You may have heard that Austin property investors are selling their rental properties in response to the eviction moratorium. The ban on evictions has left thousands of investors with no rental income and an inability to rent to tenants that have the money.
If you’re wondering whether selling is a premature move, it’s not. For many, selling now is their only hope of staying afloat.
Some property investors have no other sources of income and have relied on their rental profits to cover their personal bills. This includes older people who use rental income to pay for private assisted living arrangements.
If selling your Austin property has crossed your mind, it might be your best opportunity to get out before things grow worse. Especially since the moratorium has been extended once again.
The nationwide eviction moratorium extended to June 30, 2021
The CDC recently extended the nationwide eviction moratorium to June 30. Austin’s mayor, Steve Adler, extended the city’s moratorium to May 1, but landlords can’t evict tenants right away. That would violate the national order.
Instead, on May 1, Austin landlords may hand tenants a 60-day “right-to-cure” notice, to pay all past-due rent within 60 days or you can begin the eviction process. This means the first evictions in Austin will commence on July 1, 2021 unless the moratorium is extended further.
Although the extension seems helpful, the eviction moratorium is only a short-term solution to a much larger problem. Plus, the moratorium helps only tenants – it isn’t a solution for landlords.
Landlords have been given similar help through mortgage deferments, but not all lenders are participating. There has been no nationwide mandate for lenders to suspend mortgage payments, so at least some landlords are getting the short end of the stick.
Austin landlords struggle to maintain their properties
Since the first eviction ban was activated in mid-2020, landlords all over the nation have been forced to sell their properties. Without rental income, investors can’t afford to hold onto their properties.
The investors most affected by the moratorium are landlords who rely on rental payments to cover bills such as mortgages, insurance policies, and property taxes. If you were worried about paying your property-related bills back then, you’re probably even more anxious now.
The original extension back in December 2020 had Austin landlords uncertain about the future of their investments. Many landlords were reportedly harassing tenants over late rent, even though it was illegal under the moratorium.
Others decided to stick it out to see if things would turn around. But for many, it’s not working out very well.
If you’re one of those Austin landlords who tried to ride out the economic shutdowns, but you’re starting to believe it’s impossible to see it through, you may have to consider selling your property.
Sell your Austin property now to avoid the effects of a housing or economic crash
If you’ve sustained a significant hit during the COVID-19 pandemic because of the economic shutdowns, now is a propitious time to sell your Austin rental property. If you sell now, while other investors still have the means to acquire more properties, you’ll cut your losses before they get any worse.
Not every investor is in a bad position. Some have other sources of income and can afford to ride out the rest of the pandemic even without generating rental income. But if that isn’t your situation, selling may be in your best interest.
A new kind of housing crisis is on the horizon
Nobody can predict the future in detail, but most of the signs are pointing to some level of housing crisis and crash. Yahoo! Finance published a list of the top 40 cities likely to experience a housing crisis, and seven Texas cities are on that list.
Austin doesn’t appear on the Yahoo! Finance list, but San Antonio is one of the metropolises said to be at risk.
Since millions of renters are behind on rent to the tune of tens of thousands of dollars, there’s little potential for a full recovery. People have been out of work for more than a year, and the economy isn’t strong enough to support everyone returning to work.
So although the specifics are uncertain, one of two things is likely to happen:
- The eviction moratorium will be lifted, renters will be evicted, and millions of people will become homeless overnight. Or…
- The eviction moratorium will continue to be extended indefinitely until the majority of properties undergo foreclosure.
If you’re hanging onto your property because you can afford the expenses right now, that will start to change unless you have substantial funds waiting in the bank. If the economy doesn’t return to normal quickly, there may come a time when you won’t be able to afford your property-related expenses.
Not sure what move to make? You have two general options:
- Hang onto your investment property. You can hold onto your property, but if the renter isn’t paying rent, you’re losing money by the minute. If your property is empty, you can fill the vacancy by renting to someone with steady income. But even this move is uncertain, since that person’s income might disappear in the near future.
- Sell your investment property. By selling your property, you’ll cut your losses and prevent a much larger and inevitable future loss.
Ready to sell your Austin property? Green Residential can help
If you want to cut your losses before you go deeper in the hole, contact us right away. Currently, houses are in high demand in Austin and the supply is short. If you have a good property, we can help you sell it quickly and for a good price, even if the house needs repairs.
Unlike other realty companies, we don’t charge a percentage for helping you sell your home. You’ll still pay a 3% fee to the buyer’s agent, but we’ll work for a flat fee, which can save you tens of thousands.
Contact us today to learn more about how we can help you sell your investment property before it gets any later.