How The Unwinding Of The CDC Evictions Moratorium Will Play Out

Despite every bad faith attempt by the Biden administration to accept the Federal Court’s decision that it’s unconstitutional, the national “masks off” policy will probably finally force a day of reckoning on June 30th – the official expiration date of the current CDC evictions order. Here is our opinion of what happens next when the eviction floodgates are opened, and how to best mitigate these factors.

An unprecedented number of eviction filings will clog the court system

There are roughly 12 million U.S. households that face eviction on July 1st. That’s many, many times the normal number who faced eviction prior to the pandemic and the bungled eviction restrictions. As a result, the courts will face the prospect of processing a quantum leap in filings. This will no doubt jam the courts shut for weeks or months. So even though the evictions window will be re-opened, it will be a long process to climb through. As evictions are heard in court on a first-come/first-served basis, the important item here is to be the first to file on July 1st. Get your paperwork ready now and get the file in position to hit the court the moment it opens. Many landlords will no doubt procrastinate and they will then hit a logjam of biblical proportions.

Take advantage of this moment to resolve these evictions amiably yourself

Since the moment will be finally here to either pay or be evicted, those who cannot pay may agree to simply leave the property or deed it over to you under a “cash for keys” arrangement in which you pay them to leave immediately and with the property in good order. This can be a win/win for both parties and saves the cost and embarrassment of evictions court. Even if you have tried this with the tenant before, the reality that the evictions moratorium is ending may sober them up to making tough choices they avoided before. And, in some cases, you may be able to alternatively strike a payment plan that includes the tenant paying a substantial portion of the past-due rent on the front end. Every situation you solve is one less you have to wait in line at court for.

A huge number of home renovations to hit at one time so plan ahead

The direct result of evictions is the resulting need to renovate these homes to get a new resident. With so many evictions happening at one time, there will be a huge demand for home renovation contractors. So get ahead of the game and prioritize which homes to hit first (do your best condition homes on the front end) and line up your crews (maybe starting right now with cash-for-keys properties). You might also go ahead and start buying the necessary supplies and warehousing them so you don’t hit any shortages in necessary parts.

Get your sales or rental process primed

The end result of a large number of move-outs will require you to offer very professional marketing and sales to get them sold again. It’s time to dust off your advertising programs and your sales/rental methodology. We recommend that you use a service like Who’s Calling to track every incoming call and to record what’s said so you can spot check your manager’s effectiveness. Time to order banners for the fence and “for sale” or “for rent” signs for the yard and windows of soon-to-be vacant homes. If you don’t know how to market on Facebook and other on-line options, time to learn how. There will be a tidal wave of ads out there when all these vacant properties hit at one time, and you need to be extremely effective to get ahead of the pack. Go ahead and do all your up-front marketing work done (such as market comps) so you can hit the ground running.

But don’t count out the government yet

Of course, we are all assuming the government will do the right thing and let the CDC order expire as planned on June 30th. But betting on the government to do the correct thing at this point is a dangerous bet. Even though the Federal Court has deemed the CDC order unconstitutional and masks are no longer required in most states, that does not mean that the current administration will end this program to rob from the landlords and give to the tenants. Let’s face it, this evictions moratorium has not had anything to do with Covid-19 for months now. It’s simply the government taking the opportunity to gain friends and voters from the ranks of those who don’t want to pay rent at the expense of private owners. Would I bet $1 that the government does the right and moral thing on June 30th? Not hardly.

And don’t ever forget the bad faith the government has shown towards landlords

When, and if, the evictions moratoriums end, let’s never forget the poor treatment that all landlords received at the hands of the U.S. government. Never before in American history has private ownership been so abused. Estimates are that the evictions moratorium has cost property owners around $180 billion. And for what real purpose? It seems odd that evicting a resident was really a major concern for Covid transmission more than, say, going to the grocery store, or that paying for groceries was more important than paying for rent. The bottom line is that we were all unfairly abused as a government sponsored attempt at wealth transfer and we should never forget it. At some point in the movie the government will want landlords to do something voluntarily and we should all refuse. Your obligation to the government, at this point, is just to the letter of the law and nothing more. Beyond that, we all paid at the office.

Conclusion

The eviction moratoriums were a terrible idea that will result in the dislocation of around 12 million households. These were households that would never have gotten behind on rent if they had been required to simply pay it monthly. It’s going to be a giant court disaster to process that many cases at one time. Smart mobile home parks should already be mobilizing their plans to get ahead of the competition. And never forget what happened here as the trust between the government and landlords has been permanently broken.

Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with around 20,000 lots spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate.