How To Win Among New Foreclosure & Eviction Bans
With new foreclosure and eviction bans being put in place, how can you continue to win as a real estate investor?
For a moment it looked like these moratoriums were over, and lenders and landlords could rush back into the market to load up on inventory. Now these bans are being extended into next year.
While some may be fearful or uncertain about the future, others continue to enjoy their best years in real estate ever, and keep on growing. How can you best navigate these times?
New Foreclosure Moratoriums
Together the FHFA and CFPB have issued new rules for mortgage servicers. They effectively prevent many foreclosures being filed until at least 2022.
They also put new pressure on servicers to grant certain terms in loan modifications.
However, note that there are exceptions. Private mortgage loans are not subject to these rules and bans. Nor are vacant properties, or those on which borrowers have defaulted during trial loan modifications.
Overall CoreLogic has been reporting that mortgage defaults have been declining since April anyway. With default rates less than a quarter of than in 2005-2008. Suggesting these moratoriums may not be necessary at all anyway.
New Eviction Bans
At the beginning of August 2021, and despite previous bans being ruled unconstitutional, the Biden administration worked with the CDC to create a new eviction ban.
This new ban is said to last until November 2021. Effectively, ensuring no tenants will be evicted until sometime in 2022 at best.
This ban is said to be selective and not apply to every county in the US. The Realtors association has already reportedly filed a lawsuit against it. Many more lawsuits are likely to follow. Though, with the government already ignoring judge’s rulings which have deemed them illegal and unconstitutional, it’s unclear how much good they will do, even if they win again.
For Landlords
Some landlords are certainly speaking out against these bans. Especially, when tenants are choosing not to pay the rent, and are spending the money on boats, new trucks and even bigger TVs instead.
However, most landlords, especially those with bigger portfolios appear to be reporting strong performance levels, with few defaults.
Of course, those that are getting the rent paid by the government in one way or another are doing just fine, even if tenants are not paying themselves.
Though perhaps one of the biggest concerns may be how to manage out of state income properties if new travel bans are reinstated as well.
Real Estate Wholesaling
Real estate wholesaling certainly seems to still be the lowest risk, and most profitable strategy among all of this.
Using transactional funding wholesalers have almost no risk in making offers and flipping properties. So, line up your funding, and find sources of properties which you can flip. Including vacant property.
As for who to wholesale deals to, you may focus on rehabbers, retail, and landlords experiencing good performance, and may be using Section 8 or short term rentals instead of old annual leases.
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