House Bill 1-11: How it’s going to affect home owners in the Albuquerque Real Estate Market

Tego Venturi:

Well, there’s two bills right now that are working or we’re trying to work their way through. Oh, there’s Damon. So perfect timing. Let me talk about HB-19 first. So HB-19 was a, or in Damon, correct me if I’m wrong, but HB-19 got postponed. Correct. Is what I understand. Yeah. And I’ll introduce you in a minute, Damon, but so HB 19 was they were trying to put a transfer tax on real estate sales. So basically wanted to tax you when you sell or buy a property. And at this point that one has been shot down. So thank goodness for that. But anyway, Damon, Maddox, medics management, if you’ve been around Albuquerque Ben and you know, around the city, you’ve probably seen Maddox manage it. Mint signs. I mean, God’s statement. How long has your family been in the real estate business?

Damon Maddox:

45 years.

Tego Venturi:

Yeah. There you go. So you guys are kind of legendary in Albuquerque and especially on the property management side. But your, your father has done so much in yourself so much for the real estate world and real estate industry. So thank you for that. But the reason I got you on Damon is we want to talk about HB 1-11 which is, which is out there right now. And so first off, Damon, if somebody wants to reach out to you talk about private property management, how do they get ahold of you?

Damon Maddox:

They give us a call here Maddox management, (505) 242-0989. Or visit our website MaddoxMGMT.com.

Tego Venturi:

Awesome. Tell us about HB 1-11.

Damon Maddox:

So HB 1-11 it’s revamping the uniform owner resident relations act which is, you know, the landlord tenant laws for the state of New Mexico. It’s definitely something that needs to be looked at from time to time. You know, we, we, last time it was revised was almost 20 years ago. So when we heard that, you know, something was coming along, we, you know, we weren’t you know, it was, it didn’t catch us off guard, but when we finally saw the actual bill that they’re proposing the changes they’re proposing there’s a lot of unintended consequences.

Tego Venturi:

That was one of my takeaways when I saw it, I started going through it going, Oh my gosh, this is going to backfire especially on, you know, what I would consider some of the, you know, the, the people on the margins, both as property owners, as well as potential tenants and, and stuff. I don’t know, is that, was that your take?

Damon Maddox:

That was definitely my take, you know their, their intent is to help grow the workforce housing help us you know, the industry combat the, you know you know, homeless issue that we have in our state in particular, in our bigger cities, but the way they’re trying to go about it is, is just, it’s, it’s going to cause much bigger problems than, than it’s not going to fix what they’re trying to fix. Yeah.

Tego Venturi:

So, give us just a, some of the proposals that are out there that, that concern the property management community and landlord,

Damon Maddox:

The big concerns that we’re having with, with the, these changes is the amount of time for, for an eviction both for nonpayment of rent and, and for lease violations right now start to finish, you know, it can take about 28 days to, to go through that whole process from the time you serve that, that first notice if this passes it’s, you know, 56 days for you know, for an eviction process for, for, you know, somebody that’s been destroying the property, you know violation other than non-payment of rent. They’re, they’re taking that initial seven day notice and making it a 14 day notice, and you’ve got to do that twice before you can even, you know, file with the courts. Wow. the other, you know notable things that they want is they they’re, they’re adding they want to add a source of income as a protected class. Which, you know, it in and of itself is not a bad thing. Right.

Tego Venturi:

Sounds good. On the surface. Yeah.

Damon Maddox:

When, when you’re, when you’re forcing when Lords to, to take the, a section eight vouchers you’re essentially, you know, stifling the, the amount of rent that they can collect and, you know, it’s more, almost like a rent freeze for them.

Tego Venturi:

So wait, wait, wait. So this bill proposes that landlords, if somebody comes with a section eight voucher, which if anybody in the world, you know, they know what that is. So that’s somebody low income, they get a voucher to help supplement their, their rent. Correct. But they’re saying that landlords can’t deny somebody because they’re on a voucher plan. That is correct. Interesting.

Damon Maddox:

You know, so provided they meet all the other criteria. They, they, they have to accept the voucher as a company we work with these voucher programs and in this, the city run, the government run programs are, you know, wonderful to work with of the issue that we have sometimes is with the the nonprofits that are, you know, offering these vouchers. They don’t train their, their, their, their clients, their tenants, the whole process. They, they don’t you know, follow up on inspections like the government run wants to do. So I have some owners that do not want to take vouchers, you know, for that reason. Well, you know, you have great programs, you know, Bernalillo County housing. They inspect their properties, you know, and their clients they help us as, as property managers, make sure that, you know, the, the tenants not destroying the place that they’re, you know, doing what they have to do to stay in their program. And same thing with the city of Albuquerque housing. But some of the nonprofit ones do not, some of them are great and some of them are not. And to have to force an owner to accept all of them would, would be a detriment. I think, let me ask this, what’s the status. I mean,

Tego Venturi:

You and I talked to here earlier, but what’s the status of the bill right now?

Damon Maddox:

So the bill was in the judiciary committee last week. It was a sense back to, to have some revisions done to the bill. Some of the things that you know, we’re asked for that we, you know, we, we asked some changes to be made and they just released yesterday a new version of the bill, but it’s pretty close to the first version. Got it. So, we’ll see what it does in, in the dish judiciary committee, when it goes back to, for a vote,

Tego Venturi:

What is the property management community asking from the legislature?

Damon Maddox:

Well, first we were asking for a seat at this table you know, we were not invited to help work on this legislation really, if they simply asked us to, you know, we could point out, you know, the, the things that, where they’re trying to get something to work correctly, we let them know exactly, you know, where that needs to change. And we we’d love for it to be a two-way street. Yeah. Eddie, do you have any questions on this?

Eddie Aragon:

No, I don’t. I think it’s pretty straightforward and he’s pretty much staying on top of it. So it’s very interesting how bad this will impact. I think all of the real estate industry, I think it totally, it takes away any and all investment in real estate going forward, which I think is really concerning for, for everybody. You know, I think the biggest problem that comes in as being a former practitioner of, of real estate is this literally gets rid of those LLCs of people who were investing in properties were reshaping properties and doing all that type of thing. So, you know, for a company, and this is what’s really stressing me out is getting the Maddox company whose names are basically number one, when it comes to a residential property management, you know, this sort of puts them out of business and they’ve got to now increase their cashflow probably two to three months just to accommodate the new rules because managing on the side of the tenants and, you know, that’s not unfortunate, that’s in my opinion, that’s criminal and it’s, I think it’s it’s just really bad to go.

Tego Venturi:

Hey, Damon, tell Eddie what you told me earlier about the investors coming into New Mexico and what your, one of your concerns.

Damon Maddox:

Well, so yeah, my that’s exactly right. My biggest concern, what I see right now, we have lots of investors coming in from California, from New York, and they’re investing in our communities and, and buying up some properties and turning them around. And they always tell me that they’re coming to New Mexico because our laws aren’t as strict as, as California or New York. And these changes put us in line with California in New York. So you’re going to see less people wanting to come in at best.

Tego Venturi:

Obviously we want to make it clear, like, we’re we, we want, you know, a tenant. I mean, th the reality is right now, if tenants don’t do what they’re supposed to do, I mean, it’s still a long process to, to make the landlord whole correct. Or sometimes the landlord never gets made whole.

Speaker 2:

That is correct. It, it is. And, and I completely agree with you. If you go, we have an issue with workforce housing that you to solve, and everybody deserves to live somewhere and have a good you know, place to live, but not at the expense of you know, of these investors or these people that are putting their hard earned money in, into, into our communities.

Eddie Aragon:

Well, one of the things that occurred to me is that everyone has their stories. Everyone has their ideas about, Oh, you know, I’ve been impacted by COVID, but one of the things that happens ultimately, and Ben knows is probably a better than our Damon knows this better than anybody. And that’s the fact that, yeah, you know, stories will keep turning into more stories, into more stories. And ultimately if you’re having to pick up the phone to call a Constable, just to kind of evict your tenant there’s going to be significant damage inside. And not only is there no respect between tenant and landlord, which all of the laws now are really weighted towards, especially if this passes towards the towards the tenant. But I mean, you’re going to be dealing with real, huge repairs and remodeling every single time you have a tenant.

Eddie Aragon:

And, you know, could we do a minimum of three years on a, on a lease with no going out first month, last month, and a first two months in, I mean, I think the landlords are going to be forced to turn this into something that’s not even marketable because it’s going to be cheaper to get into a house to purchase than it is going to be able to rent. And, you know, our escalations have been tremendous here in this market. And on the landlord side, I’d say, that’s good, but you’ve had rent escalators somewhere between seven to 10% to go into amen. And that makes it really healthy for the investors from outside the market to say, Hey, you know what? This is a very affordable place to live. We can get in at a good rate and there’s still lots of room housing affordability is at an all time high, but these people just want to rent for whatever reason. And that’s just going to completely wipe out. And then I do mean wipe out an estimate. I think the rental market, and it’ll happen over a trickle-down effect over the next three to five years where people are just making the determination that, Hey, unless we have your first, last month and next of kin sign on the dotted line, you ain’t renting from us. And then no one’s going to rent. I think

Tego Venturi:

You just, you just nailed it, Eddie. And that’s the thing is this type of bill it’s going to hurt the people on the margins of most. So you think about obviously the, the, the renter, that’s got a low credit score that’s maybe on a voucher or whatever it is they’re going to get looked at even more. They’re going to be scrutinized even more. But then the other, the other side is Damon. What was the number? How many people in New Mexico that are landlords are just small mom and pop own a couple properties, right? Those are the people that are going to get hurt. It’s not the big, huge corporate, you know apartment owners, right. They got deep pockets. They can absorb it, but you know, that little mom and pop guy that owns a couple of rental properties and they can’t get rent for two or three months that that’s the people that’s going to hurt. Yeah. They’re already being hurt. Yeah. And they’re already,

Damon Maddox:

And a majority of, of, of our clients, I’d say, you know, I, I don’t know about the entire state, but I’d say, you know, 80% of our clients are mom and pop, you know, single investors, some of them, you know, they’ve, they’ve inherited property. You know, I’ve, I’ve got several widows. This is their, their retirement income, you know, they, they invested with their husbands. And you know, now that this is their retirement. So when they can’t get rent for two or three months, I mean, that’s, that’s their monthly income that they’re hoping to pay their own bills with.

Tego Venturi:

That’s a great point. That’s a great point.