act, but a habit.
robocop
Posts: 228
Joined: Fri Jan 27, 2012 9:44 pm

Re: Help for Landlords in the Stimulus Bills?

Post by robocop »

Kennedy wrote: Mon Apr 13, 2020 10:49 am
SandysDad wrote: Mon Apr 13, 2020 7:07 am

Everyone is being effected by this situation. Everyone (including landlords) are getting some help. Everyone seems to want to be made whole and wants govt or someone else to bear the costs.

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. And if your loan is federally backed chances are those for rates payments may not be due until the end of your amortization period. That sounds a lot like what renters are getting. They can skip monthly rent in many cases but they still own the money.

But here's the thing. There are lots of landlords who have paid off the mortgages for their rentals and who count on the monthly rents for their livelihood. You know, for buying food, health insurance, gas, etc. In other words, they don't have another job for which they can claim unemployment, and they don't have employees to keep on staff to qualify for the small business bail-out.

So for this group, a forbearance on a non-existing mortgage doesn't help them out at all. If the tenant is receiving unemployment PLUS the extra $600/week and is not passing along the rent portion to their landlord, the landlord is the one being shafted. Everyone else gets a bailout, except for the small mom and pop group who have paid off their mortgages and who count on the rent for their income.
In this situation, couldn't the landlord take out a mortgage to cover their costs? I know it's not ideal, but if they were really struggling to buy food, health insurance, gas, etc. and have fully paid off real estate, this seems to be a solution that could cover costs for quite a while.
SandysDad
Posts: 221
Joined: Wed Dec 06, 2017 7:27 am

Re: Help for Landlords in the Stimulus Bills?

Post by SandysDad »

Kennedy wrote: Mon Apr 13, 2020 10:49 am
But here's the thing. There are lots of landlords who have paid off the mortgages for their rentals and who count on the monthly rents for their livelihood. You know, for buying food, health insurance, gas, etc. In other words, they don't have another job for which they can claim unemployment, and they don't have employees to keep on staff to qualify for the small business bail-out.

So for this group, a forbearance on a non-existing mortgage doesn't help them out at all. If the tenant is receiving unemployment PLUS the extra $600/week and is not passing along the rent portion to their landlord, the landlord is the one being shafted. Everyone else gets a bailout, except for the small mom and pop group who have paid off their mortgages and who count on the rent for their income.
I think "shafted" is a bit much. Basically what you have is a tenant delaying rent payment. Thinking the gov't game him permission to (which they in effect did since they don't have to prove hardship). Do you really think "everyone" should get a bailout?
Landlords generally fall into two categories. I am a landlord myself.

Group 1. Ones who provide a nice place for tenants, treat them well, and expect tenants to do likewise. These landlords look for decent credit, and check references of current -1 landlord to get the real scoop.

Group 2. Ones who don't provide the nicest place and take tenants without decent credit.

Are you a group 1, or group 2 landlord? If you are a group 2 landlord, basically you have an adversarial type relationship w/ tenants, and yes, you will deal with tenants who skip and don't pay and it is not worth it to collect. This is part of the group 2 business plan. If you are group 1, this will not be a big problem that you cannot overcome.

if you are a group 1 landlord, you should be able to have a conversation with your tenant and ask them to pay since they are still able. If they won't you can put the delinquency on their credit and should verbally tell them thats what you plan to do at the 30 days mark. You can also discuss the timing of their checks, and align rent receivables to those dates.
if you have treated the tenant well, and they are not a group 2 tenant I suspect they would pay.

Also, if you have a paid off mortgage you should have reserves such that at 13 days since the 1st month post Corona rent was due you are not in a crises mode.

My violin is not really playing right now, given all the people in a much worse world of hurt. IMHO this falls into the "maybe I shouldn't complain" category.
SandysDad
Posts: 221
Joined: Wed Dec 06, 2017 7:27 am

Re: Help for Landlords in the Stimulus Bills?

Post by SandysDad »

willthrill81 wrote: Wed Apr 08, 2020 1:08 pm I'm adding this sort of risk (e.g. new laws unfavorable to landlords) to the list of reasons why I am not a landlord.
This was actually the #1 reason why I shrunk my own rental business.

If one does become a landlord, pick your state and city carefully. Not just current law, but likely new laws.
Kennedy
Posts: 589
Joined: Mon Nov 10, 2014 2:47 pm

Re: Help for Landlords in the Stimulus Bills?

Post by Kennedy »

robocop wrote: Mon Apr 13, 2020 11:01 am
Kennedy wrote: Mon Apr 13, 2020 10:49 am
SandysDad wrote: Mon Apr 13, 2020 7:07 am

Everyone is being effected by this situation. Everyone (including landlords) are getting some help. Everyone seems to want to be made whole and wants govt or someone else to bear the costs.

Landlords are all getting help. How? There is not a mortgage servicer out there who won’t give you forbearance on a few months payments. And if your loan is federally backed chances are those for rates payments may not be due until the end of your amortization period. That sounds a lot like what renters are getting. They can skip monthly rent in many cases but they still own the money.

But here's the thing. There are lots of landlords who have paid off the mortgages for their rentals and who count on the monthly rents for their livelihood. You know, for buying food, health insurance, gas, etc. In other words, they don't have another job for which they can claim unemployment, and they don't have employees to keep on staff to qualify for the small business bail-out.

So for this group, a forbearance on a non-existing mortgage doesn't help them out at all. If the tenant is receiving unemployment PLUS the extra $600/week and is not passing along the rent portion to their landlord, the landlord is the one being shafted. Everyone else gets a bailout, except for the small mom and pop group who have paid off their mortgages and who count on the rent for their income.
In this situation, couldn't the landlord take out a mortgage to cover their costs? I know it's not ideal, but if they were really struggling to buy food, health insurance, gas, etc. and have fully paid off real estate, this seems to be a solution that could cover costs for quite a while.
First, one generally can't take a mortgage out on a rental they own that doesn't have a mortgage. That would be a home equity line of credit, which is only for owner-occupied homes. Second, if a landlord does have a mortgage on a property and wants to take out a second mortgage or do a cash-out refi, the lender will want proof of income. If the tenants aren't paying and the landlord's only source of income is from the rentals, no lender will do a second mortgage or re-fi in this case.
Post Reply