Here Comes the Multifamily Investment Opportunity That I Have Been Talking About, and Family Offices Should Get Ready.

Ok, I am feeling a little like Nostradamus right now! I have been saying in articles, on panels, podcasts, and interviews that the wheels will fall off of workforce housing because rents have been inflated artificially due to government stimulus. I also said that this would happen in the next 3 to 6 months because there is about a nine-month lag from when there is an issue in renters being able to pay rent and when you see the actual effects. Just look below. And this is going to keep getting worse, just like I have been saying. Then tonight........................

I do happen to see an article in the opinion section of the New York Times, and I have to say it is not only confirming me but actually......well got my feathers ruffled, and I will tell you why.

It says - "Dec. 31. That's when the federal eviction moratorium — which has held the pandemic-related eviction tsunami at bay — expires. After that date, more than 30 million Americans are at risk of losing their homes." That is not a big surprise to me, and I say that because I have also been calling a problem that is coming up in the single-family home market, which NO ONE is talking about. People keep talking about how houses are being sold left and right. Well, that may be true, but has anyone tried to defer their mortgage payments when their mortgages are at either Citi, Wells Fargo, or Bank of America? These banks have the majority of home loans, and well, do you know what happens if you try to defer your payments for three months? (which they will let you do). Sure, you can defer, but AT THE END OF THE THREE MONTHS, YOU MUST PAY WHAT YOU OWE TO GET CAUGHT UP. Hello. If i can't make a payment this month, next month, or the month after, how the h**l am I going to be able to make a payment for four months?? 1 + 1 doesn't equal two; it equals Foreclosures.

"As of September, 9 percent of the nation's 48 million homeowners with mortgages were behind on their housing payments, according to the Census Bureau's Household Pulse Survey. By late October, close to 6 percent of those with mortgages were in forbearance. Many are house rich and cash poor. Distressed sales are expected, leaving housing stock up for grabs at a time when most Americans cannot afford to take on new mortgages."

The article goes on to say, "Cancel rent," the movement calling for rent strikes, is a useful tactic against the most notorious, fee-gouging corporate landlords. But close to half of the country's 47.5 million rental units aren't corporate-owned, as of 2015. These units, typically single-family homes or apartments in smaller multifamily buildings, are owned by individuals with their mortgages and bills." 

That's right; these 47.6 rental units have their mortgages and bills to pay.

"Representative Ilhan Omar, Democrat of Minnesota, introduced a Rent and Mortgage Cancellation bill. But that bill, which proposed government reimbursement for landlords and lenders who agree to adhere to fair practices, has been all but ignored. Congress isn't going to pick up the bag and pay the difference, so widespread canceling of rent is a sure path to displacement: either the landlord will evict, or the landlord will be forced to sell."

Ok, now you can look at this two ways, but what I pick up on is that "landlords will be forced to sell." So here is that opportunity that I have been talking about for a while now (well, 3-4 months), and Family Offices NEED to be having their cash ready to invest into these distressed assets.

From the Family Office Real Estate Study both in 2019 and 2020, 70% of family offices invest in multifamily properties. The question is, will it just end up being them, the buyers of these opportunities, the ones holding the bag.......or in this case holding the property.

Ok, now we get to the Part where "the experts" try to get involved, and you can guess where I am going here........and this time it comes from 

"Another viable (and more moderate) plan calls for the government to finance 10-year-long low-interest-rate loans to tenants so that they can pay their accrued back rent. The program, proposed by Gary Painter, director of the U.S.C. Price Center for Social Innovation and the Homelessness Policy Research Institute, goes on to say that "Everyone would be giving up something," Mr. Painter said. "The tenants would have to pay something. Landlords aren't going to be happy because they'd only get a percentage of the rent. But in the long run, if you had a plan, everyone could negotiate accordingly."

But in the long run, if you have a plan, everyone could negotiate accordingly??????????? OBVIOUSLY MR. GARY PAINTER IS NOT AN APARTMENT OWNER and thus has no clue what he is saying.

Look, we have a problem here. It's obvious, and it is not due to anything but the pandemic. We have not been through this before, and unfortunately, I think this is a "practice test" for the future. Still, if our smart, non-business, non-real estate holding friends in congress decide to act based upon Mr. Painters suggestion, then real estate prices will stagnate........and if it is up to him, it seems like ten years.

So the question is, is this a great buying opportunity that is coming up for Family Offices. My guess is yes, it is, but then again, does anyone have any clue on how the government will react to this issue? I have to stay optimistic and believe there will be a solution for both renters and owners, but then again, it's our government, so perhaps we flip a coin to see how this plays out.