Meet Kristen Cavallo.
Kristen lives in Texas with her husband and three darling little children.
Kristen is NOT a professional investor or landlord. Just the opposite. She’s a Sell-Lord who owns a townhome in Pike Township she bought in early 2006 for over $183,000. Her husband got a job transfer, then BOOM, the 2008 recession hit, and the current market price for her townhome is in the $130’s. So, to make ends meet she has been leasing it out, waiting for the market to recover.
Now that we have the formal introductions out of the way, let’s get to the brass tacks.
(Kristen has given me explicit permission to use exact numbers on her situation, so please understand these aren’t fictitious like the unicorns and rainbows her elected officials have running around in their heads.)
Here’s the numbers on her rental property CURRENTLY (1**):
As the Net Profit/Loss line illustrates, Kristen is currently running a small loss on the property. No huge deal…certainly losing less than a hundred bucks a month is a lot easier than coughing up $45,000 to sell the home.
Now….here’s the rub on the proposed legislation: Once it passes, Kristen will have no choice but to hire a property management company to be named as a “responsible person” for her unit. This is IN ADDITION to the current PROFESSIONAL HOME OWNER ASSOCIATION MANAGEMENT COMPANY already in place which maintains all the common area and exteriors of these townhomes. This legislation FORCES her to absorb an entire new line item expense for her single property.
Here’s the numbers on her rental property ASSUMING the legislation is passed and she has to hire a property management company to be named as the “responsible party” on the paperwork(2**):
Simply because of this new legislation, Kristen’s operating loss has TRIPLED! For those of you who have studied economics, this is about as basic of an example of a “tax wedge effect” as it gets.
This legislation is more than just a poorly conceived and executed legislation, it is more than a violation of Constitutional Rights, it is more than a government over-reach: it is A TAX on landlords.
Now do you understand why hundreds and soon to be THOUSANDS of property owners will very quickly be in Kristen’s very position?
Now do you understand how this will negatively impact the Indianapolis real estate recovery when good, law-abiding landlords like Kristen are forced to spend money needlessly?
Or have I overstated things?
Time to decide is now, folks.
Time to make your voices heard is also now. Otherwise, we might as well change the Constitution from reading God Given Rights to Government Given Rights.
(1**) & (2**): numbers quoted for commissions and fees are for an example only and commissions and fees are negotiable.