We live in rarified times.
I believe that to hold our Nation’s economy together and to prevent the property and other markets from going into extreme decline, we need to take stock of present circumstances and open our minds to the real events which are unfolding in front of us.
To get started. Here is a recent quote from a bulletin issued by a local law firm to its property investor clients.
“We recommend that you continue to process your Rent Demands per usual and send them to us for filing. The courts, some or all, may alter or delay the eviction process. We know for sure that Denver County is delaying the entry of judgments.”
Since they sent out that message, a HUD directive suspending eviction and forfeiture proceedings has been announced. A lot can happen in a short time when the major players are motivated. Even if it’s by ‘force majeure.’
The firm’s recommendation was/is substantially within the framework of the law as it is written.
Sadly, or fortunately, depending upon one’s viewpoint, the law is not always correct, logical, or in keeping with the times, and as I write, we are living in uncertain times.
There may soon be hundreds of rent defaulters. Not irresponsible people. Just people without the means to meet their obligations.
It was only last Monday that the Mayor of Denver and the Governor of the State of Colorado decreed that restaurants, bars, and many other gathering places be closed until 11th May.
These decrees will, hopefully, save hundreds, maybe even thousands, of lives by preventing people from mingling and becoming infected.
They will also drive thousands of businesses into bankruptcy, and put tens of thousands of employees out of work. The knock-on effects will be considerable and extremely painful.
Taking a look at today’s position from a property investor’s perspective. And for the sake of argument, let’s take a figure of 10,000 as being the number of Denver people from the catering and service industries who, as of Monday, no longer have a job or an income.
They will nearly all be rent payers or be paying a mortgage. And, if they are to eat, given that their income is now zero, they won’t be able to pay their rent or their mortgage.
The President, his advisors, and the Democrat presidential candidates all agree that there needs to be an immediate and practical financial resolution to the crisis.
Money needs to find it’s way to the people in need. But, as of now, nobody seems to know how to speedily and efficiently get the cash into their hands.
The government is talking about $1,000 or so per proven needy person. Probably not enough, and, anyway, how will each person in need prove their plight?
Thus, come the 1st April, I think it safe to predict that there will be hundreds, if not thousands, of rent and mortgage defaulters.
So, where might that leave Landlords and Lenders?
My best guess is that some of the Landlords may become defaulters themselves. And the Lenders who support them, as well as private homeowners, will also have their feet to the fire.
Accordingly, they will also need help.
There are plans afoot as I write.
Our government has said that relief plans are being put in place.
Let us hope that they don’t get buried in red tape.
If something like this does not get put in place almost overnight, then Covid-19 wins.
Hoping for the best, but not expecting it, I wish you all the very best. And I hope most sincerely that I am wrong.