Landlords need relief from COVID, too
The Biden administration, Congress and the Supreme Court have whipsawed landlords in recent weeks, imposing, debating, lifting and then reimposing a ban on residential evictions.
The whirlwind in Washington, though, is the least of the challenges property managers are facing. Balancing the demands for empathy from tenants, fiscal responsibility from banks and patience from charities is the real challenge.
Since the early days of the COVID-19 pandemic, I’ve been checking in with Ashford Communities Vice President Amer Kumar and Maduforo Eze, the director of business development for the company, which owns and operates 15 complexes for the working class. They make decisions that impact their investors and tenants every day.
“Sometimes it can be a little frustrating being kind of the bad guy in the room when we’re trying not to be the bad guy,” Kumar told me. “(Outsiders) are only seeing the people that can’t pay, whereas we also have expenses. And some of those people that can’t pay just don’t care about us.”
Renters are a third of U.S. households, according to the Census Bureau. Young people, racial and ethnic minorities and those with lower incomes are the majority of tenants, and that is true of Ashford’s 5,200 units that operate on very thin profit margins.
The federal government estimates that 11 million Americans are behind on rent and could lose their homes and credit ratings in an eviction proceeding. Congress has authorized $45 billion in rent relief, but state and local agencies have distributed only a sliver of the funds.
Ashford’s tenants tend to work in the service
sectors most upended by the pandemic. The Centers for Disease Control and Prevention declared a moratorium on evictions last September to keep people in their homes. By December, a quarter of Ashford’s tenants were not paying rent, Kumar said.
“We knew that they were going to be financially hit, losing jobs, losing their contracts and things like that,” Eze explained. “We created these road maps where we had our onsite teams helping our residents to get rental assistance.”
Kumar added a new employee whose sole job is to help residents get rental assistance. Ashford’s management team found itself learning the complicated world of nonprofit groups, assistance applications and the long wait between when a renter is approved and the day the check arrives. Sometimes it takes months.
The drop in revenue has taken a toll on Ashford. The company has not paid dividends to investors since the pandemic began. The founder and CEO, Ashok Kumar, has spent his personal savings to keep Ashford up to date on mortgages, property taxes and salaries at some properties.
July was the best month since the pandemic began, Amer Kumar said. Unpaid rents totaled only $400,000, or about 10 percent less than what was due.
“We’re not complaining because a lot of people are suffering a lot worse than us, which is unfortunate, but then it’s kind of frustrating because people are spending money on other stuff that’s not their rent or food,” Kumar said. One delinquent tenant recently asked for a parking pass for a new car.
Eze said between 3 percent and 5 percent of tenants had ignored his entreaties to apply for rental assistance. Ashford staff offer to help with rental relief applications and other forms of assistance, including for noncitizens, but some tenants simply refuse.
“Some residents just do not want to cooperate and just don’t want the help,” Eze said. “They are taking advantage of the system because they know they’re not going to get evicted because of the CDC moratorium or because of the local moratoriums that we had in the early stages of this pandemic.”
Kumar and Eze said they were looking forward to the moratorium lifting, not because they want to evict tenants, but because they believe it will encourage the recalcitrant to finally apply for assistance. They say they need leverage to get people to help themselves and their landlord.
“The worst thing in the world for us to do is file for an eviction because it affects the rest of their lives on their credit report,” Kumar explained.
“It costs us more money to evict somebody than it would cost to keep them and work with them to get them rental assistance.”
The CDC on Tuesday extended the eviction moratorium to Oct. 3. The stated goal is to give nonprofits and local agencies more time to distribute the aid approved by Congress. But that’s another two months of financial distress for landlords such as Ashford that are trying to do the right thing.
Everyone understands that increasing homelessness is bad, but demanding too much from landlords is too.