Challenges Landlords Face in the U.S.


U.S. Continues to Challenge Landlords

Dec. 13, 2019

There is an increasing push within our country to control the operations of "landlording". Of course legal protocol is necessary in order to regulate applicant discrimination and negligent landlords, however Kansas City, for example, seems to approach such regulations in a manner which could potentially victimize landlords via attempts to pass a Tenant Bill of Rights. The bill would prohibit landlords from tenant eviction history screening and exploring credit and criminal history without proof of just cause.

Another proposal, A National Homes Guarantee, authored by People's Action is working hard to implement a taxation on appreciation of privately owned properties. In the long run, People's Action is insistent on utilizing housing as a basic need rather than an asset which may be privately owned with hopes of developing twelve million units over the course of ten years. The problem: this is a great way to end residential development and the prospect of investing in real estate. It may even delete private home ownership altogether. While it is unlikely that People's Action will successfully implement this reach-for-the-stars plan, such an addition of units would create a deficit rather than a surplus of "necessary" homes. Here is what "the People" fail to understand: as high-end housing, once priced for wealthy buyers, ages, it falls into a category which then become affordable for lower income buyers. Also, new construction typically consists of higher caliber materials, assembled by top-notch builders. As a result, buyers of all income brackets are able to afford a home over the course of time.

Rent control is also another government imposed hardship for many landlords. The problem, in its most basic form, is that rent control largely affects the markets in which it is implemented. It's great for tenants who need something NOW, however the long term effects are somewhat horrendous: unaffordability, gentrification and an open door to criminal activity, just to name a few.

Related: What Does Flager's Fair Housing Proposal Mean for Landlords?

Landlords are people, too...

It is unfortunate that landlords are not often viewed in their appropriate light: they are businessmen and business women, too! In fact, 28.1 million U.S. real estate investors forked over $9.2 billion buckaroos in order to perform housing renos in 2012. This number doesn't include commercial renos, institutional investors nor developers and does not factor in property management fees. In addition, the cash helped to restore dilapidated properties, thus improving all-around property values within the affected zip codes. Even more importantly, more and more people elect to rent rather than buy, thus creating a tremendous need for affordability, great landlords and experienced property managers. In other words, landlords aren't going anywhere regardless of government imposed regulations.

As millennials take over the nation, more and more of them comprise the renter population of America. A large percentage of them, 12.3% to be exact, claim they will NEVER buy because they prefer the lifestyle and flexibility of rental living without the inconvenience of owning and maintaining a home and the pesky "surprise" expenses that comes with it. So, what is the point to all of this? The point is that, while there are certainly a fair share of shady landlords, the majority consist of smart business owners and investors who take big risks just like any other business owner. They experience firsthand that you can't pluck cash off a tree and they invest time, sweat and energy into building a successful business, working to gain happy, repeat customers! They accept responsibility for their investments and strive to maintain quality products while ensuring necessary prepares are addressed in a timely manner as they seek to ensure the continued comfort and satisfaction of their clients - their tenants.

Related: Investors Stand to Profit from Millennials

Here's what you should remember: U.S. government has the power to positively affect housing in general while protecting landlords. However, most efforts seem counterproductive in the long run as they diminish necessary entrepreneurial roles among rental property investors and landlords who are actively working to build and maintain successful businesses, thus providing crucial services for renters. Such government imposed restrictions only serve to worsen the affordable housing crisis.

For more information, contact Innovative Property Solutions today!

Innovative Property Solutions

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