Landlords welcome rental assistance
Maxamed Farax feels like a victim of the federal ban on evictions.
“It’s killing us,” said Farax, a native of Somalia. “We’re going deeper into the hole.”
The former data programmer said he recently moved to Milwaukee from Tennessee
and has bought seven rental properties, some with a partner, since 2018. Two of the properties have been sold and a third is being sold because of financial difficulties resulting from the COVID-19 pandemic.
Farax said he was attracted to Milwaukee because he saw a market where rent was high compared to low property costs. But Farax has learned that being a landlord isn’t profitable if the tenant doesn’t pay rent — a situation exacerbated by government bans on evictions, including the federal ban that started Sept. 4.
Farax has been to court a half-dozen times since June 8 when he sued to evict tenants from a northwest side condominium his Holy Land Construction LLC company bought at a sheriff ’s foreclosure sale for $10,000 in 2018. The action was filed shortly after a state ban on evictions expired.
Worn out by the ordeal, Farax said he is selling the now-vacant condo for $25,000 — which he said is just enough to cover the purchase price and renovation costs.
The tenant, Sakeena Holman, said she moved out about three weeks ago after the agent for the company buying the condo paid her $1,000 to vacate. She said she doesn’t plan to pay back rent, arguing she and her adult daughter lost income because of the coronavirus pandemic.
“When he gets a dime from me I’ll be dead in my grave,” she said.
And Farax said he learned an expensive lesson.
“The laws are supposed to be designed to go after big guys,” Farax said. “But it’s the little guys that get caught up in the dragnet.”
There is no doubt moratoriums on eviction have helped financially strapped tenants who lost jobs because of the COVID-19 pandemic keep a roof over their heads.
The federal ban on evictions was scheduled to expire Dec. 31, but an agreement on the relief bill reached by congressional leaders over the weekend extends the partial ban to Jan. 31.
Flood of evictions predicted
On the other side of the ledger are landlords who complain that they remain liable to pay mortgages, maintenance costs and taxes whether or not they are collecting rent.
“This is not a situation where there is a good guy and a bad guy or a winner and a loser,” said Raphael Ramos, head of the Eviction Defense Project, which represents tenants. “Everyone is suffering.”
Housing experts say that the extension of the moratorium is a Band-Aid and that the courts will be flooded with eviction filings once it ends.
“Anytime a moratorium is lifted you see dramatic spikes in evictions,” said Matt Mleczko, a research assistant at Princeton University’s Eviction Lab. The Eviction Lab was founded by Matthew Desmond, who wrote “Evicted: Poverty and Profit in the American City” after studying the situation in Milwaukee.
Mleczko, who focuses on Wisconsin, expects the boom in evictions will occur again when the current moratorium ordered by the Centers for Disease Control and Prevention expires.
“There’s going to be a very, very negative outcome given that we’re still in a global pandemic,” Mleczko said.
The U.S. Census Bureau’s most recent Household Pulse Survey found that 58% of the Wisconsin residents it questioned who were behind on their rent expected to be evicted or forced out in the next two months, according to the survey released last week.
The CDC eviction moratorium does not remove the requirement that tenants pay their rent.
“While the moratorium is in place... the renter still owes their rent and that back rent continues to accumulate,” said Andrew Aurand, vice president of research at the National Low Income Housing Coalition. “Without additional rental assistance, we’re just delaying evictions.”
The federal relief bill calls for $25 billion in rent assistance, an amount that many housing experts said is not enough to prevent an explosion of evictions when the moratorium ends.
“The $25 billion is important and great,” Aurand said. “It’s a solution that will cover a couple of months. We need more.”
Estimates are that as much as $70 billion to $100 billion in rent assistance is needed nationally to keep renters in their homes and provide landlords with the cash needed to cover mortgages and other expenses.
“I don’t think a landlord should be expected to shoulder the burden of taking care of a property for several months or a year,” when a tenant stops paying rent, said Dawn Anastasi, a landlord who owns 18 properties on the northwest side of Milwaukee. “It’s not the tenant’s fault, but it’s not the landlord’s fault either.”
Even with the rent assistance, landlords will be left holding the bag for much of the rent, predicted Tim Ballering, treasurer of the Apartment Association of Southeastern Wisconsin.
“The unpaid rent will never be paid, let’s be honest about that,” Ballering said, noting that even when a tenant is evicted the landlord seldom collects the past due rent.
As a result, Ballering, also a landlord, predicted a spike in the number of local landlords who sell their properties to large absentee rental companies.
“Is that a good thing or a bad thing?” Ballering asked. “That depends on your views. Do you think that the small American farmer being driven out by large corporate farmers is a good thing?”
Heiner Giese, attorney for the association, said the $25 billion in rent assistance will be helpful though he agreed it would likely only last a couple of months.
Giese noted that the federal bill will allow landlords to file for rent assistance, unlike other rent assistance programs that require the tenant to apply
Giese, who is also a landlord, said he has seen cases where tenants signed the required CDC declaration that protected them from eviction but then did not apply for any rent assistance.
“They would just say he’s going to evict me anyway, so screw it,” Giese said.
Though the CDC moratorium is referred to as an eviction ban, it really has been more of a slowdown — only tenants who meet the criteria and sign a
CDC declaration are covered by it.
Since the moratorium began Sept. 4, Milwaukee County sheriff’s deputies have evicted about 300 individuals and families from their homes — a figure that does not include people who leave when a landlord begins eviction proceedings but before a court issues an eviction order.
In addition, 2,041 eviction suits have been filed in Milwaukee County from Sept. 4 through Friday, and there are more than 1,500 hearings on eviction cases scheduled to be heard in Milwaukee County courts in January. The hearings are for a variety of issues related to eviction lawsuits.
Mary Triggiano, Milwaukee County chief judge, said officials are hoping to cut down on the eviction caseload by working with the newly formed Housing Resource Center to encourage mediation and other alternatives to eviction.
“What can we work on outside of filing evictions, outside the realm of the courts,” Triggiano said.
The $25 billion in new federal money is in addition to City of Milwaukee, Milwaukee County and state programs that set aside more than $50 million in federal CARES Act funding for rent assistance.
The $35 million in federal funds set aside by the state in May has been spent. The city set aside $15 million of its CARES Act funds for rent assistance, and the county is using nearly $11 million of its federal funds to help tenants pay rent.
Lakesha Green, a Milwaukee landlord with two north side properties, said rent assistance is just as important to landlords as it is tenants — especially when many evictions are banned.
Green said she struggled with her own bills when one of her tenants fell about five months behind on their rent.
“It’s putting me totally in a hole,” Green said early this month. “We can’t evict them, but I need my money.”
The situation changed last week when Green received money from the county rent assistance program to cover four months of rent her tenant owed. “It’s a blessing,” she said. Providing adequate rent assistance is vital for an eviction moratorium to succeed, said the Eviction Labs’ Mleczko
“Holding down evictions is only part of the solution,” Mleczko said. “As long as rental debts are occurring and growing, you’re going to keep having the same crisis over and over until the (payment) gap is filled.”