With jobless claims at record levels, the obvious concern for a broad swath of America is what to do when the rent or mortgage is due. Unfortunately, because of such overwhelming unemployment rates, nearly a quarter of Americans couldn’t make a full housing payment in the month of April.
Luckily in Dallas, many landlords are giving tenants a break on their rent, offering reduced payments or long-term repayment plans if deferring rent for a month or two.
Service Industry Bears Brunt of Impact
Huge numbers of hairstylists, massage therapists, retail workers, and restaurant industry employees are all out of work until the region recovers from COVID-19 quarantine.
According to an ApartmentList survey, renters are disproportionately likely to work in the low-wage occupations being hit hardest by shelter-in-place restrictions, and accordingly, they seem to grow more worried about their ability to pay rent the longer these restrictions remain in place.
“I know that my tenants work in industries that were hit hard and both were furloughed,” said Amanda Mann, a Dallas property owner and landlord. “They have been wonderful tenants and have consistently gone above and beyond to take good care of my house and yard. The peace of mind that they provide me is invaluable. So I knew I wanted to offer them a break on rent during this difficult time.”
Her tenants are not alone. Some recently jobless renters in several industries are struggling, too, especially considering that huge proportions of hourly workers also tend to be housing cost-burdened.
Johnny Boucher’s tenants had drastic income reductions that put incredible strain on their ability to pay rent.
“As March rolled along with so many jobs sent home and workers laid off, I reached out to our tenants. Are they seeing hours cut back, are they stretched thin?” Boucher said. “Yes, they said — cut from three incomes down to one job part-time.”
North Oak Cliff Realtor Jenni Stolarski has one tenant that worked at an upscale restaurant that closed quickly once the shelter-in-place order went into effect. A second tenant has two children and works in a salon. Even when she goes back to work, Stolarski said, she’s still be a home-schooling parent.
“COVID-19 has been a struggle for everyone,” said Phillip Murrell, a Compass Dallas Realtor and landlord. “I knew my tenant was in retail and was concerned about his ability to pay his rent and offered to defer a couple months payment or work out a new payment schedule to ease the transition back into normalcy.”
Communication With Tenants is Key
“I contacted five of our friends who are landlords at the beginning of March,” Stolarski said. “No one had thoughts on what they were going to do. Most were just going to wait for tenants to come to them.”
According to the study from ApartmentList, one in nine renters had their landlord or management company proactively lower their April rent. Among those missing their full payments, 45 percent of renters and 44 percent of homeowners were able to agree to reduced or deferred payments with their landlords and lenders, respectively.
Additionally, leasing software platform Entrata reported a significant spike in the number of repayment agreements created in April, as well as record usage of the software’s payment deferment option. In the first week of April, properties generated more than 815 repayment agreements compared to just 32 agreements the previous year.
“In April, two of our nine tenants asked to pay full rent because they did not have income reductions,” Stolarski said. “For May and going, we are handling it on a case-by-case basis. One tenant is getting a 12-month plan, with various reductions. No repayment required.”
Mann’s tenants asked to pay a portion of the rent for April after paying for the essentials, such as groceries and gas. And she’s already working with her tenants to plan ahead.
“Right now, our agreement was for April rent, but I anticipate that we will work out a similar agreement for May,” she added. “They have kept me posted about stimulus or unemployment benefits that they are waiting on so we have all agreed to just play it by ear because we know that everyone is just as confused as we are right now.”
Why should landlords give tenants a break on rent? Stolarski says compassion drove her decision. Of course, if that doesn’t sway landlords, Compass agent Phillip Murrell says it’s just economics.
“If not for compassion, it’s a good business decision,” he said. “The possible eviction process and the expense of finding a new tenant are far more costly than losing a couple of month’s rent.”
For Mann, it’s because she can relate.
“My decision was made mostly because it was not long ago that I was both a renter and in the service industry,” she said. “And I would be incredibly screwed right now unless I had a landlord willing to work with me and be compassionate.”
Long Term, Landlords Will Feel The Pinch
While renters and homeowners wait for stimulus checks to hit bank accouunts so they can pay for housing costs, in turn, some landlords will be feeling the pain of this coronavirus-induced economic recession for a while.
Stolarski says she will try to ask for mortgage forgiveness for her rental properties. “But if they don’t give it,” she said, “that will not stop us from working with our tenants.”
For Mann, cutting her tenants a break on rent isn’t necessarily a huge burden on her, but it’s definitely money out of her pocket.
“My mortgage company isn’t doing much to help owners. They have offered to let me just pay the principal for April and May (which I am taking advantage of), but even that was an uphill battle,” she said.
Mann also said it’s worth noting that landlords should have some kind of “rainy day fund” to offset these kinds of issues with payment.
“I am by no means wealthy and don’t even make any profit off renting out my house. So to hear a bunch of landlords who do this for a living cry foul seems either fishy or greedy to me,” she said. “If you’ve been making a profit off your tenants up to this point, you should certainly have a slush fund for emergencies/disasters/extended vacancies. Not to mention that sending out a terse email or flyer saying, ‘Rent is still due, no matter what’ is not only pretty heartless but also eliminating any possibility of being able to work out something with your tenants.”
But that’s exactly the kind of response some Dallas-Fort Worth tenants are receiving. Some tenants are reporting large apartment management firms have demanded rent and are charging late fees. Emails to confirm these practices haven’t yet been returned. However, firms such as Camden Property Trust and Equity Apartments have launched programs to help ease the strain.
Camden has created a grant program for living expenses for jobless residents. Equity has taken it a step further with a more comprehensive plan that includes a complete stop to evictions, zero-increase lease renewals, and payment plans.
Look For The Helpers
“Crisis should awaken a sense of duty to take care of one another,” said Boucher. “Waiving rent while we know our tenants can’t work is the least we could do.”
It’s definitely an act that not only renters benefit from, but the more good news we share about people coming together amidst this unprecedented challenge, the better.
Murrell definitely agrees.
“I’ve heard so many incredible stories of compassion during this time and I’m blessed to have the ability to be flexible,” he said. “I would encourage other landlords to consider making concessions to keep people in their homes.”
And perhaps large-scale landlords should take notes from Amanda, Jenni, Phillip, and Johnny on how to treat tenants. Their generosity is the very example of how to not only do good business but to do business, good.
“For us, if we don’t get a rent payment one month, it makes our family budget tighter, but we aren’t going without,” Boucher said. “On the other hand, if we’d been heavy-handed about rent, they might have to give up buying medicine, diapers, or food. That’s not okay with us. “