No matter your thoughts on how it happened, or if it should have happened, and whether you celebrated the victory or not, as of January 20th 2021, Joe Biden will be the President of the United States of America. Here are our predictions of what we will see in 2021 from him concerning landlords and real estate investors.
Eviction Moratorium extended and funds allocated to pay past due rent: We’ve been fighting it for the last 8 months here in Illinois, but unfortunately, it appears the national eviction moratorium will be extended by the new administration. However, there is a silver lining to this one. First of all, the national moratorium does allow for evictions of tenants who can not prove they were affected by COVID, and for those who are not attempting to get grant money or unemployment to be able to make their payments. Also, and this is the bigger one, I believe we will start to see more money pouring in to help renters pay back past due rent. This will be done through renter assistance programs, as well as through increased unemployment benefits. And, there is also the possibility of a real stimulus plan that is ongoing. Hopefully, the Government gets their act together quickly, and not only passes more aid, but also comes up with a good way to distribute it that does not cause more late payments to happen.
The end of 1031 exchanges: While this doesn’t affect you renting out a property, it does make it slightly more costly to upgrade your properties. There hasn’t been a ton of press on this, but one of the points in Biden's proposed new tax plan would be eliminating the 1031 exchange. This means, when you sell a building that you did not lived in for two out of the last three years, you will have to pay tax on your profits above what you bought it for. I think this may mean more landlords hold onto their property for the long term. At the end of the day, that's not a bad thing, but that's also assuming they are landlords who take care of their properties and tenants.
Impending foreclosure crisis: Unfortunately, I don’t see a way out of this one, and the longer the Biden administration holds off the dogs on foreclosures, the bigger the immediate rush of foreclosures will become. Once this ball does drop, I predict there will be a huge increase in single family homes for rent. And just like in 2008, there will be a huge increase in families looking to rent vs owning. My advice on this one: If you are able to, start stocking up on cash so you will be able to take advantage of the downfall in prices and increase in renters.
Of course, we all know that just because a politician says they are going to do something, it rarely means they will. So, all we can do is wait and see ... and hope 2021 is better for us all than 2020.