Is housing better, worse, or stable in your area?

Question

COVID-19 is having an impact on the entire country. I'm curious to hear what others are seeing in their local market. How has it impacted your investments, your local market, or your state-wide market?

1. Has the state put a moratorium on evictions, mortgage payments, rent payments, etc? If so, how is that impacting you?

2. Are your renters leaving on schedule? Are they asking for an extension so they can stay in place?

3. Have you seen an increase in early terminations? How about abandoned property?

4. Are renters contacting you about paying late? Demanding rent forgiveness? Negotiating something in the middle? Setting your mailbox on fire?

5. Do you still see a lot of prospective renters? Are you still getting the same number of calls, emails, etc?

John Underwood · Answer

Things are stable. Rent for April is starting to come in, most don't pay until day before it would be late.

One tenant has contact me saying they lost their job. They have an interview with a landscaping company today.

No early terminations or abandonment (so far)

I doubt I could get an eviction hearing if I wanted to. County offices are open so I know I could at least file any evictions.

I re-rented a place last week with no problem.

I am getting a rental ready for a new tenant and feel I will have no problem getting it rented quickly. I will as always make sure they can pay the rent.

I know my section 8 properties will direct deposit on the 8th same as always. I know one getting disability will make the rent. I only have a couple in the hospitality industry that I'm sure will struggle.

I don't think any of my tenants will demand free rent. But I will help any tenant that is trying to help them selves including possible free rent. I want to make sure they are successful and bale to rent going forward and I will do what I need to make that happen instead of kicking them to the curb for not paying some rent.

Any tenants making demands will not be my tenants for very long.

Payment plans might be on the table for those I think can afford to do so.

There may be a bigger costs for a turnover than forgiving some rent to keep an otherwise good tenant.

Greg M. · Answer

I think it is still way too early to tell the answers to a lot of these. What happens for April may be very different than what happens for May. A lot of people got a March 15th/30th paycheck and many included saved up sick and vacation pay, but there will be no more checks after that. The desperation will come next month.

For my area:

City and state put moratorium on evictions. City also decided for landlords how long tenants have to pay missed rent (12 months after crisis ends). It's not like we could get a fast eviction before this, so another 2 months probably isn't going to kill any landlord.

Rent payments have ranged from can't pay anything and will you forgive the entire rent, to partial payment with an odd expectation that I would forgive the difference, to full payment, to one tenant saying they are sick (didn't mention Coronavirus).

I have no vacancies, so I can only go by what I see offered online - which is something that I pay close attention to. There are less vacancies listed than normal. Quite a few of them were listed in the last two weeks. This is typical as vacancies don't last long here, so mainly fresh inventory shows available. Pricing seems to be stable. The only difference I'm noticing is that a lot of the larger complexes are offering move-in specials like one month free or first month at a reduced cost of 25%-33% of the normal rate. That's something that hadn't been popular since the Great Recession. One overpriced complex that used to push their fancy gym and community eating areas and that appeared to rather have a vacancy than lower their rent seems to have actually lowered their rates a bit. Not a lot, but maybe 5%.

Sylvia B. · Answer

We invest in a small town with a rather high demand for rentals. That has not changed. We still get calls almost every day from people looking for houses to rent. We are not under a state-wide stay at home order, and have had no cases in our county yet, though there has been one in the town closest to ours (different county)

Most of our tenants have jobs that so far have not been greatly affected, but some will definitely have problems if ordered to stay at home, since their business is not "essential". We will cross that bridge when we come to it.

There is no moratorium on evictions, but the courts aren't hearing eviction cases right now, so . . . But the only tenant that I was concerned about possibly needing to evict moved to New Mexico last month, so evictions aren't a concern right now.

I have 1 tenant closing on a house purchase in May (they hope) but the other 11 aren't going anywhere for a while. This tenant has been good, solid tenants for 5 1/2 years and originally only planned to rent for 6 months to a year.

No one has said anything about not being able to pay, and most have paid already. I expect the last 3 payments by Saturday.

So for us, things are still very much business as usual so far.

Julie Marquez · Answer

@Nathan G. What specifically are you doing to work with those who can't pay rent? Do you make them fill out a bunch of hardship paperwork, work out a payment plan, change the terms of their rental agreement? It's easy to work with the good tenants that mean well, but not so much for the always late (I should have kicked him out months ago) person.

Julie Marquez · Answer

@Nathan G. I have two vacancies right now (they both left because they bought houses), and I am not getting much response right now. Maybe 25% of the usual inquiry amount and I usually hold open houses, but can't do that now, so I don't know how it would have compared.

I've had no problem with my usual contractors coming in to work solo to clean the carpets or get the hot water heater replace.

For rent day, it was all the same. A lot of my tenants are on social security or some other already established government subsidies, and the same people that always pay late, still pay later and ask "what are you going to do for me?" Nothing different yet in that camp. I hope this isn't classified as discrimination, but my late fees and waivers will vary by tenant - if s/he is in good standing or not.

Our state has a moratorium on evictions, but I'm unclear about my usual (just cause) 20-Day Notice to Vacate. I'd still like to use that one, we have all M2M rental agreements.

More interesting is calling all my lenders to understand their options. The Fannie Mae backed ones only offer forbearance of 90 days or 7 months. Chase is a 90 day forbearance, and my local portfolio lender and commercial bank offer deferrals.

Nathan Gesner · Answer

@John Underwood my experience is about the same.

I have 360-ish rentals under management. I've had two college students, two student teachers, and one waitress tell me they were moving out and they were gone within a few days. They had paid through March and were out before April. I still have their deposit and anticipate we'll rent their unit within 1-2 weeks so there won't be any loss to the Landlord.

Only 0.4% of my renters (<15 out of 360) have contacted me to say they will be late because they're waiting on unemployment or some other assistance.

Over half of my renters have paid so far.

We're still getting a steady stream of inquiries for available rentals. Apartments are renting quickly but I've noticed a significant slow-down on single-family homes.

Sarah Brown · Answer

All good questions! The market seems to be fairly stable here.  We have seen a small dip in new purchases, but not significant.  A lot of our market is driven by folks moving in though, so that could change over the next couple of months.

I have only had one tenant call me concerned about her ability to make rent.  She received a 25% pay cut in March.  We discussed some options if she gets to that point.  She is a great tenant.  I would rather work with her and get her on a payment plan, to try to turn the unit.

Didn't the stimulus package make it so no states could evict, charge late fees, give notices? That was my interpretation.  Not necessarily up to the individual states any more.

Nathan Gesner · Answer

That's a good question. I was originally planning to have them fill out a form proving hardship. Then I decided that was probably unnecessary. Most people are trying to do the right thing and I have no evidence to the contrary, so why be so confrontational? Now, if it were a tenant that has proven themselves unreliable in the past, then I still reserve the option of asking for some evidence.

So far, I haven't voluntarily offered any concessions. When tenants call in to tell me they will be late, I thank them for keeping us informed and then tell them we will waive late fees. I also let them know we have no intention of evicting anyone for paying late this month. They all seem very appreciative of this.

If a tenant fails to communicate, hides from me, abandons the property, or otherwise tries to avoid working with us, then I'll follow my normal procedures, as much as the law allows.

Nathan Gesner · Answer

Thanks for sharing, Sarah!

The moratorium is only on federally backed loans. Many Landlords don't have federally backed loans, or they have no loan at all. So a lot of renters are still subject to late fees, evictions, or notices to vacate. Some states, counties, or cities have created their own laws.

Even if evictions are allowed, some courts are closed and not processing eviction cases at this time.

It's important to know what your options are for your market.

Is housing better, worse, or stable in your area?

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