Property Rights Under Siege: Homeowner Arrested
In a recent incident in New York City, Adele Andaloro found herself in a legal battle over her family’s cherished home in Flushing, Queens. After inheriting the property following her parents’ passing, she took action to protect it by changing the locks on squatters to keep them out. However, instead of support from the police, Adele was arrested for an ‘unlawful eviction.’ Her case serves as a cautionary tale, highlighting the delicate balance between protecting investments and adhering to legal procedures. Property rights are under siege in some parts of the country, prompting us to compare them across the U.S.
How Property Rights Vary Across the United States
To illustrate how property rights vary across the U.S., we used a ranking system based on the landlord-tenant regulation provided by RENTCafe, an online platform for landlords. It covers items like:
Security deposit rules and limits
Late fee limits and mandatory grace periods
Returned payment fee (NSF fee) limits
Eviction warning notice periods
Advance notice is required before landlords can enter their properties
Each state has a score that allowed us to categorize into one of five categories: pro-tenant, tenant-friendly, neutral, landlord-friendly, and pro-landlord, with dark orange indicating more tenant-friendly laws and dark blue more landlord-friendly laws. See chart “Property Rights Across the United States” for details.
According to the data, the most pro-tenant states are Arizona, Delaware, Vermont, Rhode Island, and Hawaii. These states have strict limits on security deposits, late fees, and NSF fees, as well as long notice periods for evictions and property entry.
On the other hand, the most pro-landlord states are West Virginia, Arkansas, Wyoming, Georgia, North Carolina, Louisiana, Idaho, and Ohio. These states have minimal or no limits on security deposits, late fees, and NSF fees, as well as short notice periods for evictions and property entry.
The data also reveals some interesting trends and patterns among the states. For example, the Northeast and the West Coast tend to have more tenant-friendly laws, while the Midwest and the South tend to have more landlord-friendly laws.
Additionally, some states have unique or unusual laws that affect their scores, according to data from Avail, an online rental market data source. For instance, New Hampshire has the shortest eviction notice period in the country at just seven days, while Maine has the longest at 90 days. Alaska has the highest limit on security deposits at two months' rent, while Wisconsin has the lowest at zero. Montana has the highest limit on late fees at $100 per day, while Rhode Island has the lowest at $5 per day.
These variations in property rights across the U.S. have significant implications for both landlords. They affect the profitability and risk of their investments, as well as the degree of control and flexibility they have over their properties. Therefore, it is important to be aware of the laws in states where you are or consider to be a landlord and to understand the rights and responsibilities under them.
Florida Enacts Strict Anti-Squatter Law
Republican Governor Ron DeSantis of Florida has taken a firm stance against squatters’ rights. On Wednesday, March 27, 2024, he signed legislation into law that abolishes these rights in the Sunshine State and imposes stricter penalties on offenders. During a press conference in Orlando, DeSantis emphasized, “You cannot simply take over someone’s private property and expect to escape consequences. In Florida, we are putting an end to the squatter scam once and for all.”
The new law will come into effect on July 1. DeSantis proudly asserts that Florida is leading the way by directly addressing squatting issues, making it the first state in the nation to do so. Lawmakers in Florida overwhelmingly supported the bill, which now allows squatters to face criminal charges if they illegally occupy a home. Additionally, property owners can submit an affidavit to prove their legal ownership of the property.
The Worst Cities for Landlords in the U.S.
Landlords in the U.S. must adhere to state-specific landlord-tenant laws. However, certain cities impose additional rules that favor tenants and place greater burdens on landlords. These local ordinances go beyond state laws, introducing more restrictions and regulations.
These cities often have rent control, eviction moratoriums, tenant screening limitations, mandatory inspections, licensing fees, and other rules that make it harder and more expensive to be a landlord. We have compiled a list of the 10 worst cities with anti-landlord laws, see chart “10 Worst Cities With Anti-Landlord Laws” for an overview.
Here is why these 10 cities are bad for landlords:
Portland, OR: Portland has rent control that limits annual rent increases to 9.9% and requires landlords to pay relocation assistance to tenants who are evicted without cause or face a substantial rent increase. The city also has strict tenant screening criteria that prohibit landlords from rejecting applicants based on criminal history, credit score, income source, or other factors.
New York City, NY: New York has one of the most complex and stringent rent control systems in the country, with about half of the rental units subject to rent stabilization or rent control. These units have limits on rent increases, eviction protections, and succession rights for tenants. The city also has a high property tax rate and a low vacancy rate, making it difficult and costly to find and maintain rental properties.
Washington, DC: Washington has rent control that caps annual rent increases at the rate of inflation and requires landlords to register and license their rental units. The city also has a Tenant Opportunity to Purchase Act that gives tenants the right of first refusal to buy the property if the landlord decides to sell it. This can delay or prevent the sale of the property and reduce the landlord's bargaining power.
Detroit, MI: Detroit has a high crime rate, a low population growth, and a low median income, making it a risky and unprofitable market for many landlords. The city also has a rental registration and inspection program that requires landlords to obtain a certificate of compliance and pass periodic inspections by the city. The city can impose fines, fees, and penalties for non-compliance or violations.
Other cities that are bad for landlords include Los Angeles, CA; San Francisco, CA; Dekalb, IL; Seattle, WA; Rochester, NY; and Atlanta, GA. These cities have some of the following issues: rent control, eviction moratoriums, tenant screening limitations, high property taxes, low vacancy rates, high maintenance costs, and tenant-friendly courts.
What Does it Mean for Investors?
Being a landlord in these cities can be a headache and a money-losing proposition. You may have to deal with tenants who don't pay rent, damage your property, or refuse to leave. You may also face legal hurdles, regulatory burdens, and high costs that eat into your profits. If you're looking for a better way to invest in real estate, you should consider alternative options that offer more security, stability, and returns.
One of these options is first trust deed lending, which allows you to lend money to borrowers who are buying or refinancing properties. Unlike being a landlord, you don't have to worry about managing the property, collecting rent, or evicting squatters. You simply collect interest payments from the borrower, who is responsible for maintaining the property and paying taxes and insurance. If the borrower defaults, you have the right to foreclose and sell the property to recover your money.
First trust deed lending is a low-risk and high-reward option for real estate investors. You can earn attractive interest rates, starting at 10%, while enjoying the protection of a conservative loan-to-value ratio of 65%. This means that the property value is at least 35% higher than the loan amount, giving you a cushion in case of market fluctuations or foreclosure costs.
If you're interested in first trust deed lending, you should partner with a reputable and experienced company that can help you find quality borrowers, perform due diligence, and handle the paperwork. Safeguard is one of the best companies in the industry, with over 20 years of experience in helping investors grow their wealth through real estate lending. We have access to a large network of borrowers who are looking for financing for their properties, mainly in states that favor landlords. We also have a team of experts who can evaluate the properties, verify the borrowers' credentials, and prepare the legal documents. We make the process easy and hassle-free for you, so you can sit back and enjoy the passive income.
Don't let the bad markets for landlords discourage you from investing in real estate. There are other ways to profit from this asset class without the hassle and risk of being a landlord. First trust deed lending is one of them, and Safeguard is here to help you get started. Contact us today at 877-280-5771 or email us at info@safeguard.com, and let's work together to make your money work for you!
