The Eviction Dilemma: Whose Rights Win?

Should landlords be forced to let tenants stay without paying?

In Florida, where I live, and in many other states, there’s a lot of discussion about evictions and eviction moratoriums.

As a society, we have a responsibility to help tenants who face challenges through no fault of their own and can’t pay their rent, especially the unprecedented tough times brought about by the COVID-19 pandemic.

But we shouldn’t do this at the expense of the landlords.

I don’t know the percentage of small, independent landlords versus large corporations that own huge properties, but I can’t count the number of those small landlords that I’ve known in my life.

Those small landlords who might own a few single-family homes or duplexes or fourplexes don’t deserve to have their business plan and financial security yanked out from under them by legislators who don’t understand or don’t care about practical economics.

Real estate investing 101

For the most part, landlords don’t own their rental properties free and clear. It’s not the best use of their cash. So they buy real estate with a mortgage. Smart residential real estate investing goes like this:

Find a slightly to moderately distressed property that you can get for a good price and fix up. Study the economics of the area — what can you charge in terms of rent?

Then do the math. If the rent will cover the mortgage payment, taxes and insurance, maintenance, and leave a little left over for positive cash flow, buy the property, fix it up, rent it out, and essentially let the tenants pay down the mortgage.

In 10 or 20 years (depending on the terms of your mortgage), you will have built up substantial equity in the property, and you can either sell it, pull the cash out through additional loans, or finally be at a place where most of your rent receipts are income you can keep.

Once you’ve bought the first rental property, do it again. And again.

Small, independent landlords don’t deserve to have their financial security yanked out from under them by politicians.

Portrait of an indie landlord

One indie landlord I know owns seven single-family homes. He’s had them for years. One was his first home that he kept when he and his then-young family upsized. Others he bought as he had the resources.

The rents have paid down the mortgages, and now he owns most of them free and clear. He takes care of them. He keeps all the systems in good working order; when there is a tenant turnover, he upgrades to the interiors. When something breaks, he’s right there to fix it. Being a landlord is a lot of work.

He and his wife are preparing to retire. Their plan is that the rent from those properties will be a significant part of their retirement income.

Isn’t that part of the American dream?

What would happen to their retirement if they were forced to let tenants live in their houses without paying rent?

Two sides

I don’t know much about the operations of large real estate corporations or what kind of reserves they have. But I’m sure those huge properties with hundreds of units have mortgages on them. The owners need the income from the rent to operate.

If people aren’t paying rent, they don’t have the right to stay in the property. Yes, I know there are situations when a tenant can legally withhold rent to get a problem fixed, but I’m not talking about that.

When tenants default on the rent, landlords can choose to be flexible and work out alternatives, but they also have the right to begin the eviction process according to the lease terms.

The eviction issue certainly needs attention, but there are two sides to the story.

If tenants stop paying rent, landlords won’t be able to pay the mortgages on their properties. They won’t be able to maintain the properties. And if the properties go into foreclosure, what happens? Think back to all the vacant, decaying properties after the 2008 crash — the landlords will lose their investments, the banks will lose money, and the tenants will still be struggling and possibly homeless.

I see story after story in my local media about evil landlords and equally evil legislators who won’t protect tenants. But how long should landlords be required to provide housing for people who aren’t paying rent?

Do tenants need protection? Absolutely.

They should be protected against landlords that don’t maintain their properties. They should be protected against retaliation by landlords for filing complaints when the landlords don’t hold up their end of the rental bargain.

Tenants need protection against bad landlords, but landlords need protection against bad tenants.

Both tenants and landlords need protection against severe circumstances beyond their control — like when a pandemic shutdown forces millions of people out of work or when an unexpected disaster makes the property inhabitable.

Tenants need protection against bad landlords, but landlords need protection against bad tenants.

Be sure it really is the right thing to do

Whether we are in a national crisis or looking for ways to protect individuals who fall on hard times, we need to avoid knee-jerk reactions that appear compassionate but will ultimately do far more damage than good.

We need to respect the rights of consumers in the real estate rental market, but we also must respect the rights of the property owners and the lenders who made loans based on the expectation of rental income.

Before we start sobbing, screaming, and name-calling, we need to get the facts, look at all sides, study all the potential consequences, and then make informed decisions that will create the best result.

Thanks for reading. You might also enjoy:

Here’s a little more about me:

Finally, here’s how to get a beautiful inspirational quote delivered to your inbox every Saturday: