What San Diego Landlords Should Know During the Current Crisis
The city of San Diego has been hit hard by the coronavirus pandemic. While actions like the closing of schools and non-essential businesses and shelter in place mandates have proven to dramatically reduce the spread and save the lives of many San Diego residents, it’s left the city’s economy in a grave state. As a result, many local business owners and investors are struggling financially. This couldn’t be truer for landlords.
As many businesses reduce their workforce and even temporarily close up shop during this crisis, there are thousands of individuals without a reliable source of income. For landlords, these changes bring to light a new reality - tenants are unable to pay their rent. Staying afloat during these uncertain times, therefore, has proven challenging for these property owners.
Landlords are, therefore, scrambling to figure out what can be done to soften the blow. To make an effective plan (if possible), property owners must first get informed about what’s happening in the city of San Diego. Here are some facts to keep in mind below:
When tenants are unable to pay their rent, landlords have a legal right to process an eviction. Though a costly process, it removes the non-paying tenant and creates an opportunity for landlords to find a more suitable renter to move into the vacant unit. Currently, however, this is not an option.
San Diego City Council President Georgette Gomez implemented an emergency ordinance that protects tenants who have been directly impacted by the coronavirus. The ordinance includes a freeze on evictions at least through the end of May 2020.
Tenants who can prove that they have lost income or suffered extreme financial difficulties from the pandemic cannot be evicted for non-payment of rent. Furthermore, tenants have at least six months to make back rent payments.
This is great news for renters, but it leaves landlords in a tough spot. Essentially, they’re required to provide free housing to tenants throughout the crisis. This, in turn, causes financial strain for landlords.
Landlords who still have mortgages on their rental properties are in a pickle. While they understand that the drastic measures taken to slow the spread of the coronavirus are causing financial problems for their tenants, not receiving rent for several months puts them behind on their mortgages. There are mortgage companies offering financial relief, but this barely scratches the surface for landlords who have multiple properties (not to mention, their own) to manage.
Many landlords who are behind on their mortgage are in a dangerous situation as property prices are going down, they are risking to go “underwater” or “upside-down” on their mortgage. This means that they will not be able to sell their property for enough money to pay off the debt to the lender and avoid foreclosure. The only way will be going through a short sale process, which is a long and complex procedure, according to HouseCashin.com.
Property Taxes are Still Due
Even if San Diego landlords are able to get some financial relief to cover their mortgages, there’s still the issue of property taxes. San Diego county has clearly stated that property taxes are still due by April 10th.
“Despite the hard times for landlords, they still have to pay the property tax before the normal deadline”, says Harry Johnson, the property tax specialist from DirectTaxLoan.com.
Though these payments are used to fund schools as well as county and city operations, landlords are struggling to make them in a timely fashion. Unfortunately, the state would have to step in to extend these deadlines and it doesn’t seem like that will be happening anytime soon.
There is Assistance Available
While a bailout for landlords during the coronavirus pandemic has not yet been solidified, there is assistance available for tenants struggling to pay their rent on time. The San Diego Housing Commission is doing everything they can to help families in need during the coronavirus pandemic.
Section 8 vouchers are available for low-income households with fewer eligibility requirements, those on section 8 will not be removed (unless a crime is committed), and individuals who didn’t previously receive financial assistance now have an option to receive rental assistance. Landlords are encouraged to make their tenants aware of these assistance programs to try and get rent paid.
Property Values are at an All-Time Low
For those interested in investing in real estate, there are now more opportunities than ever. It’s a buyer’s market as property values drop to an all-time low. Investors could stand to get properties in some of San Diego’s hottest and most prominent neighborhoods at a very good price.
For those who are looking to take advantage of the situation and acquire a duplex or triplex near the beach for a lower price than usual, this period might be a good opportunity. The prices are going down, specifically in Hillcrest, North Park, and City Heights. Pay attention to these neighborhoods, as they are the most popular in San Diego, according to this San Diego city guide.
This, of course, is only ideal if investors have the financial means to cover the cost of mortgages, maintenance, and repairs for the duration of the pandemic.
In an effort to safeguard the safety and wellbeing of San Diego citizens, no one could have predicted how much financial backlash would come with it. As these necessary changes have gravely impacted renters across the city, landlords are taking the brunt of the blow. While going back to life as normal isn’t likely to happen for some time, landlords are advised to comply with local mandates and utilize the available financial assistance resources to survive.