A new White House plan to nationalize housing policy and grant renters more protection has left mom-and-pop landlords with questions and concerns.
The Blueprint for a Renters Bill of Rights lays out five principles that President Joe Biden hopes will shape future policymaking at all levels of government, with the aim of protecting renters and promoting rental affordability.
It was designed to save renters from “egregious” rate hikes, discriminatory tenant screenings, anti-competitive information sharing (especially among large corporations) and unfair evictions.
While most reasonable landlords support the notion of protecting America’s 44 million renter households — especially after house prices and rents went stratospheric during the pandemic — due to the complex nature of housing policy, the idea of a one-size-fits-all solution has been met with criticism. And in striving to protect renters, the plan might leave millions of homeowners out in the cold.
‘Frustrated’ landlords
Over 20 million of the 50 million rental units in the U.S. are owned by mom-and-pop landlords, also known as individual investor landlords.
While renters faced an affordability crisis during the pandemic — with rents rising nearly 26% nationally in 2021 — mom-and-pop landlords had their own challenges. Many rely on rent money to pay their mortgages, property taxes and other maintenance fees — but this income stream was threatened during the pandemic when the federal government temporarily banned evictions for non-payment of rent.
The eviction ban helped prevent more than 1.5 million households from becoming homeless, but that ruling, along with Biden’s newly proposed renter protections, are “at the expense of landlords,” according to the American Apartment Owners Association (AAOA).
By December 2022, 15% of U.S. renter households were behind on their rent, amassing an estimated $12 billion total rent debt, according to the National Equity Atlas, putting immense financial strain on individual investor landlords.
AAOA director Alexandra Alvarado said it’s “very frustrating” how mom-and-pop landlords are ignored by lawmakers.
“We’ve seen it for so many years … [mom-and-pop landlords] are not being treated differently, even though [housing policy] affects them much more than it would affect any large company with thousands of units,” Alvarado said on “The Big Money Show.”
Housing policy
Rental markets vary widely across the country, which is why groups like the National Apartment Association and the AAOA advocate for local solutions.
The associations are widely against rent control — which is currently being debated by nine state legislatures — because they believe it exacerbates housing shortages, causes existing buildings to deteriorate and disproportionately benefits higher-income households.
Instead, they’ve urged lawmakers to pursue alternative solutions to better address critical affordable housing shortages.
Florida, for example, is taking a pro-development approach to the problem. Under its newly proposed Live Local Act, the Sunshine State is seeking to boost funding for property owners and developers to designate more units as affordable housing, while also banning rent controls.
Regardless of where you stand in the tenant-landlord ecosystem, it’s clear that lawmakers are under pressure to update housing policy in favor of the roughly 35% of Americans who live in rental housing.
Understanding and complying with new rules is growing more challenging for mom-and-pop landlords. But there’s another way to get a piece of the real estate pie — without all of the hard work.
Invest in REITs
Investing in a real estate investment trust (REIT) is a way to profit from the real estate market — without having to buy a house or worry about screening tenants, fixing damages or chasing down late payments.
REITs are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. They collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.
To qualify as a REIT, a company must pay out at least 90% of its taxable income to shareholders as dividends each year. In exchange, they pay little to no income tax at the corporate level.
Essentially, REITs are giant landlords. Some have seriously blue chip tenants, including the U.S. government, while others house e-commerce giants like Amazon and Walmart.
Of course, not all REITs are made equal. Many took hits during the pandemic, but generally, they’re described as total return investments that provide high dividends and the potential for moderate, long-term capital appreciation.
As REITs are publicly traded, you can buy or sell shares anytime and your investment can be as little or as large as you want — unlike buying a house, which usually requires a hefty down payment and then comes with a mortgage.
Not sure what to look for? Here are three strongly performing publicly-listed REITs to get you started:
- VICI Properties, Inc. (NYSE:VICI): VICI Properties owns hundreds of gaming, hospitality and entertainment destinations across the U.S., including the iconic Caesars Palace, MGM Grand and Venetian Resort in Las Vegas. Its stock performance was up 18.8% year-over-year (YoY) on Jan. 31.
- Gaming and Leisure Properties, Inc. (NYSE:GLPI): Gaming and Leisure Properties, which owns 59 premier gaming and related facilities across 18 states, was up 19.13% YoY on Jan. 31.
- Getty Realty Corp. (NYSE:GTY): Getty Realty was up 22.58% YoY as of Jan. 31. This REIT owns, leases and finances 1,021 freestanding convenience and auto-related properties across 38 states and Washington, D.C.
More From The Real Estate Guys…
- Sign up for The Real Estate Guys™ New Content Notifcations
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Subscribe
Broadcasting since 1997 with over 600 episodes on iTunes!
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
