[pb77]

Some of these landlords also have mortgage on rental property, one of my friend had a rental property, i think he was netting $100 a month. The rest went for mortgage, property tax, maintenance and property management person. He sold it in 2014.

I don't think he could have absorbed 12 month + of non rent payment and pay all those expenses out of his pocket.

[throwaway0a5e]

That's just the risk of investing in real estate directly instead of through a financial instrument.

[toomuchtodo]

The risk of being forced to house someone for free by government edict? Who doesn’t love unfunded mandates.

[titzer]

What's the difference if it's empty? Same loss of revenue. And sure, some maintanence/upkeep for tenants, but given how fast properties rot when vacant, that's probably a wash.

Rent seeking with someone else's money? Yeah, that's risky.

[cronix]

> What's the difference if it's empty?

Was it empty though? There is a shortage in housing and it's pretty rare to have an empty rental in this market. You're injecting conditions that don't really exist to make your point.

[threatofrain]

> Rent seeking with someone else's money? Yeah, that's risky.

This point is enough.

[jressey]

Oftentimes the landlord covers utilities and lumps that up in to the rent, and I have a place in New England where that is the convention. We pay $500-$600/month for heating oil in the winter. Then we have about $300 in electricity and another $300 for water/sewage.

These numbers might be off but you get the idea.

That's the difference.

[aww_dang]

If empty you can more readily find another tenant, perhaps at a lower price?

[_-david-_]

> What's the difference if it's empty?

If it is empty then someone who is willing to pay can rent it.

[root_axis]

The government edict didn't appear in a vacuum, it was a response to a massive crisis affecting the entire country. Ultimately, from a financial perspective, this is no different from any potential crisis that could have caused a downturn in the rental market, and those risk factors are what you take on when you make rental investments.

[arrosenberg]

It doesn’t sound like anyone in the government forced them to buy a rental property that stretched their finances to the limit.

[anonAndOn]

The government changed the terms of fully executed private contracts. But as risk increases, so follows insurance. So if the government wants to abuse contract law, watch the rent, penalties and security deposits climb to compensate for any future "moratoriums".

[arrosenberg]

The government enacted emergency powers and public health laws they already possessed when those contracts were signed. Where is the abuse?

I'd be personally ok with the government bailing out smaller landlords (just because), but the largest percentage of these defaults are going to affect private equity firms who have bought an outrageous amount of the housing stock. We need to stop socializing risk and privatizing profits, and this would be a good place to start.

[anonAndOn]

The abuse was largely in the duration and indiscriminate scope, regardless of ability to pay or not.

Student loans are cheaper precisely because they cannot be discharged in bankruptcy. Rent is cheaper because of eviction. Now that we've seen the government unilaterally discharge rent through moratorium, you can expect to see that risk profile baked into an increased monthly payment.

[toomuchtodo]

The US government and their mandate without compensation or forbearance stretched their finances to the limit.

[arrosenberg]

It sounds like they stretched their own finances to the limit. The government was trying to solve a much larger problem that required indifference to the risks they took, but sometimes that’s what the government has to do. It’s the investors job to cover risk.

[tiahura]

“It sounds like they stretched their own finances to the limit. The government was trying to solve a much larger problem that required indifference to the risks they took”

Your second point sort of invalidates the first. You argue that the government isn’t the source of the harm, then justify the government action as a prudent balancing of harms.

I think the point most are making is that they were trying to solve a much larger problem, but didn’t think the problem through particularly well.

[behringer]

If you don't want to trust the government, don't buy property controlled by the government

[rolobio]

All property is controlled by government. Name me one single place where no property laws apply.

[pseudalopex]

I think that's the point.

[AnimalMuppet]

Seems to me there's a constitutional amendment against that particular unfunded mandate. (Yeah, I know, that was specifically housing soldiers. I'm not sure a court would agree, constitutionally, that the government can force you to house civilians either.)

[behringer]

Considering the current makeup of the Supreme Court, I highly doubt they would fail to make the distinction between soldiers and civilians. Aren't half of them literal constitutionalists?

[AnimalMuppet]

I doubt they're that literal... but I could be wrong.

[rolobio]

Could an argument be made under the 3rd amendment if the renter is a US soldier?

[GavinMcG]

Almost certainly not, since they're not being housed as soldiers.

[Willson50]

They also end up with a house at the end of that mortgage.

[j_walter]

They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. When purchasing a house with the intent of renting it there are rules in place to play by when calculating the risk and return...but when the government completely rewrites the rules on the fly and basically forces you to rent for free for >1 year then its a problem.

[smileysteve]

Fortunately, the owner also gets to expense the upkeep (that's a 30+% discount on future cashflows) and depreciate the improvements over a 27 year life, meaning that they have a capital loss even if the house appreciates in value.

Oh, and they also got to forego mortgage payments during the pandemic and also potentially write off the less than market rent that they were unable to evict during. (for 30+% off of the missed rent)

[j_walter]

No they didn't...they got to put off mortgage payments for a few months, and all of those became due immediately.

Expensing upkeep...writing off rent...you act like thats free money that doesn't come out of their pocket. If you depreciate the improvements, you then have to pay the taxes on it when you sell the place.

Stop acting like it's free money and there is no risk...a significant portion of landlords do not make money month to month and do this for their long term financial health. I think if you had significant money and time tied up in any investment you would be just as pissed as they are if the government changed the rules in the middle of the game.

[danaris]

Then stop acting like the government did this capriciously with no reason. The eviction moratorium was a necessary public health measure.

Now, if you want to say "well, the government should have also enacted a mortgage moratorium, and made the banks the ones who shoulder the financial burden, rather than landlords (whether individual or corporate)," I won't argue with that in the slightest. But given who "the government" was at the time, that would have been an extremely hard sell. (Even now it would be pretty difficult.)

[smileysteve]

These two statements contradict

> They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house.

> you then have to pay the taxes on it when you sell the place.

Owners only pay taxes if the gain is greater than the depreciated loss; (and if owner doesn't 1031 exchange it for another property to lose money on) so, the premise that a rented house has lost value shouldn't really intersect with a capital gain.

[smileysteve]

> Expensing upkeep...writing off rent

Expensing missed rent and eviction costs isn't free money; it does require reserves, but it does help a 1 year impact spread out over many years.

[ms512]

While that is also true, the parent post was pointing out that the landlord has a cash flow issue without rent coming in.

If they can't pay the mortgage without a renter paying, they may have the property repossessed by the bank.