We have been writing recently about the crisis of evictions and the millions in forbearance. I found this question and answer with Doug Casey eye-opening.
Of Evictions and the Millions in Forbearance
International Man: Currently, over 18 million Americans are currently behind on their mortgage or rent payments.
That temporary suspension on evictions ends December 31st. What do you think will happen next?
Doug Casey
Just as with the financial markets, the government has no alternative but to “do something.” They will—they have to—print more money to keep the rotten house of cards from collapsing on itself.
The Democrats have already said that they want to increase the next stimulus to over $3 trillion.
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They recognize that unless they give a lot of money directly or indirectly to the hoi polloi, there are going to be millions of them on the streets.
Approximately 11 million renters and 4 or 5 million mortgages are now in forbearance. They’ll be kicked out of their houses and apartments come January 1, barring a huge bailout. Where are those people going to go?
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At this point, if they let landlords and banks kick all those people out, a number of things will happen. Residential property prices will collapse. Millions of people will be scrambling for somewhere to live. Lots of banks and landlords would go bust.
The longer the government kicks the can down the road, the bigger the inevitable bust will be. The stimulus money will have to continue because Biden doesn’t want it all to come unglued on his watch. The State is not only going to have to pay individuals and business owners that their idiotic policies have busted. They’ll be subsidizing banks, landlords, and utility companies—because you can’t live in a house or an apartment without water and electricity.
It’s worse than that because even if you cover the bare essentials, there’s no money left over for maintenance. There will be millions of buildings across the country suffering from deferred maintenance. The South Bronx, East St. Louis, and Baltimore will be replicated across the country.
And no one’s talking about how to cover the real estate taxes due on these properties. Many local governments are already bankrupt. Their expenses are going way up even while their tax income collapses.
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I’m not sure how they’re going to get out of it because the economy itself has just started to collapse. Of course, they’ll print up more money because they see that as a solution when it’s actually a cause. It’s going to worsen the collapse.
International Man: For the tens of millions behind on their mortgage and rent payments, will their back rent and overdue payments ever be repaid?
Doug Casey
The government will not only have to pay the rent for the future, but it’s going to have to cover landlords’ previously unpaid rent—if they don’t want lots of bankrupt landlords and banks.
Gloomy?
It sounds pretty gloomy, doesn’t it? Yet, on the one hand, it is a crisis and also an opportunity.
- It is a crisis because, with all the money printing, we will be experiencing a bigger pile of debt, already at $27 Trillion, but that money could lead to accelerating inflation.
- The opportunity will lead to higher prices of housing for our existing assets and foreclosures. Homeowners will need our knowledge and expertise to get through the rough times. We know how to avoid foreclosure, and we are in a position to offer immediate cash buyouts. If we have done our homework, we know how to purchase notes and work with homeowners to keep them in their houses.
Paige Panzarello, the “Cashflow Chick,” Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts, and in the Wall Street Journal as well. She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk.
Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, enjoy life, and be ready-not broken! Whether it is improving communities one house at a time, helping borrowers stay in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years potentially, Paige dedicates herself and her business to helping people improve their lives in every way. For more information got to www.CashflowChick.com.
