Need to Sell Your Rental Property Fast?
We’ve got some good news if you need to sell your rental property fast. If you’re struggling with the harsh eviction moratoriums and not receiving rent, we can help. There are a couple of ways to stop slipping into chaos. But first, let’s talk about the woes of rental property owners during these very trying times.
What is in this article?
In this article, we’ll discuss current market conditions that real estate investors are interested in, including:
- Information about the eviction moratorium
- Can you evict a renter despite moratoriums?
- Landlords and loss of rental income
- What you can do as a landlord
- Learn how we can help you avoid financial chaos.
What is an Eviction Moratorium?
An Eviction Moratorium prevents landlords from removing a tenant from a property they are leasing or renting when a renter, lessee, or tenant fails to pay rent as they initially agreed to pay when it is due, either in whole or in part.
What Is the Intent of the Eviction Moratorium?
The government, in their wisdom, believes that the current eviction moratorium orders help prevent the spread of COVID-19. They think there’s an increased risk of COVID-19 spread when renters don’t pay their bills and therefore have to move. The feds base their reasoning on a Census Bureau American Housing Survey that says that one-third of evicted renters have said they will move in with family or friends. The fed also says that household transmission of COVID-19 is six times more likely than other close contacts, so increasing household occupancy increases risk.
Who Do The Moratoriums Cover?
Any lessee, tenant, or resident of a residential property who provides their landlord with a declaration under penalty of perjury that indicates:
- The individual used all reasonable effort to obtain any government assistance for rent or housing available to them.
- The individual expects to make less than $99,001 annually. Couples filing joint returns can make up to $198,000.
- The individual did not have or was not required to report income to the IRS.
- The individual received Economic Impact Payments (stimulus check) under Section 2201 of the CARES Act.
- The individual cannot pay the rent or housing payments in full due to a substantial loss in household income due to a loss of hours, lower wages, lay-off, or untimely medical expenses.
- The individual uses best efforts as circumstances may permit complete or partial payments when considering other nondiscretionary expenditures.
- Eviction could render the individual homeless or force the renter to move and live with others, provided there are no other available housing options.
The Moratorium Does Not Relive Financial Debt
The order doesn’t relieve individuals of their obligation to pay rent, make a housing payment, including any responsibility the individual has under a lease, tenancy agreement, or another similar contract. Nothing in moratorium precludes landlords or mortgage holders from charging or collecting fees, interest, or penalties for failing to pay rent or any other housing payment as agreed.
Be aware of Your State and Local Moratoriums
The federal moratorium order does not apply in and state, territory, local, or tribal area with a moratorium order in place that provides the same or better protection as the federal order. Furthermore, under 42 USC 264(e), it does not preclude state, local, territorial, and tribal authorities from imposing more restrictive requirements.
Can someone still be evicted under the current moratorium?
Yes, but under limited circumstances. The order does not prevent evictions when a lessee, tenant, or resident is:
- Engaged in criminal activity while on the premises
- Are endangering or threatening the health or safety of other residents.
- Have damaged or pose an immediate risk of causing significant property damage.
- Violate any applicable building code, health ordinance, or similar regulation relating to health and safety.
- Violate any contractual obligation other than paying rent, late payment of fees, penalties, or interest.
Criminal Penalties for Violating Moratorium Protections
Anyone violating the moratorium orders covered in 18 USC 3559, 3571; 42 USC 271; and 42 CFR 70.18 is subject to fines not to exceed $100,000, provided the violation does not result in death. Offenses resulting in death could result in a sentence resulting in one year in jail and fines not to exceed $250,000. Organizations could be subject to fines up to $200,000 when the violation does not result in death or $500,000 if a death occurs.
How Are The Eviction Moratoriums Affecting Landlords?
We recently spoke to Jack Simms, a real estate investor who owns several Denver area investment properties. Jack has become part of an ever-growing group of smaller landlords and rental investors considering cutting their losses by getting out of the rental game.
Jack told us, “I lost my job in May, and I have been struggling to support my family ever since, which was compounded by the fact that I was unable to evict a few tenants that stopped paying rent, which has topped $24,000 across several properties. I see no relief anytime soon, and I expect these tenants will end up bailing when the moratoriums get lifted. I don’t expect ever to recoup my losses.”
Is There Any Relief in Sight?
The short answer is no! President Biden has proposed “solutions” that are nothing more than talking points by promoting Section 8 vouchers. However, the program doesn’t guarantee anything, and people who qualify may still not receive it anytime soon, leaving landlords and renters in the lurch.
As it stands, eligible families wait over a year and a half for Section 8 vouchers, and for many, the delay is much longer. Many local housing authorities have chosen to run a lottery system to determine who’ll get help first. But it’s pretty clear this is not going anywhere fast, and in the end, landlords would be saddled with new Section 8 requirements, which most smaller landlords have no desire to dive in.
Deferment Payment Agreements
While payment deferment agreements are an option, many attorneys will advise that tenants not sign anything their landlord asks them to sign anything because their landlord cannot evict them anyway.
Jack tried to talk to his tenants about a deferment agreement, but they refused to sign because eviction paperwork cannot be filed due to the pandemic moratorium laws. Tenants have all of the leverage.
So What Can A Landlord Do?
- Get a forbearance: First of all, if you’ve not done so already, you should be working with your mortgage company to try and get your mortgage payments deferred. Deferring may not cover everything, but it’s the place you should start.
- Evict Unruly Renters: Eviction is still on the table in some cases, as mentioned in this article. As we’ve discussed, you can file eviction paperwork if circumstances warrant it. We recommend talking about this with your attorney before you waste time and energy going down this path.
- Borrow Money: Call Robert at Abbey Mortgage and get a loan against your equity to help with cash flow. Abbey Mortgage has helped many local real estate investors during this challenging time. If you have equity, we can probably help you, even if it is across multiple properties.
- Sell The Property: Call Robert at Abbey Mortgage to sell your rental property fast. If you need out of the game, we may buy your rental property. We’ve bought several properties recently, which has helped the investor focus on their more profitable rental properties.