The COVID-19 Rent Crisis: A Colossal Problem


Photo Credit: RentEC Direct

It's the age old conundrum for landlords: How does one make rent affordable for the tenants, cover all property repair and maintenance costs, keep up with potential HOA dues and ever raising taxes, pay the mortgage on the property so the renters do not get evicted, and have enough left over to make this whole MASSIVE HEADACHE worth your time?


Most renters think that their properties are owned by these big giant faceless corporations, but most often they are owned by people like my parents, or like my uncle who owns numerous apartment complexes. Sure some corporations do own and manage apartments, but those tend to be the more expensive ones where they are absolutely confident that they will make a profit.


Most "slum lords" are individual people as a corporation would lose far more in ANY potential lawsuit than they would gain scalping low income rents against multi-million dollar mortgages (in the case of large low income apartment complexes). The ratio does not work when you add lawsuit costs in.


If you clicked on this story because of the photo and need help, please refer to the article that the above photo was taken from HERE.

 
 

Yet, why did I decide to write this article? Well, that my friend is the million dollar question, literally.


As I was looking over social media this morning, I came upon something that filled me with indignant rage and righteous fury. A person posted that because of COVID they had been able to not pay rent for over a year, funnel all of that money into a down payment, and now are buying a house because their landlord was unable to report their rents as being unpaid and harming their credit score beyond what they could cover with the down payment that they saved.


To make matters even worse, they clearly stated that they had zero intention of paying the back rent due to the landlord. I hope they know that such a statement is admissible in court and will likely cost them greatly in court, possibly against a charge of grand theft.


However even that was not enough to get me fired up to the point of writing about it, rather it was the responses that I saw to their post that truly got me angry beyond what my words are capable of expressing to you. Instead of incredulity and questions about how they could do that to another person, basically living parasitically off of them for an entire year and then detaching like a leach; the people responding were all supportive and cheering them on as if they had done something good.


Stealing $18,000 ($1,500 x 12) from someone, plus more because the landlord had to do maintenance, is not something to celebrate, and the fact that people think it is is an indictment of our society in ways that actually hurt my pride as an American.


That is right, it is causing me to want to distance myself from any association, no matter how tangential, I may have with them.


Imagine walking on to a car lot, breaking a window, and driving off in a vehicle with an $18,000 sticker in the window to the cheers and applause of a crowd.


Imagine breaking into a Best Buy and stealing $18,000 worth of electronics while a group of people watching erupt into chants of "way to go" or "you da' man!"


Imagine robbing a bank and getting out with $18,000 only to have the people on the street make a tunnel for you to run through as they celebrate you and pat you on the back.


What this renter did was no different, and to make it worse, they did so to someone who trusted them enough to let them live in one of the homes that they had purchased and cared for. That kind of trust violation drives people out of the industry, and their money along with them.


Yes, that's the really hard part for me to swallow, these people do not seem to understand that they are biting the very hand that feeds... er... houses them.


No one HAS to rent you their property. In fact, it is INFINETLY easier, and in many cases far more profitable, to just flip a property. Even if the house sits empty waiting for a buyer, your expenses are limited and you can often make up losses during the sale.


You cannot do that with a rental.


So let me paint you a picture, what happens when all of the people who currently are landlords decide that this is not worth their time. That they are not going to rent out their houses anymore and that they are going to just sell them.


Well, you end up with lots of vacant homes for sale, a lot of homeless or underhoused people, and a lot of people who do not qualify for a mortgage desperately trying to scrape together tens of thousands of dollars for a down payment to BEGIN the process of trying to find a house.


Landlords do not HAVE to rent out their properties, and in many cases it would be better for them if they did not.


If you happen to rent, imagine if your landlord just decided to stop. They decide to sell and hang a "notice of non-renewal of lease" on your door. They attach a note saying that they have decided that this is no longer worth their time and they are going to sell the home.


Oh, you will have right of first refusal, but only if you can secure a mortgage AT ASKING PRICE.


Could you do that in a year? Six months? Three months? One month?


This is the crisis that we are staring down the barrel of.


These unpaid rents do not go away, and neither do the mortgage payments that the landlords made. What happens when that corporate board decides that they lost too much money in property rentals last year so they want to liquidate that section out of their portfolio?


Yep, massive multi-million dollar complexes could potentially empty in preparation for sale, remodel, re-application, and most assuredly, higher rents than there were before.


Property owners do not set the value on the property, they buyers do. If you cannot offer what another buyer can, then you do not get the property as its value is beyond your means. Likewise, if you submitted the top bid, then the property owner has to swallow the fact that that was all that their property was worth, despite its Zillow listing.


Blaming landlords for the high cost of home prices is like blaming the farmer for the high cost of food prices. They do not control the factors that lead to those prices in any way, but they have to charge what they have to charge to stay in business.


Yet when a landlord suggests tenant paid maintenance costs as a way to keep the rent lower, they balk. When a landlord suggests a 50-50 split of repairs costs as a way to keep the rent lower, they angrily refuse. It is like they believe that the $200 a month that a landlord MIGHT get to keep at the end of the month is somehow worth so much that they should be entitled to everything.


Newsflash, my buddy Roger makes $200 in ONE NIGHT driving drunk people home from the bar with Uber and Lyft. Why in the world would ANYONE want to be a landlord and put up with that mess when they could make up the ENTIRE profit that they would lose in a few hours of work?


The end result is that they will not, eventually.


And when that happens, these people who think they are "getting over on the man" will see the other side of the coin.


Just like those who stayed home on unemployment during the pandemic.


Every choice you make, even as a group, has consequences, and when you do not think all the way through them...


...well, I guess you reap what you have sown.

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