Holiday Stimulus

Video Index (with direct links)

0:00 Late breaking news from the President that messed up my video workflow
0:58 Check out my animated Christmas sweater
1:30 The vaccine is here and being administered, but a new COVID variant has appeared in the UK
2:08 Second stimulus package has been approved by Congress (but not by the President)
2:59 Dr. Evil reminds us that the stimulus package is valued at 900 Billion Dollars
3:15 Direct payments to consumers
4:08 Business assistance
5:09 Rental assistance
5:56 Happy Holidays!

Hello Investors!

Christmas is just two days away, and maybe you’ve already mentally checked out for the year.  But I’m still here, trying to be entertaining and bringing you the latest news on the Coronavirus and real estate.

This is my 44th email and video of the year, so thank you for reading and watching.  So that’s one thing I can thank COVID for – developing my video skills.  If it weren’t for all the extra time I had in March, I wouldn’t have started making these videos, and it would just be business as usual for me.

The Vaccine Is Here

The new coronavirus vaccine is out.  Will you be signing up to receive it?  Both Pfizer and Moderna’s vaccines are now being administered to Americans.  So far, over half a million people have received the Pfizer version of the vaccine.  There is a long priority list and waiting list to receive it, and most Americans won’t have access to it for several months.  But meanwhile, there’s news that a new variant of COVID is spreading in the UK that can spread up to 70% faster than the ones that we have seen.  Will the new variant be resistant to the vaccine?  Health experts think that the vaccine will still be effective against it, but aren’t 100% sure.  So until then, stay safe and wear your mask and keep your distance from others.

The Next Stimulus Relief Package is Here, Unless the President Blocks It

The House of Representatives and the Senate finally agreed on a second stimulus relief package.  The first package, called the CARES Act, was passed in March 25, and it’s taken until now for the Republicans and Democrats to agree on the next package.  And the new name is not CARES Act 2, HEROES, or HEALS.  In fact, it doesn’t even have a cute acronym.  It’s called the Consolidated Appropriations Act, 2021, which is such a boring name that none of the news sources are calling it by that name.  They’re simply calling it the second relief package.

The significance of the timing of this package is that many of the programs in the original CARES act expire at the end of this year, so the new package will continue some of these aid programs.

However, late on Tuesday evening, President Trump released a video on twitter expressing that he did not like the new stimulus package and would not sign it in its current form.  One of his points of contention was that the $600 stimulus checks were too small – that they should be at least $2,000 per person.  It remains to be seen if this bill will be dead in the water – perhaps by the time you read this email, there will have been some updates to this news.

So how did we arrive at this relief package?  It first started out as a $3.2 trillion proposal from the Democrats back in May and went through many iterations and back and forth rounds, and has now been whittled down to a value of $900 billion dollars.  As a point of comparison, the CARES Act had a value of $2.2 trillion dollars.

I’m going to go over some of the highlights of the new bill and how it could affect you, as a real estate investor.

Direct Payments to Consumers

The bill proposes $600 stimulus checks to be issued to individuals, including children, for people making less than $75,000.  There will be a phase-out period for people making up to $99,000, and if you made more than that, you wouldn’t get a check.  This is based on 2019 income.  So if you have tenants in your properties who are below the income threshold, they should be receiving a check.  As a point of comparison, this is half of the $1200 checks that were issued from the CARES act.

Unemployment Boost of $300 per week

In addition, there will be an unemployment boost of $300 per week that will extend through March 14.  This is smaller than the $600 unemployment boost from the CARES Act.
Also, two programs for independent contractors and the self employed, called the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation program will be extended through March 14.

Business Assistance Programs

The Paycheck Protection Program is back, and there will be a second round of funding for companies that have fewer than 300 employees and have had revenues drop at least 25% during the first, second, or third quarter of 2020.  This is great for the mom and pop businesses and restaurants that have been scraping by these past few months.

There will also be a $15 billion dollar grant program for live venues, theaters, and museum operators that have lost 25% of their revenues.  Hopefully this will save many movie theaters from closing.

$82 billion is set aside for K-12 schools and colleges, and $10 billion is set aside for child care providers.  As I’ve mentioned many times before, child care is critical to getting our company back on our feet and I’m very glad to see that the government is helping out here.

Rental Assistance Program

There are also some provisions for rental assistance.  Aside from the eviction moratorium being extended through January 31, 2021, $25 billion has been set aside for rental relief.  The way the rental relief would work is that the federal funds would be dispersed to states, who will administer individual programs.
Renters would be eligible for the relief programs based on their income and their financial hardship as it relates to COVID.  Households can be eligible for up to 15 months of assistance.  And one great part of this is that payments will be made directly to the landlords.  This is great if you are an apartment owner but unfortunately this does not provide any assistance for landlords of retail properties.Those are just a few of the changes in the Consolidated Appropriations Act., and the ones that I think will most directly affect your businesses or your properties.Thanks for all of you who’ve watched my videos this year and made it worthwhile for me to continue making them.  I hope you have a wonderful holiday season, and I’ll see you next year!

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Mike Lin, CRE