Why is unpaid rent so high?

[Nathan Gesner]

I've read news reports that say up to 20% of rent has gone unpaid in the last couple of months. I manage 350 units and all but one has paid (we extended grace far longer than normal but now we're in the process of eviction). I network with hundreds of property managers around the country and almost all of them are in the same boat as me.

My only thought is that the higher percentage of unpaid rent must be with private Landlords. Maybe they don't run a tight ship and Tenants are taking advantage of the situation?

What's your experience? What are you hearing in your market?

And do you expect it to get better now that COVID restrictions are being lifted, or will it continue to worsen?

[Mary M.]

Originally posted by @Wesley W.:

this is not true.  Sure, some folks need coercion but most folks are paying their rent.  

If anyone wants to say the numbers are different than the link I posted pls provide a link to the data - otherwise its just hyperbole and fear mongering 

[Mary M.]

@Nathan Gesner there are plenty of folks that had not recd their stimulus check or their unemployment etc etc 

There are also some very mean rules that make it so certain US citizens wont get stimulus even tho they qualify 

fwiw, my stimulus check came about 12 days ago I think. Thankfully I didn't need the money. 

[Mark-Anthony Villaflor]

4 units, 2 of them are Section 8 paying 97% of rent, and 2 others that are still employed. All are paying on time.

I was pretty active making sure property management was reaching out with the tenants befor ethe end of the month. I imagine in the beginning folks were using the stimulus check.

[Wesley W.]

Originally posted by @Mary M.:

this is not true.  Sure, some folks need coercion but most folks are paying their rent.  

If anyone wants to say the numbers are different than the link I posted pls provide a link to the data - otherwise its just hyperbole and fear mongering 

The data I shared (38% delinquent) is not hyperbole or fear mongering; it came directly from a landlord association in Upstate NY.  Members filled out a survey on rent collection, and the results were shared with the group by the coalition leaders.  You'll have to excuse me if there is not an "official link" - do you think that just because there are numbers published somewhere on the internet that it validates them?

These numbers come directly from people in our business that practice in my area.  I know their names and faces, and I can tell you not one of them wishes those numbers were higher.  I will share the numbers for June once they are collected.  You'll be free to continue to be skeptical as to its authenticity and look for your "facts" on web links.

[Wesley W.]

Originally posted by @Mary M.:

@Nathan Gesner there are plenty of folks that had not recd their stimulus check or their unemployment etc etc 

The only people whom have not gotten a stimulus check up until this point are people that are BOTH making greater than $70k a year AND do not have a bank account set up for IRS direct deposit.

Here's the link you'll be asking about:

https://www.forbes.com/sites/zackfriedman/2020/04/21/stimulus-checks-schedule/#bab9ce37b840

[Luke Carl]

@Nathan G. I’ve got at least one tenant that didn’t make it through these few months. Eviction happening now. I also had one tenant just disappear which made no sense because they would have saved some money had they contacted us to get their deposit back.

I had a few others that were getting comfortable with an extended grace period. I have informed them that we are now operating as normal and following the content of their lease.

[Nathan Gesner]

Originally posted by @Mary M.:

@Nathan Gesner there are plenty of folks that had not recd their stimulus check or their unemployment etc etc 

That may be true, but isn't applicable to my situation. The tenant confirmed her stimulus check was mailed six weeks ago. She told me she had two jobs, both starting five weeks ago. Four weeks ago she told me she received her first paychecks but they were small and she needed to buy food and py utility bills. Another four weeks without paying a dime, she cut off all communication two weeks ago, and she refused to file for a hardship or develop a payment plan. I like strong policies, but I also have hard and I'm willing to work with people that are experiencing difficult times. In this case, her refusal to develop a payment plan or even communicate with me is a clear signal that she has no intention of doing the right thing.

Every market is different. I have around 500 working tenants and this is the only one claiming she hasn't received assistance. I have friends that are business owners and all their employees have been receiving unemployment with the $600 weekly increase. I follow social media groups and read the news and see no evidence of major delays in unemployment.

Again, none of it matters. I would have worked with her if she would work with me. I've dealt with thousands of tenants and have a pretty good sense of when someone is planning to cut and run.

[Nathan Gesner]

Originally posted by @Luke Carl:

@Nathan G. I’ve got at least one tenant that didn’t make it through these few months. Eviction happening now. I also had one tenant just disappear which made no sense because they would have saved some money had they contacted us to get their deposit back.

I had a couple of those. As soon as Coronavirus started shutting things down, a couple tenants just packed up and left. Had they communicated with me, they would have very likely received money back because apartments rented quickly even during the lockdown.

[Joe Splitrock]

Originally posted by @Nathan Gesner:

Originally posted by @Mary M.:

@Nathan Gesner there are plenty of folks that had not recd their stimulus check or their unemployment etc etc 

That may be true, but isn't applicable to my situation. The tenant confirmed her stimulus check was mailed six weeks ago. She told me she had two jobs, both starting five weeks ago. Four weeks ago she told me she received her first paychecks but they were small and she needed to buy food and py utility bills. Another four weeks without paying a dime, she cut off all communication two weeks ago, and she refused to file for a hardship or develop a payment plan. I like strong policies, but I also have hard and I'm willing to work with people that are experiencing difficult times. In this case, her refusal to develop a payment plan or even communicate with me is a clear signal that she has no intention of doing the right thing.

Every market is different. I have around 500 working tenants and this is the only one claiming she hasn't received assistance. I have friends that are business owners and all their employees have been receiving unemployment with the $600 weekly increase. I follow social media groups and read the news and see no evidence of major delays in unemployment.

Again, none of it matters. I would have worked with her if she would work with me. I've dealt with thousands of tenants and have a pretty good sense of when someone is planning to cut and run.

 I can attest the unemployment is very state specific. I have one tenant who was laid off early and he is getting his money. I have another one that was later in April and he is still waiting. None of them have received the bonus $600 and our state says it is "coming soon". Which honestly I am kind of mad about this because the bonus $600 is from the Federal government. How can one state be paying it and another not? That indicates it is a state issue, which I know our office was overwhelmed but still... 

Here is the more important point that Nathan hit on. You can't force people to help themselves. Some people choose not to file for unemployment or file for charitable assistance. I had a tenant who couldn't pay rent. I gave him the phone number of a help line that was paying rent for struggling tenants. He told me applied and they wouldn't return his calls. I call the help line and they tell me they have NO RECORD of him applying. I tell him that and he applies, only to be approved the next day. They paid 70% of his rent with no strings attached. He could have done that a month earlier and saved himself stress. Why didn't he apply? He was unemployed and wasn't leaving the house, so arguably he had free time. Maybe he was stuck due to anxiety or maybe too proud to ask for help. Either way, he lied to me and didn't take the necessary steps to fix the problem.

There is a narrative that everyone not paying rent is only doing so because of reasons out of their control. That is just false. More often people make bad choices. That is the reason eviction always needs to be an option. If the courts decide that the tenant has true hardship and has done everything they can, let them grant the extension. However if it turns out the tenant is lying or refuses to help themselves, then eviction may be needed to spur them to action to improve their life. 

Eviction in many cases is like an intervention and it can actually help people change their patterns. 

[Mary M.]

@Wesley W. there are more folks who have not recd stimulus checks. Any US citizen who is married to an undocumented person, any US citizen with an undocumented citizen in their household. There may be more loopholes but those are the ones I know about 

also, the 93% number I cited is from the national Org that collects data on this kind of thing. You can click the link to see the data. 

i would be curious to know what date range was used for your survey. 

[Mary M.]

But the point is most people are paying rent. The percentage is only slightly lower than last year. 

This is why I think its a bit of fear mongering. 93% of rent is being paid! 

[Wesley W.]

Originally posted by @Mary M.:

@Wesley W. there are more folks who have not recd stimulus checks. Any US citizen who is married to an undocumented person, any US citizen with an undocumented citizen in their household. There may be more loopholes but those are the ones I know about 

also, the 93% number I cited is from the national Org that collects data on this kind of thing. You can click the link to see the data. 

i would be curious to know what date range was used for your survey. 

 So, for this past month, the snapshot was on the 6th, when rent would have been late enough to elicit a notice and late fee (both of which are currently banned in NYS through at least August 20th).  If I remember correctly, the "control group" metric of the 6th, based on pre-COVID  numbers, was 20% (that was also asked in the survey).  So, most landlords in this study are reporting a delinquency rate that is roughly DOUBLE their typical rate.

I'm watching the recording from the meeting yesterday as I type this (as I was unable to attend live), and the coalition leader speaking reports that, in comparison to other states, is seeing a disproportionate rate of non-payment increase.

[Mary M.]

@Wesley W. I would be interested to hear what the rate is by say the 15th etc as some folks are paying late but do get it paid. 

I live in Oregon which is also very pro tenant....

[Wesley W.]

Originally posted by @Mary M.:

@Wesley W. I would be interested to hear what the rate is by say the 15th etc as some folks are paying late but do get it paid. 

I live in Oregon which is also very pro tenant....

 I understand your curiosity, but I am not sure that it would be any different than the aforementioned survey.  You're comparing the non-payment rates at two identical points in the rent cycle, so the question is answered:  are more people paying late in these times than normal?  Answer:  in Upstate NY, Yes.

And besides, by the 15th of the month any landlord worth their salt has already spent the money to begin an eviction proceeding.

[Account Closed]

1. journalism and "news" for some time now has not been held accountable legally so take whatever is coming out of all of these 'sites' and 'reporting' with a grain of salt.  they are paid promoters and nothing more.  i don't care how 'mainstream' u think a site or outlet is.  This is rampant all over the place these days and i think everyone is pretty much aware of this.  this thread once again looks to be confirming this.

2. Speaking about the US specifically there are pockets/areas that are currently designed to favor tenants and big government/policies. so much so that there is a symbiosis effect going on that consistently reinforces the dynamic of tenant relying on government and government pandering to clientele (in this case tenants). Wherever you see this happening there is disruption for the REI markets IMO. This could be as simple as rioting and looting destroying local neighborhoods and no recourse from the government (almost like they are supporting and inflaming it) enforcing rule of law and order. REI is a downstream affect of this. Another example of this is the moratoriums going on in certain areas. Now some areas want to defund police (how is that going to work out for REI i wonder...). Business shut down but thousands of people can get together to loot, riot, and protest with no worry about the WuhanVirus or government/police...hmmm. Long story short policies and things are happening in certain areas that are pushing away strong individualistic or even capitalistic tendencies in favor of reliance on government and lack of individuality and grouping in a way that is almost communistic in nature. Needless to say it is almost like a foreign presence in the US in these areas and REI imo just like everything else will be impacted until the dust settles.

so far in this thread i am reading Chicago and NY having issues. Without representation here i would venture to add Minneapolis to this list as well for now. Even for REI that wasn't destroyed in the rioting and looting; the local communities were destroyed as the group was moved through and people have lost their livelihoods, jobs, places to live, etc. This will expand out to REI in terms of nonpayment of rents IMO at some point as well. NY i would probably expand out to Tri-State area especially NJ if i had to take a guess. I would add Cali but posters here are stating good experiences there so maybe it's areas within Cali or there's enough coverup going on that REI not directly being affected yet. Looks like Seattle to be added to the list from a post on here as well.

personally i am keeping an eye on government policies and MSM.  Wherever they are focused right now i am staying far away from.  it's just common sense for me.

glad the majority is doing well. i suspect that is the case for majority of US. There are pockets of disruption (seems to be large cities right now) which are making REI more speculative or risky imo but other than that this post is a great confirmation of a strong REI market for at least rentals in the US right now. That to me is a great sign and look forward to even better in the future.

[Nathan Gesner]

Originally posted by @Joe Splitrock:

Originally posted by @Nathan Gesner:

Originally posted by @Mary M.:

@Nathan Gesner there are plenty of folks that had not recd their stimulus check or their unemployment etc etc 

That may be true, but isn't applicable to my situation. The tenant confirmed her stimulus check was mailed six weeks ago. She told me she had two jobs, both starting five weeks ago. Four weeks ago she told me she received her first paychecks but they were small and she needed to buy food and py utility bills. Another four weeks without paying a dime, she cut off all communication two weeks ago, and she refused to file for a hardship or develop a payment plan. I like strong policies, but I also have hard and I'm willing to work with people that are experiencing difficult times. In this case, her refusal to develop a payment plan or even communicate with me is a clear signal that she has no intention of doing the right thing.

Every market is different. I have around 500 working tenants and this is the only one claiming she hasn't received assistance. I have friends that are business owners and all their employees have been receiving unemployment with the $600 weekly increase. I follow social media groups and read the news and see no evidence of major delays in unemployment.

Again, none of it matters. I would have worked with her if she would work with me. I've dealt with thousands of tenants and have a pretty good sense of when someone is planning to cut and run.

 I can attest the unemployment is very state specific. I have one tenant who was laid off early and he is getting his money. I have another one that was later in April and he is still waiting. None of them have received the bonus $600 and our state says it is "coming soon". Which honestly I am kind of mad about this because the bonus $600 is from the Federal government. How can one state be paying it and another not? That indicates it is a state issue, which I know our office was overwhelmed but still... 

Here is the more important point that Nathan hit on. You can't force people to help themselves. Some people choose not to file for unemployment or file for charitable assistance. I had a tenant who couldn't pay rent. I gave him the phone number of a help line that was paying rent for struggling tenants. He told me applied and they wouldn't return his calls. I call the help line and they tell me they have NO RECORD of him applying. I tell him that and he applies, only to be approved the next day. They paid 70% of his rent with no strings attached. He could have done that a month earlier and saved himself stress. Why didn't he apply? He was unemployed and wasn't leaving the house, so arguably he had free time. Maybe he was stuck due to anxiety or maybe too proud to ask for help. Either way, he lied to me and didn't take the necessary steps to fix the problem.

There is a narrative that everyone not paying rent is only doing so because of reasons out of their control. That is just false. More often people make bad choices. That is the reason eviction always needs to be an option. If the courts decide that the tenant has true hardship and has done everything they can, let them grant the extension. However if it turns out the tenant is lying or refuses to help themselves, then eviction may be needed to spur them to action to improve their life. 

Eviction in many cases is like an intervention and it can actually help people change their patterns. 

Excellent point and another example of how LOCAL CONTROL is always better than Federal.

Instead of throwing money to everyone, even those that don't need it, they should have held the funds and made people apply for assistance. The application would include a statement from their Landlord proving the financial need, a letter from their employer proving the lack of income, and then the person could be receive assistance. $600 - $1,000 a month is enough for most of my renters yet the feds are handing out up to $5,000 per person in one month with no demonstration of need.

This would have reduced the administrative burden and the amount of tax-payer money handed out. A win-win in my book.

[Oleksandr Ivanovskiy]

@Nathan G.

All but one of my tenants paid. The one who did not is taking advantage of the situation. My attorney is working on eviction. The caveat is that if your mortgage is secure by Fannie or Freddie Mac you need to wait till July 25 to file an eviction. Thankfully this is not my case.

[Rachel N.]

I have 4 rentals and 1 tenant couldn't pay in May... so that makes a 25% rate for me. :) 

[Patrick M.]

I have been at 100% throughout.

We need to keep in mind that the documented, laid-off and unemployed are getting a windfall that goes away on 7/31. Will they go back to work? Will there be a job for them? 

The economy is being pumped full of adrenalin right now, so we must be prepared for a drop of, and a huge one at that.

winter is coming

[Steve Priola]

Charleston SC MSA - Owner manage 46 units. 1 person deferred and is now paid up as of this month. 3rd party manage 48 units, 3 people deferred and all are now paid up as of this month. Have colleagues that manage or own in the 180 to 366 unit class A and B space and they are all saying VERY low numbers for deferral and no outright no pays. We are all kind of waiting to see what happens when the cash injection runs out. HOWEVER, most Residents that are self reporting say they are working from home or working side gigs. Last bit of info to share; had a call with an agency lender we do business with and VP of lending indicated they are in a "wait and see" mode. VP said they have had some "trickles" of loss in commercial and residential space, but are bracing for possible wind fall 3-5 months down the road. 

[Alec Javan]

I own two self managed rentals in Orange County CA, higher rent amount, and I have had no problem getting the rents on time. I hear that the exceptions was for a disaster rent payment but the stimulus package is helping a lot.

[Courtney T.]

As a private landlord I haven’t received any late or non-payments. I agree with some of the previous comments about some folks hearing “I don’t have to pay” and applying it right away (with immediate need or no need). In middle class communities where more furloughs are being used rather than full lay offs, I think folks seem to be stretching their dollar and the stimulus. I suspect we may start to see some delayed struggle in those communities where they’ve made every effort to keep up. But those projections do not match what I am seeing nor what I expect to see. I’d be interested to hear from other large scale investors in lower income communities. 

[Michael Deering]

In the Leigh Valley I am receiving 94% rents (31 tenants). My associates with over 100 units are getting 90%. Both these percentages are normal.  

 I used a variance of what Brandon Turner published in his video.  I highlighted the empathy and provided clear expectations that rents were still due.  I also added links to PA unemployment and other local COVID 19 resources.  

Communication with tenants is always key.  Prior to the COVID I had a history of touch points with my tenants, so we had an established relationship.  When relationships are established we tend not to take advantage of the other (unless its family j/k)

[Jeff Little]

I receive an unsolicited email from a company called Apartment List each month containing multifamily research. Today's email said that for June, 30% of renters failed to make their full payment due on time (31% in May). The research says it is from a survey of 4,000 residents of gender and age matching that of the US. But, they do not indicate the geography of the respondents. Here is a link to that research 

https://www.apartmentlist.com/rentonomics/june-housing-payments/

I can tell you that my Class B apartments and Class C rental house in Memphis and my two Class A rental houses in Nashville (39 tenants in total) all paid fully and on time for April, May and June. To my knowledge, I don't have any tenants in the restaurant sector but I do have several in the health care field which has experienced a lot of furloughs.

[Brett Lee]

@Corby Goade

This post was great! Offering support and even bringing meals. Landlords can be kind and treat people with dignity and respect without government intervention.

Well done!