“That picture of a white landlord with suitcases of money—in our case, every one has a Day Job.

Discussion in 'General Discussion' started by HK_User, May 16, 2020.


  1. HK_User

    HK_User A Productive Monkey is a Happy Monkey

    If Landlords Get Wiped Out, Wall Street Wins, Not Renters
    Bans on evictions and rent strikes could push out small investors.

    By and
    May 12, 2020, 3:00 AM CDT
    [​IMG]
    Maribeth Shields in West Haven, Conn., on May 10.

    Photographer: Jillian Freyer for Bloomberg Businessweek
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    Nobody’s bailing out Connecticut landlord Maribeth Shields.

    More than half of the tenants in the 27 low-income apartments she owns in the city of West Haven and its vicinity aren’t paying and there’s nothing she can do about it. The state banned evictions until July and allowed tenants hurt by the pandemic to defer with no penalty.

    [​IMG]
    Maribeth Shields in West Haven.
    Photographer: Jillian Freyer for Bloomberg Businessweek
    But Shields can’t pay, either. Her profit last year came to only $24,000, and now she’s behind on $1.2 million in mortgages. Like millions of other U.S. landlords, who owe lenders more than $1 trillion combined, her fate is tied to renters now urgently focused on their own self-preservation.

    “My tenants think I’m rich,” Shields says. “They have better cars than me, better nails, and better tax refunds.”

    The next housing crisis is here, and this time, it’s about rentals. Across the U.S., landlords and tenants are wrangling over next month’s rent while an approaching avalanche of evictions threatens to bury them both.

    To avert a damaging wave of foreclosures like the one that swept the country more than a decade ago, Congress included a provision in the $2.2 trillion rescue package it approved in March that allows homeowners with government-backed mortgages to defer payments for up to a year. But Washington stopped short of offering renters comparable relief on the assumption that those in distress would likely qualify for the $1,200 checks the Treasury began mailing out in April, as well as beefed-up unemployment benefits.


    In an Urban Institute survey of renters carried out from March 25 to April 10, almost half said they had experienced material hardship in the previous month.

    Many U.S. states have imposed moratoriums on evictions. But without a national rental-market bailout, the economic pain is likely to spread as efficiently as the virus that caused it, flowing upward to landlords, their lenders, and cities losing property tax revenue.

    Property Ownership in 2015 by Number of Units
    Source: Harvard University, U.S. Census Bureau

    About half of the 43 million rental units in the country are owned by small businesses such as Shields’s one-woman enterprise. Unless help comes soon, “both renters and property owners will slide down the socioeconomic scale together,” says Emily Benfer, a visiting law professor at Columbia University. “It will have a ripple effect. Rent doesn’t just go to property owners, it pays for property taxes, mortgages, and salaries for the people who maintain buildings.”

    States with large populations of renters, including California, Texas, New York, and Florida, have instituted temporary bans on evictions. But 23 others—among them Wyoming, North Dakota, Arkansas, Ohio, and Georgia—have adopted few, if any, protections for renters, says Benfer, who collaborated with researchers at Princeton University to create a state-by-state housing policy scorecard for the pandemic.

    Trade associations that represent landlords are lobbying Congress for $100 billion to cover some of the rent shortfall, with direct payments to property owners, but they have yet to unite behind any of the various proposals floating in Congress.

    Lenders could be collateral damage, particularly regional banks that often finance local property investors. At the end of 2019, there was $1.6 trillion of outstanding mortgage debt on multifamily properties in the U.S., according to Paula Munger, vice president of research at the National Apartment Association (NAA), citing a Fed study. Defaults in the last recession reached 5% and could climb to as high as 10% during this much deeper downturn, she says.

    “That caricature of the white landlord in the suit who has suitcases of money—in our case, every one of us has a day job”

    Many landlords operate on thin margins, typically 9 cents for every $1, according to the NAA, and have nowhere to turn for help if their rental income dries up. Most don’t qualify for federal mortgage forbearance, because only about a third have mortgages backed by Fannie Mae, Freddie Mac, or another federal agency. The Small Business Administration is bolstering companies that keep workers employed, but many property owners don’t have a payroll. Shields, who tours the property with a lawn mower crammed into the back of her Toyota Prius, handles most everything herself and hires contractors for the rest.

    Rich Uncle Pennybags, the Monopoly game character who tips his top hat with one hand and holds tight to a sack of cash in the other, may be the most famous landlord in America. But the stereotype is wrong. Many landlords aren’t any better off than their tenants and certainly aren’t rich enough to credibly pull off a bow tie, says Jan Lee, who manages two buildings in New York’s Chinatown that his family has owned for nearly a century.


    “That caricature of the white landlord in the suit who has suitcases of money—in our case, every one of us has a day job,” says Jan Lee, who works as a general contractor and whose family, over the years, has run a laundromat and a home furnishings store from its ground-floor retail space.

    [​IMG]
    Jan Lee on Mott Street in New York on May 8.
    Photographer: Amy Li for Bloomberg Businessweek
    Lee doesn’t have a mortgage, but he already knows he won’t be able to pay his full property taxes. And that could mean the end of his family’s legacy on Mott Street. There’s no forbearance for property taxes, and the city can impose late fees, penalties, and liens that he’ll never be able to get from under. “I’ll have bad credit, I’ll owe lots of money. My entire family’s work over three generations will be gone.”

    In Boulder, Colo., Janet Meyer and her husband are in their 60s, with a daughter heading to college. The townhouse they bought 24 years ago was at the center of their plans to fund retirement. Now they may have to dip into their retirement savings to cover the mortgage.

    Their tenants are struggling, and the Meyers want to help. Two of the three men in their 20s who share the $2,500-a-month rent lost restaurant jobs in March. The Meyers agreed to drop the rent by $400, hoping they’ll manage to keep up.

    “We rely on the rental income to make everything work,” she says. “I don’t want to imply that if our tenant doesn’t pay rent, we’re going to miss a meal. There’s a very challenging balance around what is our responsibility in the unjust class system we’re in.”

    The pandemic has magnified the inequality of the housing market, which is sparking a new era of tenant activism. In cities from New York and Los Angeles to Kansas City, Mo., where rents have been rising year after year, activists are organizing rent strikes.

    Shane Riggins, 31, who has been unemployed since March, joined the Philadelphia movement. He lost his temp job in the mailroom of a law firm. Enhanced unemployment benefits kicked in, and he was able to pay April and May rent. But now he’s talking to the other tenants about what to do next.

    While he’s sympathetic to his landlord, who has only one rental property and a mortgage to pay, he worries about saving enough money to survive the new economic crisis.


    “It’s not like we want to stick it to this landlord, who is only trying to make ends meet and pay bills, but we all lost our jobs,” Riggins says. “Every time I pay rent, it’s taken immediately and given to a bank. Is that really, in this crisis, the best use of money?”

    Renters were cash-strapped before Covid-19. It won’t take much to push many of them over the edge, says Barry Zigas, senior fellow at the Consumer Federation of America. Tenants who pay what they can are indirectly helping themselves. They’ll help keep their homes out of the foreclosure pipeline and give the landlord money to keep up with repairs, he says.

    Small investors own much of the naturally occurring affordable housing in the U.S. If they’re forced to sell or abandon properties, more of the market might wind up in the hands of Wall Street firms, some of which have built up large portfolios of rental properties over the last decade or so. New owners with deeper pockets might opt to reposition low-income units to target wealthier occupants.

    “Landlords are not a popular class of business people, for valid reasons and not,” Zigas says. “But that obscures what’s now the very symbiotic relationship of renters and owners.”

    Shields’s mortgage lenders have allowed her to postpone payments, which she fears may only be delaying the inevitable foreclosure on her loans.

    For her—or her lenders—it may also mean evicting tenants who didn’t pay as soon as the moratorium is lifted. Renters are less likely to have enough savings to make up for months of lost income, and they also lack the incentive of homeowners to try to keep up.

    “They won’t catch up,” Shields says of her tenants. “We’re never going to recover from this.”
     
    Bandit99, duane and Gator 45/70 like this.
  2. duane

    duane Monkey+++

    The failure of the rental housing industry is just the tip of the iceberg. Small businesses have been going away for years in NH, now state mostly dominated by national chains, Small businesses still in operation are not set up for structural changes, restaurant now allowed to seat 20, need 40 to break even, most of profits in business dependent on high profit drinks, which requires friends to sit at the bar in most cases, income for antiques, gift shops, etc, doesn't seem to be there any more. Wholesale sector is falling apart as no longer sells to small stores and restaurants, instead see chain delivery trucks coming from their own distribution centers. Going to be interesting times if the money doesn't start flowing in a few weeks, every one is dependent on feds for money, as the states, individuals and companies are all taped out, but how long can feds create 7 to 10 trillion a year to cover costs of all the bloated state pensions and payrolls, the payments on the Mcmansions people have bought, the hundreds of "small business" coffee shops, restaurants, as well as the personal trainers and other disguised unemployed members of the gig economy? Know of several people who have tens of thousands of dollars in college debt for "communication or business" degrees who can not even find places to submit their resumes and their attitudes and work history are such that I would hesitate to hire them as janitors at our repair shop even if they would stoop to getting their hands dirty.

    Now have members of congress calling for free housing, free medical care, free money to spend, and could care less where it is going to be raised. Funny, if I offer to give you $5 for your vote, I can go to prison, but if I give you $10,000 in benefits and say that if you don't reelect me it will go away, and it is politics as usual.
     
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  3. Gator 45/70

    Gator 45/70 Monkey+++

    The boy has 17 units, 16 are filled and the tenets have been on time so far.
    Thankfully this is only a side business!
     
  4. HK_User

    HK_User A Productive Monkey is a Happy Monkey

    The boy has two duplex, no complaints from him yet.
    Quality late model units in a growing area and in line with his way to and from work.
    So a simple drive by each day is a good idea.
     
    Last edited: May 16, 2020
    Gator 45/70 and duane like this.
  5. DKR

    DKR Raconteur of the first stripe

    "The pandemic has magnified the inequality of the housing market, which is sparking a new era of tenant activism. In cities from New York and Los Angeles to Kansas City, Mo., where rents have been rising year after year, activists are organizing rent strikes."

    and yet every time these activist types call for higher taxes to pay fro more "social programs" -- where do they think the money comes from? A money Tree?

    Fatu Hiva is looking better all the time..
    [​IMG]
     
    oldawg, duane, TinyDreams and 2 others like this.
  6. techsar

    techsar Monkey+++

    That's the plan...strip the population of any vestiges of wealth...

    Piss poor planning...

    Banks acquiring more power and money...business as usual...

    Jefferson and Madison opposed the national bank because they felt it was unconstitutional and because they felt that the centralization of financial power would weaken the monetary system of the United States...too bad others did not have the same foresight.
     
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  7. oil pan 4

    oil pan 4 Monkey+++

    Me and my wife are a lot better off than the people we rent to. Mainly because we work skilled labor jobs to the tune of 50 hours per week.
     
    Gator 45/70, techsar and HK_User like this.
  8. HK_User

    HK_User A Productive Monkey is a Happy Monkey

    I can remember when Preachers stood up the pulpit and warned about the Law change about centralized banking in TEXAS.

    Preachers warned that too much power would cause the loss os security of homes and business. That has only been since about 1970.

    Then again My Mom lived through the Depression and saw neighbors loose it all due to something they had no control of.

    Sound familiar?
     
    Last edited: May 17, 2020
    techsar likes this.
  9. DKR

    DKR Raconteur of the first stripe

    President Andrew Jackson announces that the government will no longer use the Second Bank of the United States, the country’s national bank, on September 10, 1833. He then used his executive power to remove all federal funds from the bank, in the final salvo of what is referred to as the “Bank War."

    A national bank had first been created by George Washington and Alexander Hamilton in 1791 to serve as a central repository for federal funds. The Second Bank of the United States was founded in 1816; five years after this first bank’s charter had expired. Traditionally, the bank had been run by a board of directors with ties to industry and manufacturing, and therefore was biased toward the urban and industrial northern states. Jackson, the epitome of the frontiersman, resented the bank’s lack of funding for expansion into the unsettled Western territories. Jackson also objected to the bank’s unusual political and economic power and to the lack of congressional oversight over its business dealings.

    Jackson, known as obstinate and brutish but a man of the common people, called for an investigation into the bank’s policies and political agenda as soon as he settled in to the White House in March 1829. To Jackson, the bank symbolized how a privileged class of businessmen oppressed the will of the common people of America. He made clear that he planned to challenge the constitutionality of the bank, much to the horror of its supporters. In response, the director of the bank, Nicholas Biddle, flexed his own political power, turning to members of Congress, including the powerful Kentucky Senator Henry Clay and leading businessmen sympathetic to the bank, to fight Jackson.

    Later that year, Jackson presented his case against the bank in a speech to Congress; to his chagrin, its members generally agreed that the bank was indeed constitutional. Still, controversy over the bank lingered for the next three years. In 1832, the divisiveness led to a split in Jackson’s cabinet and, that same year, the obstinate president vetoed an attempt by Congress to draw up a new charter for the bank. All of this took place during Jackson’s bid for re-election; the bank’s future was the focal point of a bitter political campaign between the Democratic incumbent Jackson and his opponent Henry Clay. Jackson’s promises to empower the “common man” of America appealed to the voters and paved the way for his victory. He felt he had received a mandate from the public to close the bank once and for all, despite Congress’ objections. Biddle vowed to continue to fight the president, saying that “just because he has scalped Indians and imprisoned Judges [does not mean] he is to have his way with the bank.”

    On September 10, 1833, Jackson removed all federal funds from the Second Bank of the U.S., redistributing them to various state banks, which were popularly known as “pet banks.” In addition, he announced that deposits to the bank would not be accepted after October 1. Finally, Jackson had succeeded in destroying the bank; its charter officially expired in 1836.

    Jackson did not emerge unscathed from the scandal. In 1834, Congress censured Jackson for what they viewed as his abuse of presidential power during the Bank War.

    "Everything old is new again"

    Money = Politics.
     
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