The federal government’s seemingly never-ending eviction moratorium made headline news twice this past week when a federal court ruled the national eviction moratorium was invalid, only to have another court issue reverse that decision for the time being.
Apartment owners and operators continue to work to manage what’s coming next while many residents stay put in their apartments, owing millions of dollars in back rent.
Debt is piling up all over the place for owners, too, and there is one solution that could make a difference – namely those needles in the recently allocated $50 billion-plus haystack from the Emergency Rental Assistance Program (ERAP) and The Consolidated Appropriations Act designed to support of eligible renters in need.
I say needle because figuring out a way to get access to these funds is a 50-state journey, as each has its own criteria. Some operators have not even begun to look into the process which isn’t wise. The allocated funding is first-come, first served.
Solving this big problem is both good for apartment owners and their residents. And yes, you can “apply” on behalf of the delinquent renter and get those applications taken care of.
Smaller owner-operators were impacted the most over the last 12 months; the smaller the portfolio the bigger the impact from uncollected rent. For an owner with a smaller unit count, even a handful of residents who do not pay their rent for even one month put a strain on the owner. Several months of back owed debt starts to impact the owner’s ability to maintain the property, or worse, pay their mortgage. But rent is rent, and income is income. As of the end of 2020, the average delinquent renter owed approximately $5,000. So, even if you only have a handful of them, it pays to follow up and work out a payment plan for them.
To Reach Residents, Try a New Approach
I hear from operators that residents are ghosting them, even though they are trying to help them. Sincere, direct and persistent resident communications is the key to building valuable and trusting relationships with those who are behind on rent.
Those who have become chronically delinquent might not be responding – and in fact, avoiding you. Consider referencing news updates about the eviction moratorium via text or email to create a new sense of urgency. If standard outreach approaches, such as email or texting, aren’t effective, you need to consider new techniques to connect with them.
Visiting them at their apartment home is a good first option. And for those who have regained employment – and keep 9-to-5 hours – it’s worth adjusting operating hours for some of your staff so that they can visit residents in the early evening, perhaps after 7 p.m.
If this timing isn’t right, another option is contacting them by phone. Use the “emergency” contact number they gave you if you have to.
Finally, during my more than 20 years in property management, including spanning three recessions, one successful approach was to leave residents notes that tell them they have a package to pick up at the leasing office. When they visit us, we give them a gift card (it’s the “package”), but more importantly, it creates an opportunity for the property manager to speak to the resident about qualifying for financial relief.
It’s at this point when you can help them fill out the application. Many in the industry we speak to aren’t aware of how to apply for this aid. Each state has its own criteria and process. Here are a few resources to leverage:
LeaseLock’s State-By-State Application List
Emergency Rental Assistance FAQs
Onsite staff are going to have a bigger “lift” on this – relying on the resident to know what to do is simply unrealistic. If owners and operators are struggling to navigate the process to apply for funds, imagine how difficult it must be for the renters.
Property management companies and their residents need to understand this and more importantly, how to access it. Companies’ corporate headquarters should appoint someone who is expert at navigating this renter support fund procedure.
Don’t Let Your Residents ‘Shut Down’ on You
It’s been my experience that when renters begin to fall behind on their rent, their tough times spiral downward, and they shut down. Don’t be surprised if they display helplessness to you, and then even give up. Unfortunately, they might decide it’s best to move out, but that’s not a good solution and will harm their overall economic viabilities.
For another group of renters, they were receiving not one, but two stimulus checks. Some were getting significant bumps on top of their state unemployment benefits for a six-month period last year. And every day, they heard from the media that they didn’t have to pay rent because the moratorium protected them.
Misinformed residents who “feel they are safe in place” because of the moratorium, based on what they see and hear in the news, are often the ones who are most in need of accessing federal support funds through their states.
Unfortunately, some spent their stimulus dollars to pay down credit card bills or car payments. But really, their rent payment is the biggest check they have to write each month, and it should be a priority, or else their credit score and rental payment history will be hurt.
Some residents simply take too much of a short-term outlook on their finances and not a long-term one. They might be thinking, “Oh, another stimulus is coming. I’m all right.”
Owners: Don’t Have a False Sense of Security
We see in the ResMan database that more residents engaged in rental payment option plans with their owners in the first quarter. We saw 400 to 500 new repayment plans initiated. That’s a lot more than the .001 percent from a year ago.
Owner/managers, too, shouldn’t feel they are above it all and don’t have to participate in (the name of the support plan). In recent months, their occupancy and collections might be increasing, but unpaid rent remains and it’s important to address it.
“Oh, this wasn’t as painful as we thought it would be,” is not the right mentality in today’s market. Don’t let the same sense of urgency you had months ago, go away. You need to get engaged with your renters and be relentless. If they move out, it’s not good for you, either.
One thing not to do is criticize your residents on social media. You should not be callous about their situations and not rush to judgment about their behaviors because you don’t know the whole story. Therefore, if you get a chance to do so, listen.