Author Topic: Covid and landlords?  (Read 1901 times)

Kroaler

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Covid and landlords?
« on: April 24, 2020, 09:12:42 AM »
I don't see a clear path forward.

Right now everyone knows that landlords can't evict so they aren't paying rent.

Example: A family member works at a property with 1500 units. So far about 30% of rent is collected and there's not much that can be done about the 70% that isn't paying.

What's the long term solution here?  I imagine many places will soon start laying off the maintenance staff and property managers.   If the money isn't there, it isn't there...

Are any landlords on here just eating the cost? Or have most of your tenants paid?

SndcxxJ

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Re: Covid and landlords?
« Reply #1 on: April 25, 2020, 07:33:51 PM »
I don't have as many units as your family member manages but I still have three digits worth.  I allowed extra time for people to pay April's rent.  I ultimately had one family that could only do a partial payment and another that paid nothing (but there was issues there prior to covid), everyone else paid in full.  I think it comes down to unit class and type.  An F-C class building might have a hard time collecting at the best of times, and this is not the best of times.  Stimulus money won't go out to folks without social security numbers, and not even folks with ITINs so depending on the tenants it could be extra tough.  Generally speaking these properties get higher rents in proportion to unit cost so it COULD be factored into the purchase if the owner didn't spend every last penny to buy the building (and carrying costs of course).  This is going to hurt owners in the long run in a variety of ways even beyond rent collection, but it will also crush a lot of people credit assuming the owner leverages their power to try to collect.  Outside of rent collection I postponed rent increases that were to take effect April 1st, I am not sending out new increases as I normally would, I had a recent vacancy that took three weeks to fill which normally fills in the first week and the only way I got it filled was to discount the rent when I finally found someone well qualified.
I would not expect to recover most of the outstanding rent for that owner, but I would expect to be able to collect some.  If the tenant is choosing to destroy their credit in exchange for a few months without a rent payment then it appears they will pull it off.  If they don't have a SSN or an ITIN then they may not have a credit file to destroy!
Not a situation I would want to find myself in!

SwordGuy

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Re: Covid and landlords?
« Reply #2 on: April 25, 2020, 09:51:33 PM »
So far, so good.   Our tenants have been paying.

We don't have an antagonistic relationship, though, which will help.   Won't help with folks who lose their livelihood but it will help with convincing tenants to treat us right if they are able to.

Feivel2000

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Re: Covid and landlords?
« Reply #3 on: April 26, 2020, 02:06:09 AM »
Of course, people have to pay rent again at some point in time, unless we are switching to another kind of economic system.

But what I don't understand is how evicting people would be a short term solution. It will only give you more money than you get now, if you could fill the unit with someone who can pay. And if you don't have to spend money before someone else can move in. So how would it be better to evict people now instead of working out payment plans with them when the crisis is over?

Sometimes I am VERY happy to not live in the US. Your renting laws suck.

Michael in ABQ

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Re: Covid and landlords?
« Reply #4 on: April 26, 2020, 03:05:32 AM »
I don't see a clear path forward.

Right now everyone knows that landlords can't evict so they aren't paying rent.

Example: A family member works at a property with 1500 units. So far about 30% of rent is collected and there's not much that can be done about the 70% that isn't paying.

What's the long term solution here?  I imagine many places will soon start laying off the maintenance staff and property managers.   If the money isn't there, it isn't there...

Are any landlords on here just eating the cost? Or have most of your tenants paid?

1,500 units in a single complex? That's huge. I think the largest apartment complex here is about 500 units and that's 40-50 buildings.

I read some statistics a couple of weeks ago saying nationwide it was around 8-12% of residential tenants that hadn't paid by April 5th. Normal collection losses for apartments are 1% for Class A properties and 5%+ for Class C and lower.

Many of the job losses are among service workers who are more likely to be renting than own. Still, with the extra unemployment it seems hard to believe that 70% of tenants couldn't afford to pay rent. I suppose many are taking the same risk homeowners did during the last recession where they stopped paying their mortgage knowing it would take the lender 6-12 months to foreclose. Frankly it's theft in my opinion. There's a difference between truly not having the means to pay and trying to work something out and making a conscious decision that the landlord must be rich so screw them, I'm not going to pay and they can't do anything about it. Of course there will be a reckoning in a few months when those people in the latter group do get evicted and find it much harder to rent going forward.

SunnyDays

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Re: Covid and landlords?
« Reply #5 on: April 26, 2020, 10:23:26 AM »
Yeah, 70 % is a lot of people, which means some are likely just taking advantage.

I don't have rentals, but if I did, I would be sending a letter out to everyone telling them to contact me to make arrangements.  Delayed rent, reduced rent, etc would be on the table, but I would make it clear that no contact from them at all would mean eviction proceedings start as soon as allowed.

waltworks

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Re: Covid and landlords?
« Reply #6 on: April 26, 2020, 02:15:55 PM »
Landlords should be aiming to not lose their properties or have them damaged. That might mean massive rent reductions for some period of time, accepting delays in rent payments, etc. Get the tenants on your team if you can. Accept that your investment is not going to be making you any money for a while.

There are a lot of over-leveraged folks who will lose their property because they don't understand this, I'd guess. Then again we could be back up and running in 6 months and maybe those folks survive.

-W

Wrenchturner

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Re: Covid and landlords?
« Reply #7 on: April 26, 2020, 02:24:53 PM »
As a tenant who might move in the next few months, I'm definitely staying on good terms with my landlord, although I did negotiate a reduction in rent.  Tenants with a good reference are going to be very valuable coming out of this!

Kroaler

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Re: Covid and landlords?
« Reply #8 on: April 27, 2020, 07:45:45 AM »
I think the big thing is people are taking advantage of the ban on evictions.

I'm okay with reduced rents / deferred rents for those struggling.  However there should have been some requirement to reach out and ask for the deferral and attempt to craft a payment plan.

Instead people just don't pay - what's more ironic is my family member sent me photos from the trash collection sites the week the majority of stimulus money went out.  I've never seen so many empty tv boxes. It's clear what the priority was, you can't evict, well buy toys instead.

Maybe when all this is easing they start dropping evictions on anyone who didn't pay - but I doubt the government will let that happen.

Also as a side note to the person saying 1500 is alot.  Yes it is.  It's actually 3 distinct phases of about 500 units built at different times. But to me i think of it as one since they all touch property lines.  It's actually neat having an inside look at how that can be managed with 1 pm and 3 maintenance staff. I plan to borrow some best practices if i ever become a landlord.

lhamo

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Re: Covid and landlords?
« Reply #9 on: April 27, 2020, 08:34:36 AM »
It's actually neat having an inside look at how that can be managed with 1 pm and 3 maintenance staff. I plan to borrow some best practices if i ever become a landlord.

Most likely not very well.  Which probably contributes to people not wanting to pay their rent.

Michael in ABQ

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Re: Covid and landlords?
« Reply #10 on: April 27, 2020, 08:47:34 AM »
It's actually neat having an inside look at how that can be managed with 1 pm and 3 maintenance staff. I plan to borrow some best practices if i ever become a landlord.

Most likely not very well.  Which probably contributes to people not wanting to pay their rent.

Yeah, I can't imagine only three maintenance personnel for that many units. I appraised a lot of apartment complexes and I would expect to see a few assistant property managers and a maintenance staff of probably 10-15 for something that large. A typical 200-300 unit property would generally have 1-2 administrative staff and 2-4 maintenance staff.

SndcxxJ

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Re: Covid and landlords?
« Reply #11 on: April 27, 2020, 02:56:56 PM »
1 property manager and 3 maintenance staff is ridiculously tiny for that amount of units.  It's too small for a third of that many units!  Maybe they make use of a small army of sub contractors and the maintenance guys role is more to oversee the subs?  The owner might be saving a lot by running a skeleton crew but I would hate to see the condition of that property (or the books & office for that matter).

matchewed

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Re: Covid and landlords?
« Reply #12 on: May 01, 2020, 04:47:14 AM »
I think the big thing is people are taking advantage of the ban on evictions.

I'm okay with reduced rents / deferred rents for those struggling.  However there should have been some requirement to reach out and ask for the deferral and attempt to craft a payment plan.

Instead people just don't pay - what's more ironic is my family member sent me photos from the trash collection sites the week the majority of stimulus money went out.  I've never seen so many empty tv boxes. It's clear what the priority was, you can't evict, well buy toys instead.

Maybe when all this is easing they start dropping evictions on anyone who didn't pay - but I doubt the government will let that happen.

Also as a side note to the person saying 1500 is alot.  Yes it is.  It's actually 3 distinct phases of about 500 units built at different times. But to me i think of it as one since they all touch property lines.  It's actually neat having an inside look at how that can be managed with 1 pm and 3 maintenance staff. I plan to borrow some best practices if i ever become a landlord.

It is in the landlords interest to be proactive in this scenario. The tenant is not incentivized to be proactive in seeking rent reduction. I don't buy the "oh woe is my friend/family member" if they haven't reached out to try anything. And with 1500 units a couple of boxes in the garbage doesn't mean shit.

remizidae

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Re: Covid and landlords?
« Reply #13 on: May 04, 2020, 03:42:09 PM »
1 property manager and 3 maintenance staff is ridiculously tiny for that amount of units.  It's too small for a third of that many units!  Maybe they make use of a small army of sub contractors and the maintenance guys role is more to oversee the subs?  The owner might be saving a lot by running a skeleton crew but I would hate to see the condition of that property (or the books & office for that matter).

Maybe the lack of maintenance has something to do with why people aren't paying rent.

clarkfan1979

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Re: Covid and landlords?
« Reply #14 on: May 17, 2020, 02:25:42 PM »
The norm is one full-time person for every 100 units. My step-dad owns a 39 unit. His staff is 2 people at 20 hours/week. One management person and one maintenance person. For 1,500 units, there should be 15 full-time people. If they are very exception at what they do, maybe 10 full-time people at the least.

I have 3 rentals (4 doors). I have received all of my rent payments. One was two days late and I waived the late fee. I have one month deposit and last months rent. I wouldn't start to get worried until I get 2 straights months of non-payment.