Eviction Moratorium: Small Time Landlords Hanging On by Fingernails
By: National Review
S E E D E D C O N T E N T
Protesters surround the L.A. Superior Court to prevent an upcoming wave of evictions and call on Governor Gavin Newsom to pass an eviction moratorium in Los Angeles, Calif., August 21, 2020. (Lucy Nicholson/Reuters)
One of Raj Sookram's tenants stopped paying rent in December. Another man hasn't paid him a cent in 20 months. He now owes Sookram over $20,000.
One woman stopped paying this spring, Sookram said, then demanded that he fix her hot water heater when it blew. That ended with city officials threatening Sookram with daily fines.
In all, Sookram said, about half of the tenants living in his 13 Rochester, N.Y., rental properties are behind on rent. Sookram said he's struggling to pay his bills and taxes. He's had to take out loans and work side handyman gigs to provide for his wife and three kids.
As the coronavirus pandemic drags on – and as the federal government continues to extend its legally dubious eviction moratorium – more and more people are “jumping on the bandwagon, like, ‘Oh, I don’t have to pay you,’” Sookram said.
The problem has been exacerbated by the extremely slow distribution of $46.5 billion in emergency rental assistance approved by Congress in late 2020 and early 2021. And as some leaders in the real estate and rental industries have pointed out, that money wasn’t even enough to cover the $57 billion in unpaid rent due at the end of last year. They peg the likely total due today at over $70 billion, and growing.
This leaves small landlords like Sookram in a tough spot. While there has been great focus on the plight of downtrodden renters, there continues to be noticeably less concern about the impact of eviction moratoriums on struggling property owners.
“Where am I supposed to come up with this money to take care of everybody?” Sookram asked. “What am I supposed to do with the very few that are paying me when something breaks for them? Should I tell them that I can’t fix their problem because I took the money to take care of people who refuse to pay rent?”
Overdramatizing an Eviction Crisis
The expiration of the Center for Disease Control and Prevention’s eviction moratorium last weekend sent Democratic lawmakers into a panic. They fretted about a looming eviction crisis, pointing at the more than 11 million people living in rental housing across the country who are behind on rent and could soon be thrown into the street by heartless landlords. Missouri congresswoman Cori Bush, a member of the progressive “Squad” who once was homeless after an eviction, camped outside the U.S. Capitol to protest the expiration of the moratorium.
Feeling the pressure from the Left, President Joe Biden on Tuesday agreed to extend a more targeted moratorium another two months, while openly questioning the constitutionality of the move. A day earlier, Gene Sperling, a top Biden advisor, insisted that the president had “double, triple, quadruple checked,” and found no legal authority to extend the moratorium, which now includes threats of jail time and fines of up to $500,000.
The administration seems to be betting that they can work out the kinks in the rental assistance money pipeline before the courts have time to shut down the eviction ban.
Landlords and rental industry leaders who spoke to National Review said the threat of a massive eviction crisis has been overdramatized. Yes, there are millions of Americans behind in their rent, and yes, some evictions are inevitable. But the eviction process is very expensive, and can often drag out for months, even years. Courts already are backlogged, meaning that even routine evictions will take longer than normal. It usually makes more financial sense to work with residents than to evict them. And if tenants leave, or are kicked out, the property owners likely will not be able to collect rental assistance from the government for that tenant, no matter how much they are owed or how good their reason for evicting.
“There’s incentives all the way through this to keep people in housing,” said Bob Pinnegar, president and CEO of the National Apartment Association.
When the eviction moratorium does eventually come to an end, property owners will be reluctant to evict tenants who communicated with them in good faith, worked out payment plans, and applied for government assistance, Pinnegar said. On the other hand, people who “ghosted” their landlords – meaning they stopped paying rent, stopped responding to emails and letters, and actively avoided contact – likely won’t be given the same benefit of the doubt.
“There will be some evictions,” Pinnegar said, “but I think the conversation about millions of people being evicted, and homeless centers being overrun, and people on the streets, it’s a great exaggeration that I think unfortunately is driving public policy.”
The biggest problem at the moment, Pinnegar said, is the failure to distribute federal rental assistance money. The New York Times reported this week that of the $46.5 billion that Congress has approved so far, only about $3 billion has actually been distributed.
Pinnegar points the finger at the decentralized nature of the program, which has been farmed out to about 400 entities — state and local governments, nonprofits — with few controls over how the money is delivered. Some of those local programs are putting restrictions on the money that Congress didn’t intend, Pinnegar said. Some allow landlords to apply for money with the okay of their tenants, while others require the tenants to do the heavy lifting.
The program needs to be streamlined and standardized to a level of base functionality, he said.
Ultimately, Pinnegar said, Congress needs to pump more money into the program, which he believes already is underfunded by about $25 billion. And the longer the eviction moratorium lasts, the more that debt will continue to grow.
“If there’s going to be a tsunami of anything, there’s a tsunami of debt out there,” he said.
In late July, the National Apartment Association filed a federal lawsuit to recover damages on behalf of rental providers who’ve suffered losses under the CDC’s eviction moratorium. Ideally, Pinnegar said, industry and government leaders would work together to fund the gap, but he’s doubtful. “I just don’t think that Congress cares about this issue enough to provide another round of funding,” Pinnegar said.
‘They’re Just Abusing Us’
Landlords and property owners who spoke with National Review said they want the eviction moratorium to end. But more important, they said, is for the federal money to start flowing.
“Get us the money. I don’t have a problem with the guy staying,” Sookram said of his tenant who hasn’t paid in nearly two years. “I just want my money to pay my bills. That’s all I want. I want to be paid so I can carry on the business.”
“Unless you are selling drugs and destroying the property, I don’t have a problem keeping you.”
Joe LaBarbera, who also owns rental properties in Rochester, N.Y., said the landlords he knows work with their tenants when times are tough. Most of his tenants have been able to keep up with their rent, but he’s had a couple that have fallen behind, he said.
“I do not want to kick anybody out of their home,” LaBarbera said. “I have some tenants who have been slow to pay, and I always work with them. Because, look, you’re dealing with families, you’re dealing with people with kids. These are real life people. It’s not about numbers. No landlord likes to deal with evictions. Nobody does.”
Lincoln Eccles, who manages a 14-unit family-owned building in the Crown Heights neighborhood of Brooklyn, compared the current scenario – the government banning evictions, but also not expediting payments to landlords who’ve been waiting for over a year – to slavery.
“At this point they’re just abusing us,” he said. “And it’s some version of slavery to me, forcing people to work and produce a product for free, and there’s no compensation.”
Eccles said he has several tenants behind on rent, including one woman who owes him more than $40,000. In addition to the nonpayers, New York City’s rent stabilization laws and high taxes force him to operate some of his units at a loss, he said. He’s way behind on his utility bills and property taxes. He’s signed leases he normally wouldn’t to scrape together enough money to replace his 116-year-old building’s boiler before the weather starts getting cold. He said he’s operating on “handshake credit.”
“I’m holding my nose because I need money for these boiler guys,” Eccles said.
He’s worried about his taxes, which he describes as a “super crisis that’s about to hit me.” While the government has forced him to keep providing services, in some cases without compensation, there’s been no temporary forgiveness of his tax bill.
“If the local government turns around and is this vindictive, aggressive monster, and comes after me, they could topple me over,” Eccles said. “And they’ll do that to a bunch of us smaller owners where we’re struggling, and all we have enough is to keep the lights on.”
Hanging On by Their Fingernails
Some of the landlords and property owners who spoke with National Review said they have tenants who refuse to work with them, and refuse to apply for federal aid. They said they should still be able to get federal assistance whether the tenant cooperates or not.
“Every other business was just, ‘Here’s this money. Stay afloat,’” Eccles said. “Property owners, they are forcing some of us to fail. Those like me are just hanging on by their fingernails.”
Stephanie Graves, who has an ownership stake in five apartment complexes in and around Houston, Texas, also does third-party property management, said that even some of the tenants who do apply for federal assistance are getting caught up in bureaucracy.
“We have some residents that owe us $12,000,” she said, “and we’ve been playing follow-up with these rental assistance programs: ‘The application’s pending. Okay, wait, we sent a check. Okay, we sent it to the wrong place. Oh, wait, we sent it to the resident. Oh, no, we didn’t send it to the resident.’”
Graves said that overall it’s a small number of her residents who aren’t paying rent, but she operates on small profit margins, so even a small number of nonpaying residents can have a big impact. In one of her buildings, three of her 14 tenants aren’t paying, she said. In that building it takes nine tenants paying in full for her to afford her payroll, taxes and insurance. That doesn’t leave much wiggle room to turn a profit, or for anything else.
In one of her buildings, she’s been unable to replace a $6,200 pool pump. “I can’t afford to pay that because I’ve got $27,000 in delinquent rents,” Graves said.
She also worries about the long-term impact of the eviction ban. For many smaller landlords who rent out single-family homes, the rents they collect are their sole source of income. With interest rates low and real estate prices soaring, there’s a great incentive for those landlords to sell their properties now, likely reducing the nation’s affordable rental stock.
“Why wouldn’t you do that,” she asked, “rather than fight this process of residents who aren’t paying or can’t pay?”
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I can imagine landlords who might transform apartments into condos and sell them off. That always = higher rents.
So you gave "Scranton Joe" your vote....What say you now?
Does that actually sound like a solution to a housing crisis to you?
If I still had some rental properties I would do whatever is necessary to make the ownership profitable.
I suspect most mom-and-pop landlord families would do the same.
The least of my concerns would be the so called housing crisis.
People who need housing dont just disappear off the face of the earth just because you evicted them. But it wouldnt be your problem any more so that makes it all good, huh Greg ?
That's kind of how reality works John. I have to look at it from a personal survival perspective.
I didn't create the housing/homeless mess and I can't fix it.
Much of the problem is caused by drug and alcohol addiction, and I can't do much about that either.
Guess I'm just not one of those SJW's.
We probably shouldnt have so much low income housing stock owned by private individuals.
Well, John, most ordinary hard working tax paying folks can't afford to buy into big properties like high rise apartment buildings or shopping malls,
The small time investor can probably afford a rental property or two, or perhaps live in one unit of a duplex and rent out the other.
That's the people this wrong headed decision by Biden is hurting.
We would have a hell of a mess in Denver if they did that. We already have a problem with the homeless in America, do we want to multiply the issue tenfold? How would we fix that Greg? Urban camping bans will not fix it.
"Much of the problem is caused by drug and alcohol addiction..."
What % is "much?" In Denver about a third of the Homeless pop. are people that lost jobs due to covid and or got priced out of the metro Denver housing market by greedy owners.
I live in Denver up in the Highlands area. I see the "campers" all the time. But times keep changing. The homeless are now considered to be the "unsheltered"
No one is this Democrat run city and state know what they fuck they are doing. The more comfortable you make it for these people (the majority of whom have drug and alcohol problems or mental health issues), the more will come. So that won't fix it either.
The eviction moratorium will cause many small landlords to go broke, the bank gets the property back, and then sells it to management companies who will raise rents which will put even more poor people out of reach of decent housing.
No, that only makes housing more expensive, but AOC & co is causing all this, wich is ILLEGAL btw!
Contrary to public opinion, most landlords are not the ultra rich, or big banks or mortgage companies, but tend to be ordinary folk who own a few rental properties and need the income these properties generate. All this "compassionate" government given largesse like jobless benefits and rent relief will have to eventually come to a screeching halt.
Then what? The fallout will get very ugly. Both tenants and landlords will cast the blame solely on old Joe and his band of progressive henchmen.
I think its probably safe to say that many of these apartment buildings where people face eviction are in , as Johnny Rivers might say , "the poor side of town". Who will the new tenants be once the current ones are evicted other than folks in the same financial boat?
Money has been allocated to tide over the landlords, let's get it out , and in the future let's provide more government backed low income housing.
And let us get a ruling from the SCOTUS on what AOC just forced sleepy Joe to do.
The government is having a problem distributing the money already allocated.
Most government, both nationally and locally, currently tends to be led by the Democrats, so therein lies the problem.
Woof! Woof!
If you own and rent out housing to a low income clientele that is without savings you are in theory always in precarious territory as far as collecting rent goes. Any number of setbacks can leave people living paycheck to paycheck from paying their rent. That is why most of such housing should be run by the government, which can temporarily absorb such losses.
Aren't the Republicans always telling us how they took over the local governments? I.e. school boards, city council, sheriffs etc.?
I don't know about any of that, but the Democrats here in Denver are pretty much in charge of everything.
Owner not getting any rent but gets fined if he does not fix water heater and still has to pay property tax. That's progressive government for you.
Yep and here's your sign progressives .....
Why would anyone not be able to pay their rent now?
Because they don't have to go back to work, because they are making more money on welfare than they ever did working, even more so because they don't have to pay their rent, etc, etc ....
I thought there was a huge fund set aside for landlords to make claims against to alleviate their financial problems when the rent isn't coming in, and hardly any are taking advantage of it.
How it feel to live like a poor person?
Let us act on emotion/s
That is what you are playing on with the articles that you write and post, emotions.
It is just that some people actually care about others and how they get by. The rest of you are just sucking the life out of them, and for the most part have been able to codify this leaching as The American Dream to remove yourselves from actually having to do anything about someone else. You cling to the individual without regard for a society made up of all people. I know you don't see it that way, but that is my opinion, and the ability to form and hold one's own opinion is what makes America great.
At least you didn't use any dog whistles in your comment. Good Boy!
We have plenty of safety nets for the poor. Anyone who doesn't have housing doesn't want it.
Isn't there government subsidized housing for poor people?
We don't currently have enough the people that "qualify as poor." Section 8 housing is very hard to get into, there is a waiting list for it.
True. Many of us wouldn't know.
Because we've worked our asses off so we weren't poor and in doing so we pay more taxes to help more of the poor.
That's how that shit works.
And most of the poor folk in this nation also work their asses off, it is just that they are not compensated fairly.
As you say, "That's how that shit works," which is exceedingly unfortunate.
They are compensated based on the employer's value placed on the job they are doing. One cannot pay $20 an hour for a job that only contributes $15 an hour to the revenue. That too is how this shit works.
They need training in another area. \
So what do you consider "fair" compensation?
Yeah, i call BS that on supposition.
I would agree that some do work their asses off and can't get ahead but not most. We have a whole sector of people looking for the easy way out. I've watched it my whole life. Starting with the kids that worked at fast places because the work was easier. They whined even back they should make more because we made more working manual labor, digging ditches and construction. You know, hard labor .... chain gang kinda stuff ..... Fewer people were willing to work hard so those that were willing made more. More people wanted the easy work so they made less. Simple ... economic 101
That has continued throughout life for folks who aren't willing to work hard and there are a lot of them. I'll never forget some HS buddies telling me i was stupid wasting my time on college. They stayed home and made money, partied and lived high on the hog. I went into debt and ate macaroni and cheese for four years. And yet, most of them were actually mad when i graduated and lapped them in salary on day one. Yep, SOSDD.
So yeah, that is how that shit worked .....
If you work somewhere for 40 hours a week and you have to live paycheck to paycheck because it all goes towards basic living expenses, you are not paid enough.
In my experience, the price of labor is charged at an increased rate from the actual rate that is paid to the laborer, so that the employer of the labor makes money off of that laborer.
If you're selling widgets that take an hour to assemble and you pay $20 per hour because someone thinks they are owed that because they exist, and the market will only pay you $30 for the widget including the materials, the employer needs to make money and cannot afford to pay the $20 and therefore the job, TO the employer is only worth paying $13 an hour. So that's what the job pays. Find another job.
An employer is NOT responsible for your choices in life. As said above, no one is going to pay what you THINK you are worth simply because you exist. Again, find another job.
An employer is NOT responsible for your choices in life.
Unless you work for a company dealing with a union.
Case in point, we had three men show up in our shop to have a job done on an utility tractor on a Wednesday, I'm working on it and the men were complaining about how much they were making at GM, about 22 - 25 dollars an hour at that time, it just wasn't enough to pay for their new trucks, the wives vehicles, the boat, mobile home, snowmobiles, 4-wheelers, and the payments on the hunting property they were up to get ready for hunting season. So I said then maybe you should be working today and come up on the weekend, which the one said "Oh no, we're working, we had a friend of ours punch us in today."
Which is major reason that GM went bankrupt.
No, it means your skills, or the lack of them, are not worth more than you are being paid.
The employer needs to make a reasonable profit
You need a better marketing plan. Any widget that takes 1 man hour to make should be priced well above $30. Or maybe you need to invest a little bit of time in productivity improvement.
I will stick by my original statement:
If you work somewhere for 40 hours a week and you have to live paycheck to paycheck because it all goes towards basic living expenses, you are not paid enough.
And that is no one's fault but your own.
Are they all your choices? Did you choose to become unemployed or did someone make that choice for you? When you returned to work was it because you needed money? So you took any job that would pay, because feeding your family is more important than being choosy about whom your employer is?
It is all very easy for one to sit back and give anecdotal evidence of someone abusing the system, as it is to give examples of the systems abuse of people, all in a dry and detached manner. One is prosecutable under law, one isn't. I wonder why? /S
Bullshit
No, no it's not. It is up to you to better yourself NOT someone else. Again, people don't get paid what they think they are worth simply because they breathe. Doesn't work that way...........never has.
Personal accountability just isn't in some folks DNA Jim.
It is always someone else's fault other than their own.
Always!
Yep. Protect me from me in spite of me.
I think most renters have tried to pay their rents but there's probably 5% who have taken advantage of this moratorium and just didn't pay anything. With the stimulus checks and unemployment bonuses this moratorium was unneeded, it just gave unprincipled people a license to steal. People who owe their landlords 5-10-20 grand have no intention of paying it back, their plan is to milk it for all it's worth then get evicted and move somewhere else. It should be no surprise that the same party that supported burning and looting small businesses support policies that legalizes theft. Most of these Landlords have had to evict tenants for nonpayment in the past and they know full well they will never see dollar one of the money they're owed so I think most of them are just trying to hang on to their properties and stay in business. I think the Eviction Moratorium should have been limited to people who were short 15% of their rent at the most not this total rent amnesty, at least the 15% would have just shorted the landlords their profit but allowed them to still pay their obligations and not go out of business.
Where I live that stimulus check MIGHT have gotten you one month's rent, 2 tops and that is if you are living in a 400 square foot shit pile. The unemployment MAY cover rent, but you wouldn't have much of anything left for any other needs.
Screwing people out of their property and attacking the rule of law and the Supreme Court.
Joe Biden has shown his true colors.
I think he could put his money where is mouth is and offer free housing in his mansions.
Hard to feel sorry for any forced to sell in this market
If landlords are having such a difficult time why are they not applying for assistance? They are eligible under ERA.
As of a few days, ago $46 billion had been allocated for ERA and only $3 billion of it had been distributed.
Why and where is the hold-up?
This whole mess is turning into another government give away to financial investors. Forcing little operators out of the market will make a lot of properties available at bargain prices. Guess who will take advantage.
What seems to be lost in all the media blathering is that renters are still going to owe rent. A moratorium on evictions doesn't cancel rent. So investors buying up properties at bargain prices are also buying that renter debt. With deeper pockets they can sit on that debt longer and renter debt defaults give them tax deductions for losses. They can even package that renter debt as derivatives and sell it off.
Instead of setting up programs that subsidize rent, the government has chosen an approach that will force small operators out of the market. This is nothing more than another political favor for the rich to make the rich richer. Democrats have chosen Wall Street over main street again.