As millions of people lose paychecks amid the coronavirus pandemic, some 48 million renters have missed their April 1 payments, causing financial trouble for mom-and-pop landlords, according to a CNBC report on Thursday (April 2).
Property management firm Avail said there are about 8 million individual landlords in the U.S. that own 10 rental properties or less — roughly 50 percent of rental properties nationwide.
In a March Avail survey of more than 3,000 mom-and-pop landlords and over 7,000 tenants, 54 percent of renters indicated that they were already jobless because of the COVID-19 pandemic. About a third of those already laid off they would stop paying rent if they couldn’t make ends meet. Others indicated they would ask family or friends for money and some said they were not sure what they were going to do.
Most landlords have mortgages and all expenses won’t be covered by the government stimulus package, Avail said.
Laurence Jankelow, co-founder of Avail, told CNBC that many smaller landlords don’t earn much from rental properties. Most of the money coming in every month goes toward expenses, with the real benefit being property appreciation in the future.
“The expenses they have to pay for maintenance on the building — there’s no forbearance on paying your utility bill,” he said.
By way of example, Taylor Denchfield is handling tenants individually on the several properties he owns in Maryland.
“There is virtually zero assistance for middle-of-the-road landlords,” said Denchfield. “The federal stimulus package, and various state legislation, contain assistance for individuals, and for businesses in the form of grants and loans, but little to no relief for property owners.”
Denchfield is also concerned that some tenants who get expanded unemployment and stimulus checks will skip out on the rent anyway because of the stay on evictions in most states.
“What I believe we will see is in addition to the tenants that truly cannot pay during this time, there will be a number of tenants who are chronically behind that will simply refuse to pay because they know they cannot be evicted,” he said.
Retailers, too, anticipate having trouble making rental payments amid closures. Mattress Firm and Subway are among the major U.S. merchants that don’t want to pay rent in full due to the coronavirus pandemic’s economic effects.