Landlords stuck in the middle between tenants and lenders
NEW YORK — When it comes to sympathetic figures, landlords aren’t exactly at the top of the list. But they, too, have fallen on hard times, demonstrating how the coronavirus outbreak spares almost no one.
Take Shad Elia, who owns 24 single-family apartment units in the Boston area. He says government stimulus benefits allowed his hard-hit tenants to continue to pay the rent. But now that the aid has expired, with Congress unlikely to pass a new package before Election Day, they are falling behind.
Heading into a New England winter, Elia is worried about such expenses as heat and snowplowing in addition to the regular yearround costs, like fixing appliances and leaky faucets.
“We still have a mortgage. We still have expenses on these properties,” he said. “But there comes a point where we will exhaust whatever reserves we have. At some point, we will fall behind on our payments. They can’t expect landlords to provide subsidized housing.”
The stakes are particularly high for small landlords, whether they own commercial properties or residential properties. Many are borrowing money from relatives or dipping into personal savings to meet their mortgage payments.
The big residential and commercial landlords have more options. For instance, the nation’s biggest mall owner, Simon Property Group, is in talks to buy J.C. Penney, a move that would prevent the department store chain from going under and causing Simon to lose one of its biggest tenants. At the same time, Simon is suing The Gap for $107 million in back rent.
Michael Hamilton, a Los Angeles-based real estate
partner at the law firm O’Melveny & Myers, said he expects to see more retail and other commercial landlords going to court to collect back rent.
Residential landlords are also fighting a Trump administration eviction moratorium that protects certain tenants through the end of 2020. At least 26 lawsuits have been filed by property owners around the country, many of them claiming the moratorium unfairly strains landlords’ finances and violates their rights.
Apartment dwellers and other residential tenants in the U.S. owe roughly $25 billion in back rent, and that will reach nearly $70 billion by year’s end, according to an estimate in August by Moody’s Analytics.
An estimated 30 million to 40 million people in the U.S. could be at risk of eviction in the next several months, according to an August report by the Aspen Institute, a nonprofit organization.
Jessica Elizabeth Michelle, 37, a single mother with a 7-month-old baby, represents a growing number of renters who are afraid of being homeless once the moratorium on evictions ends.
The San Francisco resident saw her income of $6,000 a month as an event planner evaporate when
COVID-19 hit. Supplemental aid from the federal government and the city helped her pay her monthly rent of $2,400 through September. But that has dried up, except for the unemployment checks that total less than $2,000 a month.
For her October rent, she handed $1,000 to her landlord. She said her landlord has been supportive but has made it clear he has bills to pay too.
“I never had an issue of paying rent up until now. I cry all night long. It’s terrifying,” Michelle said.
Gary Zaremba, who owns and and manages 350 apartment units spread out over 100 buildings in Dayton, Ohio, said he has been working with struggling tenants — many of them hourly workers in restaurants and stores — and directs them to social service agencies for additional help.
But he is nervous about what’s next, especially with winter approaching and the prospect of restaurants shutting down and putting his tenants out of work. He has a small mortgage on the buildings he owns but still has to pay property taxes and fix things like broken windows or leaky plumbing.
“As a landlord, I have to navigate a global pandemic on my own,” Zaremba said.