People Have STOPPED PAYING THE RENT

A little over a year ago, my wife and I got out of the landlording business, at least for now, and I'm so glad that we did, because being a landlord these days means that not only are you fighting rising expenses and dwindling profits, but now you have to worry about if your tenants can even afford to pay the rent, because more and more people are starting to miss rent payments because of how expensive everyday living has become. In fact, this has been a growing trend since April of 2023, where on-time rent payments have been falling since then, according to Shandon Economics. Shandon reports that the three-month moving average of late rent payments for independent rental properties is forecast to be at 11.4 percent as of July of 2025. In July of 2024, an average of 9.3 percent of rental payments were late, so that is a two percent increase in just one year. That might not sound like a lot, but that translates into millions more people being late on their rent this year versus last year. Obviously, nobody should be surprised that that's the case, because everything has gotten far too expensive, and to be able to keep up with everything, well, we know people just can't, so they don't pay things that don't have immediate consequences. People stop paying credit card bills. People stop paying the rent. People stop paying medical bills. Anything where you're not going to see an immediate problem for not paying, those are the type of bills that people put off and pay late or don't pay at all. Now, late rent payments tend to decline when people start getting their tax refunds in the spring. However, the late rent payments in May were still more than 2.3 percentage points higher than the same time last year, so consistently throughout 2025, the late rent payments have been up over 2 percent throughout all of the year so far. Now, Shandon Economics does report that even though more people are behind on the rent, that eventually they do catch up, but that's for now while they still have a job, and anybody who saw my recent video about the jobs report, you got to be living under a rock not to be able to realize that the job market is in major, major trouble right now. If you're a landlord that's lucky enough to have a tenant that still has a job and is still able to pay on time, well, luck certainly is the word for your situation because more and more people are unfortunately not in that situation because what's happening with businesses right now is even people that are lucky enough to still have a job, a lot of people are starting to see reduced hours at their job, and for sure they're seeing slowing wage growth, which is basically wages that have not been able to keep up with inflation, and both of those things are problematic. You know, people are making less money compared to what that money can buy, combined with the fact that you might be getting your hours cut and just not able to work as much. It's not really a recipe for keeping up with the bills. And across the board, inflation has really impacted everybody because it's not just the rents that people are falling behind on, you have people falling behind on other forms of debt. We even have 4 million student loan borrowers who are on the verge of default right now, not even counting the ones who are already in default. You're seeing mortgage delinquencies rise, you're seeing car loan delinquencies rise, you're seeing credit card delinquencies rise. Now sometimes I get emails and comments asking me like, hey Michael, you talk about all these bad things that are happening, people are going broke, they can't pay the rent, they can't pay off their other debts, what is anybody supposed to do about it? And it seems like no matter how many times I talk about the things that you can do about it, people just, I guess, don't hear it, or they need me to say it again, I don't really know. But I will say it again in this video, if you are somebody in this situation, you have to do a couple of things all at the same time. The first thing that you have to do is to stop accumulating any more debt at all, which means no more credit cards, no more types of loans of any kind. At the same time, you need to be paying down those debts and simultaneously you need to be looking for other ways to earn extra income. And obviously I'm not going to get into the specifics here, this is not a course on how to make a side income in 2025. But that's the formula, guys. However you decide to work that formula is entirely up to you. And I know it's easier said than done, but it is possible because I'm living proof because I was somebody that had to do that like 15 years ago. Sometimes people forget that this isn't the first time we've been in a bad economy, and last time we were in a bad economy, I was a lot younger and I was in this very same position where I could barely pay the rent, where I had debt, and I wasn't making enough money to pay the bills because the expenses were too high. And I am not a genius, guys, but I just followed that formula I outlined. Let me show you this real quick. I've never seen this. It looks like they're moving this house or elevating it or something like that. I've never seen this before. Literally a house on blocks. Maybe they're replacing the foundation. I don't know. Sometimes they actually move houses. Naturally the easiest way to make extra money in 2025 is to turn to the gig economy. A lot of people do DoorDash or Uber or some other type of delivery app like Instacart or TaskRabbit. Things like that, guys. Those are things that basically anyone can do. You are going to need a car or some sort of transportation method. In Miami Beach where I live, for example, I see a lot of people doing DoorDash and UberEats on electric bicycles because then they can really save money and don't have to upkeep costs of the vehicle and are able to pocket a little extra profit using that. I chose a different route when I was in this situation rather than pick up a second job because I was working real estate full-time back then. I decided to just work longer hours and harder at real estate and make that work simultaneously having virtually no expenses. No debt payments besides getting out of the debt that I had. Just the rent and the basic food and necessities and that was it. If it wasn't necessary, I didn't pay for it. After enough years of doing that and being able to get out of debt while simultaneously increasing my income, I was finally able to springboard into a situation where now I'm not living paycheck to paycheck and not living trying to keep up with just paying the bills and trying to just keep your head above water. Once you make it to that point, you can maintain that forever. It's kind of like somebody who wants to lose weight, for example. Losing the weight is the hardest part. Maintaining your body after you've lost the weight is the easy part. The same thing goes with money, guys. Like if you are having a hard time with money, getting out of the money troubles is the hardest part. Once you're out of it, staying there is easy as long as you just employ the same discipline that you had that it took to get out of the money troubles and don't make the same mistakes you did in the past. I can guarantee you that anybody right now that's having serious financial troubles is probably living beyond their means. You might not want to admit it or you might not want to face that fact, face that reality, but that is most likely the case for the vast majority of people. Not everybody, but almost everybody who's having financial troubles is spending more than they should. That spending exceeds their ability to spend that money and they should be saving a lot more rather than spending it. The other thing I would really suggest is breaking all of your old bad financial habits, whatever that might be. For some people, it's impulse buying things on Amazon or TikTok or when they see somebody using something that they really want. This is especially common with women. Or maybe it's just you don't want to cook at home and you love going out to eat all the time and you spend a lot of money on that. Whatever it is, you got to cut it out and it has to be stay cut out permanently. Doesn't mean you can never go out to a restaurant again. It just means keep it down to just two or three times a month instead of two or three times a week. Also, I would strongly suggest that if you are a tenant who's having a hard time paying the rent is you need to talk to your landlord. Explain to them that it's not that you don't want to pay. It's just that you're having a hard time paying and it must be a legitimate thing. Okay, it's not that you're spending $500 a month buying things online that you shouldn't be buying and that's why you can't afford to pay the rent. It's because you've actually fallen on hard times for whatever reason. Because they're going to be able to tell that you're full of you know what if you're faking it. There might be a possibility that your landlord will be willing to temporarily lower your rent and let you catch up on the difference later on once you get back up on your feet. So don't be afraid to talk to them. I mean the worst that can happen is they can say no guys that's it. So for people that say I never give you any solutions on how to handle these things, I've always given the same solution. I've brought this up numerous times in past videos but the problem is that people don't always watch the whole video guys. These videos are typically 20 to 25 minutes long and the average view duration on these videos is like seven or eight minutes. So people aren't even watching half of the video let alone the whole thing. Which makes me want to mention real quick that I am actually probably going to be starting a clips channel which is just going to be shorter clips of what I'm already doing. So if this video is 20 minutes long, I might make a clip where I turn this video into two or three smaller and shorter videos that are five to eight minutes long maybe 10 minutes long maximum. Kind of that just cover one topic because you know how I always cover more than one topic within the video. That would be the formula. So for people that complain that the videos are too long or you don't want to watch the whole thing, I'm going to have a solution for that pretty soon. Here's the perfect example because I'm going to transition into a new topic right now. So this next topic could be an entirely different video on the clips channel whereas on this channel it all just runs in one long video. But anyways speaking of the rent people can't pay the rent what happens if you can't pay a condo special assessment? Because so many people are getting hit with special assessments at their condos right now what happens if you can't pay that? Well here's the deal all unit owners at condos are required to pay the special assessments and when you purchase your condo you agree to follow your association's rules and bylaws which includes contributing to the shared expenses hence the special assessment. And if someone is unable to pay the consequences can be quite severe. Now just like people who can't pay the rent it is suggested that you reach out to your board of directors or property manager whoever's in charge of collecting the special assessments and let them know that you're having some tough times financially and they might be able to work with you or come up with a payment plan. Now that's not a guarantee but at least it might be an option and in most cases like in Miami for example at all of the condos I've seen whenever they come up with a big special assessment the board usually secures some sort of financing option for people that cannot afford to pay it in one lump sum and that does mean you're going to be paying interest because you're essentially getting a loan but at least you're able to stay in your unit and you can afford to pay it hopefully you can manage those payments. But if you still fail to pay even if you're on a payment plan then what can happen is the board of directors or the property management company is most likely going to place a lien on your unit and if it's not resolved within a certain time frame they might even pursue foreclosing on you in order to recover the unpaid assessment. Now that usually is the last resort and sometimes that can drag out and take years for that to happen but that is the end game if you don't pay. A lot of people will tell you to try to tap the equity of your unit if you can't pay or if you're a senior citizen to do a reverse mortgage and all this nonsense. I think all of that stuff is a bad idea because eventually you're still not going to be able to pay. Whenever the next special assessment comes along or something else happens you're not going to be able to pay and then you won't even have those options anymore so what do you do next right? My suggestion is if you're in a situation where you get hit with a large assessment that you can't pay even on a payment plan you have to sell guys. It really is the only logical solution. You should just sell and save yourself the hassle of having to come up with the money. Sell, take whatever profit you can after selling and move into something more affordable and if there is nothing more affordable wherever you're living now is already the most affordable place you could possibly find well then it's time to probably move in with a roommate or friends or family member somebody else that can take you in. Unfortunately that's where this ends and in such a tough economy like today that's going to be your best bet rather than trying to barely keep your head above water in a place you can't really afford. And you know the crazy thing is about people not being able to afford the rent payments right now is the fact that renters on average are saving over $900 a month compared to the typical homeowner right now. According to recent research from realtor.com as of June of 2025 renters are saving on average of $908 a month by renting instead of owning and that's in the top 50 metropolitan areas across the country. So deciding to buy a home right now can actually be one of the worst financial decisions that you can make if you're looking to put away extra money each month. According to realtor.com they say that the median U.S. rent for July of 2025 is $1,712 per month which is actually down two and a half percent year over year. And while the average monthly mortgage payment does change significantly depending on how much you paid for your house and your interest rate and your down payment and everything like that. According to Redfin the median monthly mortgage payment at a 6.58% interest rate right now is about $2,600 a month as of the end of August and that's with a 20% down payment guys. And we're going by the median sale price of about $435,000. So that is still a crazy amount of money and you got to come up with 20% down in order to even get a payment that low which means you need to have like 90 grand at closing. Might as well just call it a hundred when you round up to having all the closing costs and title fees and things like that paid for. So you got to spend a hundred grand right off the bat out of pocket to have a $2,600 or $2,700 a month mortgage payment right now. Whereas if you're renting that same property you could be paying $1,700 a month. And even with that massive savings that $900 or $1,000 a month savings being a renter people still can't afford to keep up with the bills and frankly neither can a lot of homeowners. That's why you're seeing so many homes for sale right now and nobody buying them. I mean who wouldn't choose to be saving 40% every single month on their monthly housing payment. That's what people are choosing. They're choosing that 40% savings and in many cases about 14% of the time still can't make the payment. Now I'm definitely not saying this is the case everywhere and that everybody who's renting is paying less than somebody who's an owner. That's not what I'm saying. I'm just saying that if you're somebody looking to enter the market right now and you're looking to buy today or rent that is most certainly the case almost everywhere. There's a little side real estate story here that I want to tell you because in this story they talk about a real estate agent in Boca Raton, Florida. So Florida is like ground zero for the housing crash right now and this real estate agent in Boca Raton says that he just worked with a couple from New Jersey that moved to Boca and they were looking at renting and paying about $4,000 per month but instead they decided to put a down payment on a home worth $790,000. That was the purchase price apparently and they said they felt based on the appreciation trends in South Florida that the home could gain $150,000 to $200,000 in equity in the next five years. Man I feel bad for those people. If we pull up the ReVenture app here we can see that home value growth in Boca Raton is already down 3% year over year and is projected to go down another 2.7% year over year by next year which means that the forecast for Boca isn't looking too good and that prices are projected to continue to fall for the foreseeable future but yet these people from New Jersey got swindled by a real estate agent telling them that prices are going to continue to go up guys and unfortunately I'm sorry to say this but people like that deserve to lose that money because they didn't do the research ahead of time on their own to confirm what they were being told by the local real estate agent. It is up to you the home buyer to do your own due diligence guys. You cannot rely on other people to give you the most accurate information for the largest purchase that you're going to make in your life and listen to this according to Lexard Capital Management the typical homeowner pays nearly $1,800 more per month than renters once you factor in taxes, insurance, maintenance, and a potential HOA or PMI payments included. So they're just looking at the mortgage payment when you're coming up with that $900 per month difference. They're not factoring in all the additional costs of homeownership because when you do that difference now doubles to $1,800 per month difference between being a renter versus an owner today. Strictly from a financial point of view renting right now is the smart thing to do guys because if you're saving $1,800 per month and you actually save that money like say you can afford to be an owner and you're investing that money right now into gold and silver bitcoin and the stock market all three of them would be good not just one you are making massive gains that you are not going to make as a homeowner right now. Sure you don't get the advantages of building the home equity and having a more secure place to live you might have the threat of having to move out but that might be a sacrifice many people are willing to make if you can build some serious wealth on the side. But the issue of course is that a lot of renters just don't do that. A lot of people are renting because they can't afford to be an owner so a lot of their money just goes towards rent and other bills and they don't have anything left over to save and invest. That's the most typical scenario and the other scenario is that people do have the extra money and because they're renting they decide to just blow that extra money on all that freedom and extra experiences that they want to have and they don't save it and then they end up with nothing later on. And so Redfin just came out with a study recently saying that probably by the time we reach 2030 that housing costs might finally return to normal. Now what do they mean by normal? Well they're saying that by normal by definition it means that you're able to keep your total housing costs like your rent or a mortgage plus any other associated costs we're talking the taxes insurance HOA to 30% or less of your gross income. Because when we go back to July of 2018 as a reference point we can see that's roughly where people were at. We were at about 30%. Even if you go all the way back to 2012 it was actually much lower than that. It was around only 18% of people's monthly income was going towards owning a home and that's because buying a house in 2012 was dirt cheap and you can see by this graph that it did creep up to around 30%. But ever since the housing market exploded in 2022 that number just skyrocketed to around the 40% mark that we're at right now. We're around 38 and a half percent. It's close enough to 40. That is just completely unaffordable and Redfin says that we're going to get there through a confluence of wages continuing to go up and home prices remaining stagnant. However I think home prices are going to fall. They might remain stagnant in some areas but they're already falling in many areas across the country. But I'm also skeptical about the wages actually going up enough for that to happen. Redfin is also assuming that mortgage rates are going to kind of remain where they're at right now around the 6.5 to 6.7 percent mark which is kind of ironic because all the predictions were saying that mortgage rates were supposed to be below 5% by now. But honestly I think if we continue to stay in this awful spiral that we're in in this economy where AI is rapidly replacing many different jobs and the wage growth is not really keeping up with inflation because obviously inflation is still a problem and there is high speculation that the Fed is going to cut rates in the middle of September which is going to make inflation worse and if we keep perpetuating these cycles like this there's no way that the incomes are going to catch up to being able to buy a home guys and that's just because of inflation. Even if home prices remain relatively flat when you adjust them for inflation they will still go up and because the inflation will be outpacing wage growth people will essentially never be able to catch up unless they can significantly increase their income which goes back to the lesson I said at the beginning of this video. If you're somebody having financial troubles you need to eliminate your debt, stop accumulating more of it while simultaneously increasing your income and getting out of that debt. If you're able to do that you're going to be able to put yourself in a secure financial position forever as long as you maintain it. That's the key. You have to maintain your situation once you get there. You can't go back to old ways and old spending habits once you get there and say well it's all finished now I fixed everything. No. You have to stay in that good situation forever and maintain it and stick with the good saving and investing and budgeting principles that got you there. So if you guys enjoyed this video make sure you subscribe to the channel and if you don't want to wait for my next video to come out check out this one on the screen right over here and I'll see you in the next one.