Landlords in US are getting squeezed between tenants and lenders – ET RealEstate

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 year-round costs, like fixing appliances and leaky faucets.

Elia wonders how much longer his lenders will cut him slack.

“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, such as storefronts, or residential properties such as apartments. Many are borrowing money from relatives or dipping into their 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 as they get squeezed between lenders and tenants.

Residential landlords are also fighting back against 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 in places such as Tennessee, Georgia and Ohio, 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 all 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. “I don’t know what to do. My career was ripped out from under me. It’s gotten to the point of where it’s like, ‘Am I going to be homeless?’ I have no idea.'”

Some landlords are trying to work with their commercial or residential tenants, giving them a break on the rent or more flexible lease terms. But the crisis is costing them.

Analytics firm Trepp, which tracks a type of real estate loan taken out by owners of commercial properties such as offices, apartments, hotels and shopping centers, found that hotels have a nearly 23% rate of delinquency, or 30 days overdue, on their loans, while the retail industry has a 14.9% delinquency rate as of August.

The apartment rental market has so far navigated the crisis well, with a delinquency rate of 3%, according to Trepp. That’s in part because of the eviction moratorium, along with extra unemployment benefits from Washington that have since expired.

“There are bad actors, but the majority of landlords are struggling and are trying to work with a bad situation,” said Andreanecia M. Morris, executive director of HousingNOLA, a public-private partnership that pushes for more affordable housing in the New Orleans area.

Morris, who works with both landlords and tenants, said that government money wasn’t adequate to help tenants pay their rent, particularly in expensive cities. She is calling for comprehensive rental assistance.

She fears that residential landlords will see their properties foreclosed on next year, and the holdings will be bought by big corporations, which are not as invested in the neighborhoods.

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, “and it’s confusing.”



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In US, ‘cancel rent’ movement gains ground – ET RealEstate

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LOS ANGELES: Without a job and terrified of being left homeless during the coronavirus pandemic, Manuel Acero had no other option but to enlist in the US Army.

His distraught wife Ady Carrillo stayed behind in the studio apartment they rented in Los Angeles, but the 48-year-old isn’t just awaiting his return home — she’s taking action.

Carrillo has joined the “Cancel Rent” movement, which is gathering steam with protests across the United States as Americans hit hard by the coronavirus pandemic pile up debts.

Activists want landlords to suspend rent obligations for those in the most dire straits, having lost their jobs in the economic chaos sparked by the virus crisis.

Like the 31-year-old Acero, who is now at boot camp, many have been forced to resort to extreme measures.

“It’s been three months since we were able to make rent — the only choice my husband had left was to join the army,” Carrillo told AFP, bursting into tears.

“I’m scared they’ll send him away from me” on an overseas deployment, she said. “If he dies, I die with him.”

– Housing as ‘human right’ – With tens of millions of Americans out of work because of the pandemic, federal, state and local authorities temporarily suspended evictions on tenants who cannot make rent.

But many worry about what happens when those concessions run out.

Over the past week, the Los Angeles County Sheriff’s Department has resumed evictions ordered before March when the lockdowns began, local media have reported.

In the city’s Chinatown neighborhood on Monday, a small group of protesters including Carrillo rallied and marched on City Hall, demanding answers.

“Cancel rent!” “Housing is a human right!” community organizer Annie Shaw yelled into a megaphone.

“We demand strong measures like canceling rents,” Shaw said. “Canceling rent will protect the community.”

Los Angeles has the sixth-highest rents in the country, according to a ranking by the real estate site Zumper, trailing behind cities like San Francisco and New York.

“It’s been so hard for me to make rent during the pandemic,” said Rosa Hernandez, who also attended Monday’s rally.

“I am an independent cleaner, and used to make $700 a week. Now I make only $100 to $200 a week. If there is food on the table, there is no extra money for rent.”

– ‘We are not going to pay’ – Demonstrations and “rent strikes” by the “Cancel Rent” movement have been staged in various cities across the country since the start of the virus epidemic, which has so far left more than 164,000 Americans dead.

“We are not going to pay,” said Lydia Nicholson, an organizer of the LA Tenants Union.

“I don’t think it’s going to be pretty at all for anyone if they make us do something that we just obviously can’t do.”

Los Angeles prosecutors have said large-scale rent forgiveness is out of the question, and would cost the city more than $1 billion in compensation to landlords, according to a memo seen by the Los Angeles Times.

Mayor Eric Garcetti’s office did not respond to an AFP request for comment for this story.

For their part, landlords say freezing rents would not only affect the upkeep of their properties but would also impact the payment of taxes, which are key to the city budget, as well as mortgages.

Suspending rent payments is “just shifting the debt up the food chain,” said Jay Martin, director of a group that represents owners of rent-controlled properties in New York.

He said that many landlords “are working with [tenants], they are forgiving parts of the rent.”

“A tenant that can pay partial rent is better than a tenant who can pay no rent,” Martin said.

But the situation only appears set to get worse as federal supplementary support of $600 a week for the unemployed has now expired.

“I’ll have to go sleep under a bridge,” said Joaquin Gutierrez, 63 who has been out of work since February.

Gutierrez had been planning on returning to his native El Salvador when the coronavirus broke out and left him stranded in the United States.

Now, he does not have money to buy food, much less the $500 needed to pay the rent on his room in LA’s Van Nuys neighborhood.

“The only solution is for me to leave,” Gutierrez said, calling on the government of El Salvador to repatriate him.



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