On the 3rd of August, 2021, the Centre for Disease Control (CDC) issued a new 60-day moratorium on residential evictions in areas with high levels of COVID-19 infections. The agency cited the raging Delta variant as the reason for this and a survey that revealed that 6.9 million renters were behind on their rent in June. Suggesting mass evictions were likely without action.
CDC Director Rochelle Walensky noted that “the emergence of the Delta variant has led to a rapid acceleration of community transmission in the United States, putting more Americans at increased risk, especially if they are unvaccinated.” According to him, “this moratorium is the right thing to do to keep people in their homes and out of congregate settings where COVID-19 spreads.”
Unlike an investment in stock where you can choose to sell/buy any stock with the press of a button, real estate is different. There are regulations to manage, tenants to consider in all your decisions, and the returns that your investors must get. All these make investing in real estate unique.
Why does this news matter?
Reuters reported that “the order applies to about 80% of U.S. counties that have substantial or high COVID-19 community transmission rates and covers about 90% of the U.S. population.”
This comes as one of the regulations that we have to deal with as we invest in real estate in the US. So what are the implications of this regulation?
- In areas of high-level COVID-19 infection, house owners are expected to give a 60-days moratorium. Meaning renters are to stay in the house for 60 days even if they are unable to pay the rent due.
- Reuters have reported that this covers about 90% of the US population. So basically, this new regulation affects almost all house owners in the US, including our Risevest users.
- If renters don’t pay, the monthly house maintenance fee will be funded by the house owner. And the owner will equally lose income in those 60 days. For Rise Real Estate investors, that would mean a reduction in their monthly returns.
But it’s not all doom and gloom.
One, the regulation is not yet ratified and is deemed to face several legal challenges. The National Apartment Association, with 82 thousand members who collectively manage about 10 million rental units has already sued the U.S. government seeking billions of dollars in unpaid rent due to the moratorium.
Two, not all renters would be up for eviction and unable to pay rent. For instance, one of the things we put into consideration when letting out Rise properties is the ability to pay at such a time as this. And of all the properties that Risevest users own, 100% of our renters have been able to fund their rent so far with no default.
We believe the reason for the regulation is in good faith. We need to do everything possible to stop the spread of the pandemic. Yet, just like the National Apartment Association has demanded the government to make up for the shortfall, we also believe that to be a fair ask. Bearing in mind that a lot of house owners also require the rent to make ends meet. Whatever the outcome is though, be rest assured that we are on top of the situation and will do all within our power to maximize your wealth while being an ethical and compassionate landlord.