Happy New Year!
One week into 2021 and we continue to wish everybody a very happy New Year! It is certainly a powerful message after the year we just completed.
As the new year kicks off a few thoughts for what residential investors should be planning for their portfolios.
1. Continuing eviction moratoriums. At what point will enough Americans be vaccinated to allow governments to determine there is no longer a health emergency? That likely is when we can start to see the ability to remove non-paying tenants.
2. The CDC Declaration is being touted for every eviction case...even when the tenant is perjuring themselves with claims of having a COVID related hardship. Until somebody successfully mounts a claim against a specific claimant that they were not affected, nobody is going to do more than just ask. Do landlords want to spend additional legal fees to challenge a tenant with a federal protection umbrella?
3. Despite clear language in the CDC Declaration that it does not cover lease violations, a significant percentage of Judges will not hear such a claim from a landlord if the tenant has presented the CDC declaration. It seems unlikely that this situation will improve.
4. The only remaining option for landlords is to negotiate cash for keys with their non-paying tenants who file the CDC. This will hurt pocketbooks but if the above is correct it may be financially prudent. In recent cash for keys discussions though tenants know they have the advantage and are demanding several thousand dollars to even discuss.
5.Tenant screening is more important than ever. If you are using a PM or renting your property yourself, take the extra step to verify each and every bit of information. We are now seeing very convincing fake paystubs and verifications with fake information.
With all of this news...here is the good news.
2021 will be a year where opportunistic real estate investors can find value unlike what has been seen in the last few years. Fortunes are made in real estate when times seem the worst.
It has become well documented that residents of expensive cities (Chicago?) are moving to more affordable markets (Indianapolis). Not only is it more affordable but with the ability to work from home small and mid-size markets are seeing a boom in growth. Additionally, people want more space and in markets like Indy you can rent or buy a lot more space for your money. Check out the color coded map in this report to see how this trend is developing.
Figure out your plan now. Are you going to look for opportunity or sit this time out? A lot is not known about how this year will look but we have seen the opportunity. Many investors have gotten out and moved on. Similar to the period of 2007-2010, a new crew of real estate investors are ready to bloom
If you want to be one of them, let us know. We are specialists at finding creative solutions for real estate investors.
To Your Health!
WILMOTH Team
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