Just a Landlord

There are those who see rental housing as a zero-sum game — the only answer to the COVID rental economic crises is to have the property owners absorb all the lost rent.  

What we learned from looking at the September 2015 and May 2019 Milwaukee County eviction data that less than 2.4% of eviction judgments are paid even after five years, with less than seven tenths of a percent paid within six months.  

So when you read of $50-120B in rent debt due before the economy returns, that means someone is expecting $47.5B to $117B will be borne by housing.  

The right answer is for renter advocates and housing advocates to work in unison to get the funding necessary to prevent evictions and stabilize rental housing .

If the rent is paid, people will not need to worry about eviction, nor will they have to worry that rental housing will fail, also leaving them homeless and facing higher rents in the future. And let’s not forget the cost of housing foreclosures on municipal budgets.

There is a revision to the 1099 link:

Kim here from Best Accounting Software.

I noticed a broken link on this page – http://justalandlord.com/2011-irs-form-1099-revisions/

The IRS now has a section for self-employed individuals with all sorts of tax guidance, perhaps you’d like to update your page to point people to – https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

In 2010 two laws revised the 1099 requirements  effective for payments made after 1/1/11 ( 2012 tax year)

The 2010 Small Business Act extends the 1099 requirement to all rental property owners. Prior to 1/1/2011 small rental property owners were exempted from the aw.  It appears very unlikely that this provision will be reverted.

The 2010 National Health Care Reform Act P.L. 111-148 (a.k.a. Obamacare) extended the 1099 requirement to all purchases of GOODS (previously the requirement applied only to services.) This bill also eliminates the exemption for if the party you paid was a corporation. An attempt to reverse this portion of the Health Care Bill in December failed, but now that evenPresident Obama is considering fixing parts of it, so it may change.

The Apartment Association is collaborating with Community Advocates, Legal Action, Legal Aid, Mediate Milwaukee, Impact, Hope House and others, working towards finding resources that help renters, and therefore property owners, succeed.

Here is the kick off video that I participated on:

Milwaukee Rental Housing Resource Center Info Session

Maybe that’s why experts who specialize in housing policy have begun to talk with increasing excitement about a third way that President-elect Joe Biden put forward in his campaign platform. Under his proposal, every cost-burdened, low-income family would receive a check to bridge the gap between their actual rent and the rent they can afford. The impact would be immediate.

“It would be like food stamps, but for housing,” explained Anne Fadullon, who directs Philadelphia’s Department of Planning and Development, and is a fan of the proposal. “If you qualify, you get it.”

https://fusion.inquirer.com/columnists/philadelphia-affordable-housing-rental-assistance-section-8-vouchers-biden-policy-parkway-encampment-trump-20201124.html

Two must view videos.  They tell our story well and the quality of the video work is great.

Have your own story that you want to share?  Send me your contact info to tim@apartmentsmilwaukee.com and I’ll put you in touch with Nick Sakalis, who produced these.  

If you want to share this or any other housing concerns with your elected officials, go to democracy.io and enter your address.  The site allows you to write to both your US Senators and your Congressperson at the same time without searching for their emails or finding who represents you.

We should be asking for housing assistance to prevent the failure of both renters and housing.

If you do write – I’d appreciate if you send me a copy to Tim@ApartmentsMilwaukee.com

Notes on housing, supported by reliable sources such as Census.gov

74.4 % of rental properties owned by individual investors. Source: https://www.census.gov/newsroom/press-releases/2017/rental-housing.html and in an easier to read format in this report from Harvard: https://www.jchs.harvard.edu/blog/who-owns-rental-properties-and-is-it-changing

55% of rental units as owned by part-time landlords: https://www.avail.co/education/articles/state-independent-landlords-2017

Rent debt will be $25-34B by January 1st. https://www.ncsha.org/resource/current-and-expected-rental-shortfall-and-potential-eviction-filings/ 

roughly 10 – 14 million renter households — home to 23 – 34 million renters — were behind on their rent by a total of roughly $12 – $17 billion as of September 14, 2020.

These renters will owe $25 – $34 billion by January 2021,
(from a chart just below the P1 fold)

More State-Specific info at: https://assets.aspeninstitute.org/content/uploads/2020/08/chart3_fsp.png

Local economic multiplier of rent payments from a report by Brookings Inst.
 

RENT HAS IMPORTANT MULTIPLIER EFFECTS IN THE LOCAL ECONOMYRent checks don’t just line the pockets of fat cat landlords—they also contribute to essential government services and other workers’ wages. If many households are simultaneously unable to pay rent, the economic impacts will be felt throughout the local economy.

The first entity that gets paid by a monthly rent check isn’t the landlord—it’s the local government. Property taxes have a higher priority even than mortgages; if a landlord falls behind on both property taxes and mortgage payments, the local government’s claim supersedes the lender’s.

Cities and counties rely on property taxes from all their constituents—individual homeowners as well as owners of apartments, offices, and other nonresidential properties—to cover the cost of providing public services. Although local governments could defer property tax payments during the current crisis, the pandemic is already stressing local government budgets. Cities are front-line providers of health care and emergency services, and also need money right now to feed children whose public schools are shut down and care for older adults and vulnerable populations.

https://www.brookings.edu/blog/the-avenue/2020/03/25/halting-evictions-during-the-coronavirus-crisis-isnt-as-good-as-it-sounds/ 

Census reports that the average rental unit generates $1,198 per unit per year in wages.
https://www.census.gov/data-tools/demo/rhfs/#/?s_byGroup1=12&s_tableName=TABLE4&s_type=2
Mean Payroll Costs for Employees Per Housing Unit 1,198

We can fix evictions for what it costs to allow the problem to continue
https://assets.aspeninstitute.org/content/uploads/2020/08/Evictions-Data-Update-August.pdf

Providing shelter and services to a family experiencing homelessness can cost local governments $10,000,[1] which is more than the $9,120 average annual cost of one housing voucher to the federal government[2] 

[1] Evans, William, James Sullivan, and Melanie Wallskog. “The Impact of Homelessness Prevention on Homelessness.” Science, 333:6300 694–6999, 2016. https://science.sciencemag.org/ content/353/6300/694.full.

[2] U.S. Department of Housing and Urban Development. “Snapshot of Housing Choice Vouchers, 2016,” June 2018, https://www.huduser.gov/portal/elist/2018-june_08.html. 

Impact of the 2008 housing crises on Milwaukee

The following is from a letter we wrote to Milwaukee’s mayor.  It outlines some of the economic factors of rental housing and the harm that will come if there is a mass failure.  In 2008 smart money could see prices rising over a two and a half year period at a rate not sustainable by wages.   In 2020 the economy was screaming, then two weeks later it stopped. The suddenness of the event is a recipe for disaster.

If action is not taken to avert this, the aftermath of 2008 will look like a walk in the park on a sunny day.

A December 2019 Milwaukee Dept of City Development report  stated “The economic impact of the Great Recession and mortgage foreclosure crisis has had a significant, detrimental, and ongoing effect on City households.” DCD 12/2019.[ii]  Foreclosure filings in Milwaukee County were three times higher in 2009 than last year.[iii] From 2008 through 2010,16,000 Milwaukee properties were in some stage of foreclosure by lenders and the city.[iv] In those two years, the tax base lost almost $2 billion in value, with a resulting $16.7 million loss of tax revenue.  The resulting demolitions had a large impact on the City’s budget due to the cost of razing along with the impact on the property tax and municipal services collections.[v] The neighborhoods where those properties were located suffered long-term damage.  We continue to feel that impact even today, and we certainly hope to avoid a similar outcome in the future.

[ii]Section 2: Housing Needs and Demand Housing Affordability Report Department of City Development  |  December 2019 https://storymaps.arcgis.com/stories/eb043b089173407aa469eba948dd9601

[iii] State’s Foreclosure Rates Have Plummeted » Urban Milwaukeehttps://urbanmilwaukee.com/2019/07/11/states-foreclosure-rates-have-plummeted/

[iv] www.sewrpc.org/SEWRPCFiles/HousingPlan/Files/foreclosure-in-milw-progress-and-challenges.pdf

[v] Tom Barrett wants to spend $2.4 million on home demolition, rehabarchive.jsonline.com/news/milwaukee/barrett-wants-to-spend-24-million-on-home-demolition-rehab-b9933176z1-211401301.html/

Household debt was at a moderate level relative to income before the public health shock, but many households have lost jobs and seen their earnings fall. As many households continue to struggle, loan defaults may rise, leading to material losses.  

https://www.federalreserve.gov/publications/files/financial-stability-report-20201109.pdf

https://www.greaterohio.org/publications/2020/11/4/local-interventions-for-eviction-prevention-and-why-they-are-needed

The Greater Ohio Policy Center (GOPC) has released Local Interventions for Eviction Prevention and Why They Are Needed, a guide for laying the groundwork to support Ohio renters and prevent evictions related to the COVID-19 crisis. 

Experts anticipate a tsunami of evictions to begin in January 2021. Given the limited state dollars available and the uncertainty of additional federal dollars, local governments must take the lead to protect their residents. This Working Paper profiles interventions from around the state in order to provide ideas and templates for communities that need housing stabilization programming.

https://static1.squarespace.com/static/59396fee59cc6877bacf5ab5/t/5fa3267c92abc63d53774755/1604527743492/Local+Rent+Assistance+Working+Paper.pdf

Some interesting concepts.  One is Pay and Stay, which I would support:

Community Spotlight: Pay to Stay Ordinance, Village of Yellow Springs Under “Pay to Stay,” a landlord is obligated to accept back rent (including reasonable late fees and court costs) up to the point where the bailiff is knocking on the door to begin physically removing tenants’ belongings. Pay to stay prevents a landlord from evicting a tenant where the tenant can pay back rent and reasonable late fees prior to the eviction judgment. If the eviction has been granted, the tenant can stop the eviction by paying back rent, reasonable late fees and court costs.

Featuring: How To Navigate Eviction Moratoriums

We are excited to announce Attorney Tristan Pettit’s Landlord Boot Camp will be held on November 14th, 2020. 

Due to recent changes impacting the CDC National Eviction Moratorium, we delayed the event to include the most timely information on navigating the current Moratoriums. 

The Saturday, November 14th event will be held as a live-streamed webinar from 8:30 AM -5:00 PM with live Q & A from 5-6 PM. 

Enjoy these advantages of the new virtual format:

• Attendees will receive a searchable PDF Boot Camp manual, making it easier to search and reference items in the future.
• A recording will be available to attendees for 14 days after the event to re-watch portions that you want a deeper understanding of.
• Attend the event from the comfort and safety of your home. 
• As in prior Boot Camps, the live Q & A session is part of this event.
• You will receive all of the same information normally presented in Landlord Boot Camp PLUS the latest information on navigating the CDC and CARES Act eviction moratoriums. 

For pricing and registration click here:  

https://aasew.org/event-4043452

www.aasew.org

Since June I’ve been saying that the COVID economic crisis is going to make 2008 look like a pleasant walk through a park on a sunny day. Sadly more and more indicators are pointing to that being the case.

In 2005-2008 smart folks could see that housing prices were unsustainable and either sold, like many of my buddies did, or at least stopped buying.

In 2020 the US and world economies were flying high. Then in a matter of a couple of weeks, everything came to a sketching stop. This was unpredictable and no one was prepared. This was compounded by the dysfunction of our federal government.

Even without eviction moratoriums, rental housing providers will fail. With the government pushing this entirely onto the back of the property owners I see a future of much higher rents and municipalities struggling to survive right alongside the property owners.

Forbes has a great article outlining the precarious conditions facing the housing market.

Mortgage delinquency rates are at a 20-year high  worse than the 2008 high if that tells you anything (and it should), and there are predictions that at least two million mortgages will soon go into default. And that is just the tip of the iceberg, as an estimated six million folks missed their mortgage or rent payment in September. The economic news isn’t too hot either, as the so-called “third wave” of coronavirus cases that is beginning to his the U.S. is already proving to be the worst yet.