There is potential for people gaming anything and everything where money is involved. From the pulpit to political and charitable donations, to taxes, there will be "gaming." As long as people are involved, there will be problems. That's life.

Tenant Bob apparently can do anything he wants with his money. However, I think some percentage has to be paid to Landlord Lucy. I thought that was a stipulation in the moratorium.... I dunno. Tenant Bob is supposed to be experiencing some kind of hardship.... loss of employment, ideally Covid related. Again, I dunno.

I was looking at your chart, and I would have liked to see who is putting the stimulus in savings, and who is using it towards food and housing. Tenant Bob is most likely spending it on essentials, food. People like me, who don't need it, just set it aside, wait for the Covid to go away, and will spend it on vacations or some new toy.

As to what happens in the end, when the moratorium ends, who knows. Will Tenant Bob skip town? Anyway, unless there is divine intervention, it is extremely unlikely that Tenant Bob or anyone who has not been able to pay their rent for months obtain the wherewithal to pay all the back rent to Landlord Lucy. They might also lack motivation. Garnish wages until debt paid perhaps????? Landlord Lucy needs an advocate in high places. I have an idea, rollback those tax cuts given during the previous administration to the very rich and famous and divvy it out the revenue amongst struggling landlords (and bar owners and restaurant owners).....

Edited 1 time(s). Last edit at 02/18/2021 10:24AM by 1forum1.

@shoptastic wrote:

@1forum1 wrote:

Seems like that $1400 dollar stimulus non paying renters receive should be redirected directly to their landlords or something for example.

This was the most recent stimulus check usage polling I could find:

I mean, if the $1,400 stimulus is needed because they can’t pay rent, they were a problem even before COVID. Are we forgetting that if work is an issue, there was a $600/week stacked on top of state unemployment last year? And now it’s $300/week, which will offset most people earning lower incomes to essentially make what they’d normally make if they were working their normal hours?

Tenant Bob has bills that need to be paid this month, unlike his rent.

Tenant Bob has a car. He cannot get a stipend for gas, but he can skip a few payments.

Tenant Bob can get food from a food bank every month at no cost to him. Tenant Bob has to pay for gas and electric to keep and cook his food. These utilities have to be paid this month or next.

Tenant Bob has a few credit cards that were well managed at one point. Not any more, for various reasons.

Tenant Bob has internet, cable and a cell phone bill. Are these necessities? I say yes, most say no. Those bills have to be paid.

When Tenant Bob tallies the bills that he has the the best interest in paying, it is likely that some bills will always get paid and others will not.

Tenant Bob knows where his stimulus/unemployment/pandemic funds are going.

Here’s another aspect on real estate... Is leveraging it to pull equity from your property via Cash-Out, Refinance. Recently, I refinanced 2 of my properties, so here’s the breakdown of one of my properties with actual numbers:

2018:
- Purchased the home for $303k with 25% down (~$75k), 30 year fixed conventional mortgage.
- Total mortgage payment was ~$1,400 for principal, interest and escrow.

2021:
- Principal is now down to $244k just paying the bare minimum $1,400 mortgage over the past 2.5 years.
- For a max cashout refinance for a owner occupied home, you need 80% Loan-To-Value (LTV). Will explain below. For a rental, LTV is 70%.
- Refinance will still be a 30 year fixed conventional mortgage.
- Proceeded ahead with loan process and came back at $384k appraised value.

This means... 80% LTV = $384k * 0.8 = $307k.

Thus, “new mortgage” - “old mortgage” = cash out
$307k - $244k = $63k cash out, tax free.

And of course, close out costs. You can tinker with the interest rate, but paying more in close out for a lower interest rate, or the other way around.

In the end, closing costs will be ~$12k, but mortgage payment (principal, interest, escrow) will be -$1,600/month. And $63k -$12k = $51k cash in my pocket when it’s all said and done, and the mortgage reset to 30 years again.

And then if the house appreciates again, I’m going to repeat the process and pull cash out.

So the benefit of refinancing? You try to maintain a similar mortgage payment as your expense, write off the mortgage interest off your tax returns, and pocket equity you “cash out” with and is tax free.

Many people don’t like this mainly because cashing out and refinancing is optimal when you “reset” your mortgage back to 30 years. But my view? Pull the cash out with a similar mortgage payment, then use that money to make you more money (stocks, buying more real estate, etc.)

Hope that helps give you guys insight on the power of real estate!



Edited 1 time(s). Last edit at 02/19/2021 04:41AM by Tarantado.

What was the interest rate on the mortgage in 2018? And the rate on your new mortgage? I'm guessing it was probably a couple of percentages higher in 2018. I know current rates on a 30yr fixed is in the 3% range. The plan is easier to work if there is a change in rates from higher to lower. I think we can plan on rates slowly rising in the upcoming years.....as the economy becomes more normalized.

@1forum1 wrote:

What was the interest rate on the mortgage in 2018? And the rate on your new mortgage? I'm guessing it was probably a couple of percentages higher in 2018. I know current rates on a 30yr fixed is in the 3% range. The plan is easier to work if there is a change in rates from higher to lower. I think we can plan on rates slowly rising in the upcoming years.....as the economy becomes more normalized.

2018: 3.8%

2020: 2.6%

I mean.... My main property that I’m also refinancing again have been pretty low too....

2013: 3.5%

2020: 4.3%

2021: 2.6%

On my end, I guess I’m used to rates always being under 5% my entire time being an adult, as I’m a millennial.

Overall, the percentages haven’t budge that significantly. The main factor on why cashing out has been worth it has been more so due to appreciation of the property values. It’s actually been pretty crazy that I literally just refi’d last year in one case and somehow still pull out $70k+ since the appraisal came be another ~$85k-ish higher from just last year. That’s just the reality of the Denver market as it hasn’t honestly stopped booming since 2011? Crazy times we’re in....



Edited 1 time(s). Last edit at 02/19/2021 11:42AM by Tarantado.

@1forum1 wrote:

What was the interest rate on the mortgage in 2018? And the rate on your new mortgage? I'm guessing it was probably a couple of percentages higher in 2018. I know current rates on a 30yr fixed is in the 3% range. The plan is easier to work if there is a change in rates from higher to lower. I think we can plan on rates slowly rising in the upcoming years.....as the economy becomes more normalized.

Careful what you wish for.

A rising U.S. 10-year (global benchmark risk free rate), on inflation and reopening success expectations, is wreaking havoc on our over-levered economy. Everything crashes with rising rates:

stocks (the TINA trade reverses)
gold (...this one is weird, b/c it's nominal yields that are rising, even though real yields have been negative...but it crashes too)
bonds (losses on duration)
real estate and autos markets (withering sentiment and less applications)
corporate credit (if high yield spreads begin to gap...watch out below for all assets!)...

We'll see how long before the Fed steps in to smash these rising interest rates back down. . . it'll be a fun upcoming few months for all asset markets....

Edited 3 time(s). Last edit at 03/05/2021 02:05AM by shoptastic.

It just seems to me that various rescue laws help every business except small landlords.

I agree. The rent relief payments should go directly to the landlords.

This was a good segment today on CNBC: [www.youtube.com]

small landlords (who own just about over 50% of the country's rental homes) are struggling...11% have already been forced to sell one of their properties

Edited 2 time(s). Last edit at 03/29/2021 06:50PM by shoptastic.

@Susan L. wrote:

It just seems to me that various rescue laws help every business except small landlords.

Maybe so the Big Banks can steal their homes like in the TARP (the analog of CARES back then) rescue package of 2008-2009 ---------------------->
[www.youtube.com] (I don't remember the exact spot where Barofsky begins talking about HAMP - the mortgage modification program of TARP - but it's somewhere near the "middle" of this lecture)

I wrote about this (briefly) in the stimulus thread. Part of the "stimulus" back then involved tricking home owners into signing up for these mortgage relief plans, so the Big Banks could steal their money and foreclose on them purposely. Geithner admitted this to Elizabeth Warren when grilled (see video). Most people don't believe this until they hear the evidence... ...Obama's largest political donors were the Wall Street Big Banks in 2008-9. He appointed quite the goon in Tim Geithner to Treasury Secretary, who helped rip off American homeowners AFTER the sub-prime mortgage crash under to guise of trying to help them. The corruption and fraud detailed by Barofsky is blood boiling.

One victim was comedian Graham Elwood, who has openly talked about his case to create public awareness: -------------------->
[www.youtube.com]
He actually signed up for HAMP and was tricked out of his money (the monthly payments) + lied to and foreclosed on and lost his house. As Geithner explained Elizabeth Warren, we had to protect the Big Banks who were still struggling and could be insolvent, so they tricked homeowners and stole their homes/money/life savings.

That it happened under Obama/Biden is why main stream press doesn't cover it much.

Edited 11 time(s). Last edit at 03/31/2021 01:38AM by shoptastic.

^^^point being that if those landlords fail...guess who gets their homes?...the banks!

I have rental property that is a niche situation. I have two duplexes that are two bedroom two bath. I only rent to male felons with no families who are on parole. They have to put up first and last and I let them pay the security deposit over a few months in equal installments. I don't evict. I don't have to . Conditions of parole state they have to pay their rent and have a job. They don't pay, their parole officer puts them back in jail. My units are clean, well kept and in 12 years I have never had anyone go back to jail. I pay back in an account with their deposit 10% of the rental payment each month so when they move out they have a nice down payment on a house. To get the money they have to successfully complete parole. They agree to this stipulation. I also have rules about no women or children. Less drama and other problems. There are no parties or congregating in the front yard. One of the tenants mows and keeps up the yard for a little extra spending money. If the police are called to the units for any reason, parole is called. They know this and don't bring drama to the house. They know I mean business. i help where I can with skills like banking, job interviewing etc. They know they can call me if they are having a hard time. I don't do handouts. I will help them figure a solution but they have to be involved. They know that too. Each unit usually has two guys, one in each room. So I have a total of four parole officers coming by usually one per week. These guys have to have a recommendation from their parole officer and a recommendation from someone in the community to rent from me. This is their second chance. No one wants to rent to them. I have a waiting list. If you drove by the duplexes you would never know there are felons living there. I have the nicest places on the block. I have had 7 guys move to their own homes during 12 years and are successful members of the community. I am looking for two more to add this year, but housing is going up quickly and finding those fixer uppers cheap is not cheap anymore. Houses you could buy for $40-50K are now $150K. If you are wanting to go into this market, find a niche market is my advice.

Talking with other small landlords, and small business, it is important in coming months if you have a choice avoid millenia, woke, etc. Quite a few business are just going through the last $ of their ppe loans. Once the money is gone they will start firing people and the first to go are the millenia who have no understanding that 9-5 means 9 not 9:30 or 10AM, they are needy drama queens, tone deaf in the team's needs, need to be pampered and hold hand, little prince and princess. When I screen tenants, I find it better as a tool to google them and look at their cv and extracurricular activities than credit report.

@mmsackett...that's awesome that you do that. Wish more people could.