It is irrational behavior for these landlords to evict or pileup unrealistic future obligations. On the other side of covid it will be far better to have an existing in place restaurant or bar tenant than to try and lease space in a glut market and take on lots of tenant onboarding costs.
Paying people to spend more than they can afford in order to let them keep paying rent is a bad idea that ultimately helps only landlords.
If someone lost their job due to covid, then they need to find a new job, and that often means finding a new job somewhere else and quite possibly for different pay. Similarly landlords in areas where jobs have dissapeared need to know what the true demand is for their units so they can be priced appropriately.
Just paying money to pretend nothing has changed in each location is not good for either the rental market, or the job market, or the people who are pretending.
I’m a landlord and I don’t think that’s the average landlords rationale. Yes you become more picky regarding tenants because you don’t want to deal with an eviction. That was always the case though. You’re just going to need to carefully understand how the tenant behaved during Covid. Eg. Did the get evicted from being 18 months in arrears that they will never repay? Did they lose stable income for a period of time but now it’s back? Did the sell a billion dollar tiny house in $HUB and move to your town flush with cash and a remote work lifestyle? All very different and likely already biased groups demographically speaking.
But now, you may have some losses to recoup and this whole thing is akin to theft/shrinkage of goods. It has to get factored into the price. Also, the biggest thing pushing rental prices IMO, housing prices. Since buying is the alternative to renting, they are strongly correlated.
>Even if they think they can force the current tenant into bankruptcy and collect, there won't be much to collect after taking away the tenant's only income stream.
A lot of landlords have no choice. They themselves are businesses, often leveraged to the hilt, with not a whole lot of room to offer grace.
And yes, I realize there are massive REITs behind some of these properties, that have large earnings and reap huge windfalls for shareholders. That doesn't mean they're equipped to receive no income for months during a pandemic. It's sort of the way our economy works: right on the edge at all times.
Those landlords should get a real job in that case. They chose to treat housing like a speculative asset and it didn't go their way.
Makes zero sense to me that our pandemic response was about "keeping small businesses afloat" rather than keeping transmission low for a few weeks. I guess besides sacrificing grandma to the economy for $2 margaritas at Applebee's we should have evicted millions during winter so that landlords wouldn't be aversely affected by a pandemic. Weird how the eviction moratorium included aid for them as well, but I guess they were the real victims here and should have gotten more.
Reading the article, the owners aren't exactly rolling in it and are also depicted as mostly working class. If it wasn't for a global pandemic, most would have been fine and they would have thought to have invested very conservatively. In my mind, it's just that it's convenient/expedient to make them eat the cost of unpaid rent -
Still, in the past, when you made a mistake and got a bad tenant, the option was eviction.
You say "in the past" but you really mean "when there isn't a global pandemic". Events change things. It's simply a risk of renting property to people that very few landlords bothered to consider.
There is absolutely no reason why landlords should be immune to circumstances that affect everyone. Complaining about it, and tacitly suggesting that your rental income should be prioritized over a disease that eventually killed hundreds of thousands of people, is silly.
If the rent is relied upon to pay a mortgage, then it wouldn't be wise to wait until the pandemic is over. Landlords also have bills to pay. Rationally, this pandemic won't ever be over. The Spanish Flu still circulates.
Also, there is no particular reason to believe that jobs will spring back to where they were, if they ever do.
Except, of course, that tenants are not paying because the economy is being shut down in response to COVID. The better solution would be for the government to take over some fraction of the loans, large enough to prevent contagion but small enough to avoid zombie businesses. Not an easy balance to strike but probably the only way to see this through to the end of the crisis.
I am a landlord (part owner in a family run business) - 9 residential houses/condos/duplexes and 4 commercial buildings. We suspended rents (meaning no payment expected at all) at the start of the state COVID shutdown for some of the 9 residential properties where there was need. Since some have started paying voluntarily based on their capability. For months the commercial properties could not be open we suspended rents as well.
We have good tenants who usually pay on time and aren't problems. There is no way we'd kick them out. Quality tenants are gold. I cannot overstate this. Some tenants have rented from us for over 20 years. We've seen them lose and get jobs before, and we can all weather this one out as well, I'm sure, with cooperation.
My vacant rental property has been off the market since the pandemic started. It will not go back on the market until this ends. The government is giving renters the legal ability to squat until this is all over. Why would I want to risk end up with an unevictable tenant who could do more damage to my property during that time that their rent is worth?
I don't understand why landlords would be in a class by themselves when the pandemic hurt businesses/ventures across the board. Why are restaurants forced to close not made whole? What about factories that lost productivity? What about people that lost their lives being "essential workers"?
CA is already the biggest landlord/homeowner friendly state by far with Prop 13 screwing everyone else. Not sure why landlords charging $4000 a month for a 100 year house gets off scot free when we have business shutting down permanently from COVID.
A lot of people are in debt to their landlords due to non-payment of rent from when the economy shut down and the subsequent recession. Sure, they may have jobs now, but the "rising wages" due to the current "labor shortage" aren't significant enough to be generating an extra $10-20k for back rent for average-wage workers.
But I'm sure there's also plenty of people scared of COVID and/or using COVID as a reason to not work or pay rent and hope the whole thing works it self out.
FWIW, I think it is worth noting that a small landlord is a small business owner, and they have--in general--been screwed during the pandemic (I am not taking a position on whether this is sane or not, but I think it is important to move the discussion away from landlords as being unique victims: I can see arguments then where this framing hurts them, but also ones where it helps them).
It's not good news for landlords if they can't find tenants because they've all been blacklisted even though many would have been good tenants absent the current crisis. Landlords who have monthly carrying costs but no tenants will quickly get hit in the wallet. In the end, unless there is an overabundance of renters, the landlords are going to have to look past this event and look at data from before the pandemic.
Landlords tolerate eviction moratorium with covid because only a fraction of their tenants stopped paying.
I think a scenario where just a few million or whatever were effected you are correct. However if it was almost everyone, landlording would become a straight up mob. You'd have to employ violence and bypass the state to maintain the properties and enterprise. No one would rent out property the legal way if they couldn't collect the rents.
A landlord would not go for a rental contract that places the risk of something like a pandemic solely on their own shoulders. Those landlords more often than not financed the property (development, property costs, construction) with long term loans themselves, so they have to repay that with interest in top of what the taxman wants, payroll, etc.
It is absolutely not a landlord's job to assume the business risks of their tenants. Definitely not.
If the restaurants declare bankruptcy, yes, then there is limited ability for them to get their rent, but otherwise, the restaurants 'owe'. It may be a good idea for renters to renegotiate and for smart landlords to take heed.
But in general - contracts need to be obligated. It doesn't matter that you view the 'landlord' as 'doing nothing'. Also, in most cases, remember that land has been commoditized, it's not like the 'King' owns everything - the land was purchased for some amount, has a value, it's being 'managed' like any other asset, and if there's competition in this industry (there is a lot), the surpluses are going to be thin, just as thin as any other industry.
While there are existential issues about the 'productivity' of real estate, they don't really matter at the most local level, because the most local 'landowner' is just playing in a competitive layer of business like anyone else.
So for now - it's best to honor contracts, re-negotiate, and follow the laws.
The government may want to intervene in a 'really really smart way' but I don't see how this is perfectly possible.
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