“If you don’t have a seat at the table, you’re on the menu.”
In his opening remarks at Think Realty’s Baltimore Expo this past June, Maryland State Delegate Marvin Holmes, a landlord and property manager himself, encouraged landlords to get involved and speak out for their cause.
This sentiment is what inspired me to create Landlord411 (now NAIL411). I wanted to bring visibility and clarity to our industry, which is faced with a myriad of issues that deeply impact small businesses and independent landlords.
Let’s start with some facts:
• The majority of rental properties are owned by small business and independent landlords.
• 57 percent of those properties are single-family or 2-to-4 units, which house 60 percent of the rental population, with 87 percent of those properties owned by individuals and trusts.
• Despite making up the majority in the rental housing industry, small business and independent landlords severely lack a collective spoken voice.
• Local legislation tends to permeate borders and cross into neighboring counties and then, states. Advocacy at the local and state level can and routinely does have a national impact.
There is a national cause that every small business and independent landlord should care about and rally behind: rental housing innovation. It is literally going to take an act of Congress to affect change!
I hereby submit to you an open letter written to Dr. Ben Carson, Department of Housing and Urban Development (HUD) Secretary, copied to his boss, Donald Trump, the President of the United States, and fellow cabinet member, Linda McMahon, the Small Business Administration (SBA) administrator. This letter is the basis for a petition that I’m requesting every real estate investor sign to bring this issue to the forefront of the national housing discussions.
The following is a reprint of the letter submitted by Brian Wojcik to HUD Secretary Ben Carson in September 2017.
U.S. Department of Housing and Urban Development
Attn: Secretary Dr. Ben Carson
451 7th Street S.W.,
Washington, DC 20410
Dear Secretary Carson,
Please accept my congratulations on your nomination and confirmation as HUD secretary. I’ve admired your critical thinking and courage to speak out on matters by speaking facts. Further, your allegiance to the principles of government, by the people, and for the people; and your acknowledgement that private/public partnerships can resolve some of our biggest issues.
I speak on behalf of the unspoken, the silent majority of rental housing providers – the small business and independent landlord.
The purpose of writing is three-fold. My first two points shed light on a problem our community is deeply mired in, and the third offers a solution that will require innovation in government partially involving your department, among others. If there is anyone up for the task, I’m confident that it is you, and that you’ll give it its due consideration.
First, the facts*:
• 57 percent of all rental housing in the U.S. is made up of properties consisting of four-units or fewer, and house approximately 60 percent of the rental population;
• Approximately one-third of this rental stock are buildings with 2-4 units, 87 percent of which are owned by individuals and trusts; and
• The majority of these 2-4 unit properties are priced closest to the needs of affordable housing, with over one-third renting for less than $600 a month.
*Aggregate data from Harvard Joint Center for Housing Studies and the American Housing Survey
Bottom Line: Roughly 86 percent of all rentals are buildings with fewer than 19 units that are majority owned by small business and independent landlords. Further, the majority of these rental units are priced closest to the needs of affordable housing. The 57 percent consisting of four-unit properties or less are ineligible for any SBA funding programs, a mandate that can only be changed by Congress.
Secondly, as you know, the affordable housing gap is increasing and government programs have simply not kept pace. Current programs in housing focus on new or multi-family redevelopments, with the economics for these projects in stark contrast to the need, thus missing the target supplier of affordable housing. What may not be fully understood is how the macroeconomic forces of increased rents, lower wages, and an increasing shortage of affordable housing has led to enormous and unsustainable pressure for landlords at the state and local level. They are often targeted as the reason for the problem because of a few highly visible bad actors, and thus unfairly branded as an entire community of people who take advantage of the poor.
The consequences are unfavorable policies/legislation, which invite spurious lawsuits where landlords cannot operate with confidence. At the ground level experience, I can tell you those who are informed and aware are exiting because the risks are no longer worth the reward. They are selling to the uninitiated, less experienced landlord, which further fuels the landlord/tenant acrimony. Many of these small business and independent landlords, who comprise the majority of rentals and likely the majority of affordable housing, came into this business by chance, accident, or were forced to because they are upside down on their mortgage and cannot sell their home. Many of them, part of working households with a rental property on the side, lose money because they are not aware of the astonishing volume of and variations in local landlord-tenant law. Despite tens and hundreds of tenant advocacy groups, many of which are publicly funded in part by those affected, there are few support groups for landlords. Further, I’m unaware of any courts or government-related consumer affairs groups willing to refer out help for landlords in contrast to the many groups, often housed in the courts, that refer help to tenants.
The solution I humbly offer: Commission a Joint Office between HUD and the SBA that serves the Small Business and Independent Landlord for Rental Housing Innovation.
It is my belief that the affordable housing gap can be assuaged by creating a climate of competition fostered by public/private partnership as a joint effort between HUD and the SBA. The partnership could offer access to capital, protection instruments to safeguard investments, improved investment returns, protections against unintended consequences, education resources, and incentives for responsible landlording. A competitive landscape encourages quality that will often meet or exceed government standards, simply because it’s good business practice.
The key mandate of this joint office? Improve and streamline Government operations and services to this market of small business landlords, and evaluate and eliminate superfluous cost burdens. Further, embracing natural market drivers that can encourage and stabilize investment by small business and independent landlords could help assuage the affordable housing gap.
The SBA and HUD can play a critical role in supporting investment in properties that are fewer than four units, likely responsible for the majority of available units of affordable housing. It’s my understanding that change would require an act of Congress. If enacted, the SBA could:
• Create a specialized office specific to rental housing that caters to the small business independent landlord, similar to what it has put in place for government contracting;
• Encourage investment and redevelopment in housing units that are four units or fewer through newly created lending and grant programs;
• Facilitate existing owner-occupied conversion to rental properties to support the small business independent landlord;
• Bring forth innovation in rental housing and management through SBIR funding;
• Aid in the creation or endorsement of responsible landlording programs;
• Qualify sole proprietor small business and independent landlords for services offered by the SBA; and
• Commission a study to better understand the market and needs, as current data is partial at best.
Combining internal staff resources with the private sector’s innovation and creativity could allow the Federal Government to better serve America’s housing needs. Just imagine an abundance of affordable housing that could be available to serve the growing low- and fixed-income housing markets in a naturally competitive landscape.
Federal Government funding could influence restrictive state and local level laws, to ease unnecessary burdens to allow more affordable housing providers. Further, Federal influence could encourage fair play on the distribution of block grant funding to recognize that landlord organizations which encourage responsible landlording are equally as important as tenant advocacy groups.
I’m hopeful ideological lines can meld on issues worth solving, and that nobler minds will prevail. As a representative of a grassroots movement for this community, I’d be grateful for an opportunity to detail more thoughts on this topic with you.
Respectfully yours,
Brian Wojcik
National Association of Independent Landlords
http://www.NAIL411.org
Cc: President of the United States
Secretary Linda McMahon, SBA Administrator
A call to action for you, the reader: Sign the petition at NAIL411.org.
It will take less than five minutes individually. In aggregate, it will speak volumes in the halls of Washington and show that we have strength in numbers.
Independent landlords, this is our time to get in the game, double down and play to win! We can be the cause to improve our situation. By doing good work, we can help assuage the effects on us due to the affordable housing gap. It is in our best interests to be a part of the solution. It’s time to be at the source and cause of change.
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