EPTHousing/Rent/Mortgage/Land Ownership Discussion Thread - P…
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ZerOCoolSC2
9010 Posts
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Blitzkrieg0
United States13132 Posts
On May 24 2020 00:02 ZerOCoolSC2 wrote: My math isn't the greatest. Is that 61 states? Are they including states in multiple categories? Also, the CARES act isn't forever. It will end and the people who were receiving those benefits will need a job. With a lot of the country slowly reopening and still with a lot of places at 25% max capacity, those people receiving UI won't get the same money they are receiving now. I don't like how that is presented either, but yes a state that exceeds 130% of normal benefits is also included in the 120% count because it also exceeds 120%. States unemployment benefits in relation to average wages 8 States under 100% 8 States over 100%, but under 110% 13 States over 110, but under 120% 15 States over 120, but under 130% 6 States over 130% | ||
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ZerOCoolSC2
9010 Posts
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GoTuNk!
Chile4591 Posts
On May 24 2020 00:22 ZerOCoolSC2 wrote: I guess to tie this back into the housing topic of the thread, there will be some tense moments as people are underemployed and just not able to make payments. As with some interviews and reports, people are choosing between food and shelter and the landlords/prop management companies are going to be looking to evict them and get new tenants in. The problem is, a lot of people still won't be able to fill those vacancies. So what are both parties to do? The government is going to need to figure something out. Not optimistic that it ends in the favor of those most impacted by this entire thing. Well if you can't find tenants at the current price you have to lower prices? (to old or new renters) Nothing sucks more for a landlord than an empty place. (or if you live outside of the us, renters who do not pay at all and it takes forever to evict them). Maybe in the US it is different, but I know plenty of small business renters who re-negotiated their rent deals, getting their current months payment cut, postponed or something in between. It is in the interest of the land lords to keep their renters afloat long term. | ||
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LegalLord
United States13779 Posts
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KwarK
United States43365 Posts
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GreenHorizons
United States23516 Posts
On May 24 2020 02:21 KwarK wrote: My employer negotiated a payment deferral. We’re paying our share of utilities and communal costs because the landlord has to pay those but we’re not paying rent for a year (after which we’ll pay the back rent, it’s deferred, not forgiven). In installments or as a lump sum if you don't mind me asking? | ||
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LegalLord
United States13779 Posts
The impending and/or current commercial real estate crisis would help fuel said desperation, of course. | ||
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Chocolate
United States2350 Posts
This is going to be especially interesting to see in SF proper because of the rent control policies. Eventually I'm sure some of the lower income rent control people will get evicted, which is actually good for landlords because they can rent out the unit for more money, but a lot of the higher end of demand will also vanish. So market rate rents go down, vacancies go up, but landlord profits may not get effected as much since they can dump their tenants which are paying significantly below market rate. I'm torn on what to make of this. I'm thinking of moving out myself when my lease expires in September, but I want to avoid a situation where all the businesses start mandating going back to the office at once, as rents will probably get squeezed as everybody rushes back. Renting in SF somewhere that is rent controlled will probably be the safest move because it lets me lock in a (relatively) low monthly payment indefinitely, which is basically something I can hold on to until I need a larger place or leave the area. Buying a condo or multi-unit rental property (like a duplex) during the dip is potentially the most lucrative but also the most risky and relies on lucky timing and a decent recovery. | ||
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KwarK
United States43365 Posts
On May 24 2020 03:06 LegalLord wrote: That’s a hell of a deal. The landlord must be truly desperate to agree to something like that. The impending and/or current commercial real estate crisis would help fuel said desperation, of course. It’s not a space anyone else can use and they’re a not for profit entity without owners to account to. They can still record the accrued revenue on the books, it’s the actual transfer of cash that is deferred. | ||
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Sbrubbles
Brazil5776 Posts
On May 24 2020 05:52 Chocolate wrote: Interestingly in my area (SF Bay peninsula) nonpayment doesn't appear to be too much of a problem, but vacancies are. Many people are able to work from home due to software dominating the local economy, but since rents are so high here, people are moving out once their leases expire to save money. Since a lot of people expect to be primarily working from home for the rest of the year, this will probably have a huge effect on the rental market, and squeeze out overleveraged property investors who can't keep up with the lowered/zero cash flow. This is going to be especially interesting to see in SF proper because of the rent control policies. Eventually I'm sure some of the lower income rent control people will get evicted, which is actually good for landlords because they can rent out the unit for more money, but a lot of the higher end of demand will also vanish. So market rate rents go down, vacancies go up, but landlord profits may not get effected as much since they can dump their tenants which are paying significantly below market rate. I'm torn on what to make of this. I'm thinking of moving out myself when my lease expires in September, but I want to avoid a situation where all the businesses start mandating going back to the office at once, as rents will probably get squeezed as everybody rushes back. Renting in SF somewhere that is rent controlled will probably be the safest move because it lets me lock in a (relatively) low monthly payment indefinitely, which is basically something I can hold on to until I need a larger place or leave the area. Buying a condo or multi-unit rental property (like a duplex) during the dip is potentially the most lucrative but also the most risky and relies on lucky timing and a decent recovery. How are these landlords able to rent the units for more money when the lower income people get evicted? Loopholes in the rent control legislation, off-the-book payments/bribes or something else? Or are rent controlled prices proportional to income? | ||
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farvacola
United States18843 Posts
On May 24 2020 06:14 KwarK wrote: It’s not a space anyone else can use and they’re a not for profit entity without owners to account to. They can still record the accrued revenue on the books, it’s the actual transfer of cash that is deferred. Accrual accounting ftw  | ||
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Chocolate
United States2350 Posts
On May 24 2020 06:17 Sbrubbles wrote: How are these landlords able to rent the units for more money when the lower income people get evicted? Loopholes in the rent control legislation, off-the-book payments/bribes or something else? Or are rent controlled prices proportional to income? The way rent control works here (to my understanding) is that any rental unit, other than single family homes, built before 1979 can only raise rents at the inflation rate - with a few exceptions for the landlord to cover increased expenses. So sometimes you get people who have been renting since long before the tech boom paying like $1000/mo for a 2bed apartment which would have a market rate rent of $4500/month. Even people who started renting in e.g. 2010 are significantly under the current market rate. The interesting thing is that rent control tied to the unit rather than the economic status of the tenant, so everybody living in these units can take advantage of it, whether they make $30k/year or $300k/year. Also once the tenant vacates the landlord can in general offer the unit at market rate - so yeah, landlords are generally incentivized to evict these people if at all possible. I might be missing some nuances but that's the gist. This has interesting effects on the market - it severely reduces liquidity because during times of rising rents, you end up paying a huge discount to the current rate, and you lose it if you move. Landlords of course want to get rid of rent controlled tenants paying well below market rate if at all possible. Having low-rent tenants actually greatly reduces the book value of a property if a landlord were to sell. Of course the rents are so high here, and given proposition 13 many landlords are actually paying extremely low taxes, that it's hard to feel sorry for these landlords. The main effect on average people is that there is very low liquidity in the market during times of rising rent, which reduces supply and hence makes prices rise faster. | ||
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Kokujin
United States456 Posts
On May 23 2020 21:12 Acrofales wrote: [citation needed] (not that I know anything about the US situation, but that's a strong statement and needs some more than a throw away one-liner post to support it) So state maximums for unemployment vary greatly from 200-800. In Nevada the state with the highest unemployment rate it is $469 weekly, in California, the state with the highest unemployment numbers, it is $450. People making minimum wage in CA get ~$180 check weekly. There is a pandemic assistance add on that adds $600 weekly to these numbers. So, for CA minimum wage workers, their unemployment handout is $780/week in CA, $3120 month which will be April-July, and pending an extension. Comparatively, full time minimum wage workers at $15, which isn't even in every county/state, get $2700 monthly. Also, this isn't even mentioning the free $1200 got. So yes, the majority of people are making more than before, at least in these 3-4 months. | ||
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GreenHorizons
United States23516 Posts
That there are millions of people (especially essential workers) making so much less than that/what it costs to afford housing in the US is shameful imo. | ||
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Belisarius
Australia6233 Posts
Here's a guy with six properties, 1.1 million owing, and who was somehow expecting to service this debt while retired. He says "People think property investors are multi-millionaires but probably about 40 per cent of them never make a profit. They're not rich, fat cats, they're just people trying to get ahead for the most part." https://www.abc.net.au/news/2020-05-23/interest-only-home-loan-reprieve-coming-from-banks/12276196 Perhaps if 40% of people doing a thing fail to make a profit, you should think twice before leveraging yourself to the eyeballs to do that thing in your freaking retirement. Especially when your tax-break funded attempts to get ahead come directly from the pool that new owner-occupiers are trying to buy from. If these people still have their shirts in a year we are officially a post-capitalist society. Too big to fail. | ||
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LegalLord
United States13779 Posts
On May 25 2020 10:49 Belisarius wrote: If these people still have their shirts in a year we are officially a post-capitalist society. Too big to fail. Definitely in the US, and in too many other countries around the world, mortgages are too big to fail. They've been traded around and leveraged so many times over within the financial system that if any appreciable number of people start defaulting on them, the whole system will melt down. What I see in the articles you saw is some bad investment decisions mixed with poor timing. In a normal world - shit happens, but the landlords should eat a loss on a bad investment. But they'd take down so many other bad investments in failing to pay that loan that they'll probably get some free money to stay afloat with the hope that the bad economic times pass quickly. | ||
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IgnE
United States7681 Posts
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Belisarius
Australia6233 Posts
I'm not opposed to bridging a going concern through the crisis. A landlord is effectively a small business. If an otherwise viable business has been disproportionately affected by the pandemic, by all means help it get to the other side. What I'm opposed to is the idea that distressed sales are, in and of themselves, worth spending public money to avoid. We all know the recovery from any downturn is partly driven by resources and human capital freed from inefficient enterprises that fail. This guy's empire is not a going concern. It has not turned a profit in 10 years. It is a zombie propped up by a ludicrously favourable tax environment, hoping to inflate away its debts. These owners were dragging their feet to the wall before the pandemic even happened. If we save them, is anything allowed to fail? | ||
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Vivax
22106 Posts
On May 25 2020 13:55 LegalLord wrote: Definitely in the US, and in too many other countries around the world, mortgages are too big to fail. They've been traded around and leveraged so many times over within the financial system that if any appreciable number of people start defaulting on them, the whole system will melt down. What I see in the articles you saw is some bad investment decisions mixed with poor timing. In a normal world - shit happens, but the landlords should eat a loss on a bad investment. But they'd take down so many other bad investments in failing to pay that loan that they'll probably get some free money to stay afloat with the hope that the bad economic times pass quickly. Deleveraging and meltdown sound so bad for the phase of the economy where savers win :| Not a fan of rent seekers who were careless, but they got incentivized to do so. Banks will take their property, central bank takes the backed securities removing the price hit for the bank, private goes bust and bank gets bailed out. Business as usual in the new normal where everyone is in it together, but some more than others. | ||
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