NEW Stimulus Details | FREE RENT & MORTGAGES

What's up guys, it's Graham here. So, as I'm sure we've all been following, the two point six trillion dollar stimulus is well on its way. People are finally beginning to receive their $1200 checks. Small businesses have exhausted all 250 billion dollars of funding within a few weeks, and now it's becoming apparent that that's not enough and more needs to be done.

That brings us to today. In an effort to draft another round of stimulus, there have been a number of proposals currently in the works. One of which includes refunding the small business loan program. Another proposes giving every eligible American $2,000 a month, tax-free. And now, the latest is another stimulus proposal that would cancel all rent and mortgage payments for an entire year.

That's right! That means all my videos about how to house a can live for free would become entirely obsolete, at least for the next year because this would do it automatically for you. So, let's talk about who's eligible to have the rent and mortgage payments canceled for the next year, what this means, and the likelihood of this actually passing.

As a real estate investor myself, this one could be music to my ears. I own my own primary residence, I have three other mortgage payments on rental properties, and I don't necessarily look forward to paying my mortgage every month. So yeah, this one could benefit me directly a lot, not to mention it's also going to benefit my tenants who wouldn't have to pay their rent either.

Except they would still have to smash the like button for the YouTube algorithm because it helps out my channel tremendously. Same with you, if you wouldn't mind destroying the like button until it turns blue, it would be greatly appreciated. So anyway, let's begin with the video, and trust me, this one is going to be a doozy.

Okay, so right off the bat, here is what's being proposed: all rent and mortgage payments would be canceled for an entire year going back to April 1st of 2020. Here's why this is being done. Due to the illness, we're finding that more tenants are falling behind on their payments. Mortgage forbearances have skyrocketed, and as of now, it's just too early to tell how severe this is going to get or how many people are not going to be able to catch themselves up once this is over. So, eliminating rent and mortgage payments would be, on the surface, an easy fix.

So with that, let's talk about the new plan. To start, it's very important that every bill being proposed right now has a very catchy name, and this one takes a cue directly from our very own YouTube, where canceled culture is typically frowned upon. But this one has a right to be allowed because it's called the Rent and Mortgage Cancellation Act of 2020.

Now, as usual, I'll link to the bill down below in the description for anyone who wants to read it word by word, but here are the highlights that I find very impressive. Let me just get this out of the way very early on: everybody in the United States is eligible. Let me say that again: everybody! Yes, even you watching this right now. It doesn't matter how much money you make, how expensive your rent or mortgage payment is, it doesn't matter if you're a multi-billionaire or you're making $10 an hour; this applies to you.

So listen up. Let's begin with all of the rent payments out there. All rent payments are going to be canceled on your primary residence for one full year. No tenants will receive any fines for non-payment of rent. No tenants will have their unpaid rent treated as a debt. No tenants will be held liable for repayment of this rent, and lastly, any unpaid rent will not impact your credit score.

Next, we're going to be moving on to your mortgage payments. Just like with rent, all mortgage payments would be canceled on your primary residence for an entire year. No homeowner is going to be liable for repayment of these mortgage payments. You're also not going to be foreclosed on for not paying your mortgage during that year. No fees or penalties will be incurred during this time, and not paying your mortgage will not affect your credit score.

Now, at this point, you might be wondering to yourself, what happens to all of the landlords out there if they're not receiving the rent? Don't worry about that. There's a relief fund set up for them. The Secretary of Housing and Urban Development shall set up a relief fund for landlords who can be reimbursed for lost rent to offset their cost. Now, to be eligible for this, the landlord must make sure that they follow these guidelines for the next five years.

One: they're going to be subject to a rent freeze, meaning they cannot raise the rent of the property for five years if they accept the funds. Number two: the landlord cannot evict the tenant without just cause. You cannot just evict them because you don't like them as tenants, or you feel like it, or because they didn't smash the like button for the YouTube algorithm if they didn't do that already.

Number three: a landlord cannot discriminate against how the tenant makes their money or their source of income and during a vacancy, they must make it available for government assistance programs. Number four: you could only receive the amount of rent you were getting from before the illness and not afterwards.

Now, from there, the federal government would create an additional relief fund for lenders where they would be reimbursed for the lost mortgage payments during the year. Then from there, there would be another fund set up for housing acquisition for the purpose of buying multifamily properties to ensure that people have a safe, affordable place to live.

Best of all, there are no income requirements or limitations listed under this bill, so it's open for everybody. That means the guy making $100,000 a month reselling hand sanitizer online and living in a penthouse apartment on the beach for $20,000 a month is going to receive the same rent break as the guy making $10 an hour and barely scraping by.

This one encompasses everything in the United States and is basically a plan of let's freeze everything for a year. No matter who you are or what you do, everything is frozen. However, as a landlord and real estate investor myself who also happens to have a mortgage, there's a lot more to this than the bill is letting on, and I have some serious concerns about how this is being implemented.

One: this is going to be quite expensive. Although, believe it or not, this is actually going to be cheaper than giving every eligible American $2,000 a month. To prove that to you, I'm going to be showing you the numbers from 2019 because I didn't believe it myself until I saw this.

As it stands today, about sixty-four point eight million Americans own their own home. The average mortgage balance is one hundred and forty-nine thousand dollars, and out of the sixty-four point eight million Americans who own their home, 62% of those have a mortgage. That means that forty point one million Americans have a mortgage with an average payment being $1,100 a month.

So if we do the math, on average, it's going to be costing 44 billion dollars a month on mortgages, which comes to a total of five hundred and twenty-nine billion dollars spent over the year. But now let's take a look at rentals. The American Housing Survey found that forty-three point nine million rental units are occupied with an average price of fourteen hundred and seventy-one dollars a month.

That means if we just run the numbers, forty-three point nine million rentals multiplied by fourteen hundred and seventy-one dollars a month brings us to a total of sixty-four billion dollars spent per month or a total of seven hundred and sixty-eight billion dollars spent over the year.

Now, there are a few small details being left out here. For instance, if you have a mortgage and you rent a place at the same time, you could only pick one or the other. This is only also for primary residences, which means you can't use this towards a vacation house or a second property. But overall, we could see that if we just combine these numbers, it's probably going to be costing around 1.3 trillion dollars over the next year to cancel rent and mortgage payments.

Although here are some of the flaws when it comes to this, and this is where we get into many of the problems. No one, since there's no eligibility requirement and everyone qualifies, some people are going to be getting some pretty insane benefits whether or not they actually need it. For example, the multi-millionaire paying twenty thousand dollars a month for a beachfront penthouse apartment is going to receive the biggest break from everybody versus the other person who's patiently paid off their mortgage over 30 years and is going to be receiving nothing because they don't have a payment.

So I would argue a portion of this money is going to go towards people who don't actually need it and never had a problem paying the rent or mortgage in the first place. Now second, I'm only assuming since it's not explicitly stated that if you're not paying your mortgage, you're only getting the interest portion of your mortgage forgiven, not the entire thing plus principal; otherwise, the person with a 15-year mortgage is going to get substantially more money than the exact same person with a 30-year mortgage, and that makes absolutely no sense.

So we're going to be assuming that they've somewhat thought this through and that only interest is going to be forgiven for the first year, but that also has its own issue. That's the person who just got a mortgage paying way more in interest upfront that would be forgiven. So that person would end up getting way more benefit than the same person who's 15 years into their mortgage, and a lot more of that money is going towards principal.

The third, there's also the very real issue for landlords out there who still have to pay their property taxes, insurance, repairs, utilities, maintenance, and property managers during a time where otherwise they're receiving no rent. Now, even though there's a fund out there that covers the landlord's rent for the next year, by taking it forces them to enter into an agreement where they have a five-year rent freeze on the property.

So they're going to be unable to raise rents to cover their cost at a time where property taxes are going up, insurance is going up, the cost of labor is going up, and also the building is going to need more maintenance as it gets older. To me, it's just like you've cut off the landlord's income, even the mom-and-pop landlords who rely on that income to survive, and then you say, "Well, if you want your money, you're going to have to agree to a five-year rent freeze on your property whether you like it or not, and whether or not your tenants were actually affected in the first place."

Not to mention this especially hurts landlords who own their property outright in cash and don't have a mortgage and then have the rent taken away from them, and then the only way to get that money back is to agree to a five-year rent freeze again whether they like it or not. There are really just so many nuances that would have to be worked out for this to ever be implemented.

And when it comes to this, here's what I think. Now even though, yes, this is cheaper than giving every eligible American $2,000 a month, it's still insanely expensive and heavily skewed in terms of who has benefits. And trust me, I would love not to pay my mortgages for the next year and just stack a whole bunch of cash off to the side instead, but come on!

In all reality, I don't need these benefits, and using it on me is just going to be a waste. It also doesn't take into account a portion of your mortgage payment going into home equity that cannot be forgiven. You can't just go and pay down people's mortgages for a year because the person with the shorter-term loan would benefit way more than the person with a 30-year mortgage.

Not to mention a person who just did a massive cash show or financed six months ago would get a lot more money back in no payments than the person who didn't do that. Plus, anytime you own a home, you also have to pay for property taxes, insurance, maintenance, and repairs on top of your mortgage payment, whereas if you're renting, all of those costs are baked into the amount that you're currently paying.

There's also plenty of tenants out there who have in no way been affected by this illness in terms of their ability to pay rent or income. So by giving them a break and then either forcing the landlord not to get rent or accept a five-year mandatory rent freeze is not the ideal solution either.

Ideally, we should focus on giving money to the people who really need it the most, who have been adversely affected, and giving a blanket amount of money to everybody, whether or not they've actually been affected, just seems to me like a waste of resources.

Now, when it comes to all of this, just like the $2,000 a month proposal, it's all just an idea. And even though I'm not accusing anyone of doing this, it is easy to come up with a very ambitious proposal, throw it out there, get a whole bunch of publicity around it, even though there's such a small likelihood of it ever actually happening.

I have a feeling over the coming few weeks, as it becomes more and more evident that more stimulus is needed, we're going to be seeing a lot more like this coming up with a very small likelihood of actually passing. As it currently stands, I think we all agree that the current stimulus is underfunded. A one-time payment of $1,200 is probably not enough for the majority of people out there, and more needs to be done.

But a solution to this has to be realistic, and canceling rent and mortgage payments for a year doesn't seem feasible to me, at least without a lot more details thrown into the mix. For example, what happens if you move somewhere within that year? Is the new rent going to be forgiven, or is it only going to cover what you were already paying? What happens if someone owns the home outright? Do they get nothing from this? Then what happens to your property taxes, and what happens to your mortgage principal if this isn't paid? Is this going to set you back on your mortgage?

What about utilities? If your tenant stops paying your gas, water, and electric? What if you don't need the money? Or what happens if a new tenant moves in a year from now? Does the rent freeze affect them too? Also, how would this affect business owners who also have rents and mortgages to pay for their office? And also, what about commercial real estate landlords who are not receiving rent right now from small mom-and-pop businesses that had to close down?

And also, why would this have to be for an entire year upfront? This just might be an idea right now, but coming from someone who's been in real estate for over 12 years, there are a lot of holes in this plan that really need to be ironed out, and the entire concept just seems like a long shot of ever actually happening.

And even though this plan is cheaper than giving every eligible American $2,000 a month, I have a feeling this is another one of those too-good-to-be-true proposals that stirs up more popularity for the person drafting the bill than it does actually getting us any closer to getting money back in the pockets of people who actually needed it the most.

But again, just my opinion as some guy on the internet, and take that for what it's worth. So with that said, you guys, thank you so much for watching. I really appreciate it. As always, make sure to destroy the like button, subscribe button, notification bell.

Also, feel free to add me on Instagram. I post there pretty much daily, so if you want to be a part of it there, feel free to add me there. On my second channel, The Graham Stefan Show, I post there every single day I’m not posting here. So if you want to see a brand new video from me every single day, make sure to add yourself to that.

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Thank you so much for watching, and until next time. Oh, one more thing I want to mention to anyone who actually made it to the very end of the video: it's my birthday coming up on Wednesday. So to celebrate this, I'm doing a huge discount on all of my programs, up to 50% off down below in the description. I'm just going to throw this here at the very end of the video; I'm not going to mention it soon.

So, anyways, if you—if you made it here to this point down below in the description, enjoy that 48 hours. Thank you so much for watching, and until next time.