"Squatter’s Rights:"Where Governments Side with Criminals Over Owners

Amid the nationwide scourge of squatters, owners and landlords are facing prolonged legal battles to regain control of their properties. In this newsletter, we untangle the complexities of squatting, exploring its causes, impact, and what preventive measures homeowners are taking. This month we will show you practical strategies to protect your property and explore secure alternative investment options for your portfolio.

Squatting and the Problems It Can Cause

There's a common misconception that squatting is solely associated with individuals facing financial hardships or homelessness, suggesting a lack of employment as the main culprit. However, this oversimplified view doesn't capture the full spectrum of squatting scenarios. It just as often involves someone who previously resided on the property legally and now adamantly refuses to vacate.

More commonly, it is an individual who unlawfully enters a property, seizes control, and strategically employs legal maneuvers to prolong the eviction process. Adding to the complexity, Dr. David Phelps, founder of the real estate investing community Freedom Founders, notes that squatters usually inflict damage on the property during this occupancy period or, at the very least, leave significant amounts of garbage. All of this is expense passed on to the owner no matter the outcome of the squatter’s case.

Squatting Hot Spots

When it comes to investing in real estate, it's important to be aware of where people can easily occupy a property without permission. Laws about this vary by state, affecting how easily property owners can remove squatters differently by location.

Some states like California, Oregon, Washington, and New York, provide more legal protection to squatters. This makes removing squatters a tougher and longer proposition for property owners to evict them. So, if you're a property owner or investor, it might be a good idea to think twice before investing in places that strongly support squatters or that are tough on landlords.

On the flip side, there are states like West Virginia, Indiana, South Carolina, Florida, and Texas, where the laws make it easier for landlords to kick out squatters. Many large cities have additional restrictions on property owners, like New York City, NY; Chicago, IL; Minneapolis, MN; Denver, CO; Atlanta, GA; Austin, TX; or Los Angeles, CA. See the "Squatting Hot Spots" chart for details. Being aware of these differences in state and city laws helps investors make smarter decisions and avoid potential problems.

Why Squatting Is Happening More Often Today

The surge in squatting incidents today can be attributed to the challenges posed by inflation, despite the robust U.S. economy. Specifically, the cost of shelter, which includes rent and other homeownership expenses, has been influenced by inflation since January 2021. Initially, shelter costs rose at a slower pace compared to other goods in the consumer price index (CPI). However, in November 2022, a tipping point was reached, with both shelter costs and the CPI experiencing a simultaneous 7.1% annual price increase.

From that point, shelter costs reached their peak with an annual price hike of 8.2% in March 2023, consistently remaining at higher levels than the CPI until today. For a more detailed breakdown, refer to the "Shelter Price Increase Above CPI" chart.

Home prices and rent have been continuing to climb steadily across the country. Consequently, faced with the escalating costs of traditional housing, some individuals have turned to “alternative housing arrangements, “ like squatting. In January 2024, the cost of shelter recorded a 6.0% annual price increase, while the CPI came in at nearly half the rate of inflation of only 3.1%. Both indicators came in above expectations, creating an even higher incentive for people to live on someone else’s property without paying rent.

Squatting Tactics

Squatters employ crafty tactics to seize control of vacant properties without permission. Upon discovery by the property owner, who contacts the police, the squatter may present a forged lease and claim to be a paying tenant, creating the appearance of lawful residence. Unable to make an immediate legal determination, the police must refer the case to the courts. This clever maneuver benefits the squatter, affording them months or even years of free housing during the lengthy court decision process.

In certain instances, organized crime groups actively browse online for indicators that a property is vacant, such as records indicating it is up for sale, facing foreclosure, or the owner has passed away. Subsequently, they exploit this information by selling it on social media to individuals interested in squatting in empty properties, typically for a one-time payment. These strategies employed by squatters and organized groups contribute to the complexity of addressing this issue in the real estate landscape.

Squatters rely on the backlog within the legal system, anticipating significant delays in scheduling court hearings. When a legal hearing does eventually take place, the squatter intentionally fails to appear in court, further prolonging the legal process, and providing them with additional rent-free time in their illegally occupied property.

Preventative Actions You Can Take

Implementing preventive measures is crucial to ward off squatters and protect your property. To create the illusion of occupancy, maintain a well-kept yard and regularly empty the mailbox, giving the impression that someone is actively living on the premises. Enhance security by installing motion lights, an affordable yet potent deterrent that makes unauthorized access more challenging without detection. Physically secure your property by diligently locking doors and windows, reinforcing the first line of defense against potential intruders.

Establishing a positive relationship with local law enforcement, particularly the night shift, is another effective strategy. Ensure they are familiar with your property's location and aware that no one should be there. Additionally, prominently display 'no trespassing' signs on your property. This not only communicates a clear legal stance but also provides law enforcement with the authority to detain and remove anyone found on the premises without authorization.

These proactive measures collectively help to improve your property’s security against the threat of squatting.

What Does it Mean for Investors?

Consider options other than regular property ownership and renting to lower the risks of dealing with squatters. First trust deed lending is a good choice because it puts the risk of squatters on the borrower, ensuring the lender gets paid no matter if the property is occupied or not. The loans are conservative with low loan-to-value ratios of 65%, so there's enough money set aside in case the property needs to be sold due to squatters. These loans are mainly for properties in states that favor landlords. Be a lender rather than a landlord.

Safeguard offers competitive rates, starting at 10%. Importantly, these investments remove the risk of not having enough cash on hand, giving investors a stable and worry-free ownership experience. In a high-interest environment, borrowers compete, and lenders win.

With our team's 20 years of experience in helping people build wealth, we're here to assist you in making the most of your investments. Reach out to Safeguard today at 877-280-5771 through a call or email, and let's work together to make your money work for you!

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