The Pandemic of 2020 has truly altered or drastically affected everyone’s life and day-to-day operations. As a landlord, navigating these difficult times has definitely been challenging. As we enter the middle of August, the situation does not seem to be getting any better. In fact, landlords and property managers are starting to wonder if things are actually getting worse.

The truth is that the end of the $600 a week stipend and the moratorium on evictions essentially expiring on August 24 are leaving millions in limbo. So, what exactly does this mean for the months ahead? Well, that is the question on most landlords' and property managers' minds. The best way to address this question is to look at the many façades of the multifamily rental industry that have been affected by COVID-19.

Rent Payments

Clearly, COVID-19 has had a significant impact on tenants’/renters’ ability to make consistent or on-time rent payments. Many tenants have worked out agreements with their landlords, some are simply unable to pay, and others have found a way to stay afloat during these uncertain times. The concerns here are the reduction of unemployment benefits, the looming end to the moratorium, and many businesses closing their doors for good. With all these things happening at the same time, it is unclear how people are going to continue to pay for the basics.

The good news is it is not all gloom and doom here; there has been a significant shift when it comes to remote workers. Since a good portion of people can now work from home, there seems to be some hope that things are going to get better. Moreover, with the promise of a viable vaccine on the horizon, the months to come might just have people getting vaccinated and going back to work in record numbers.

Obviously, without a vaccine at the moment, there is no guarantee that come 2021, things will be back to normal, but we are all learning to adjust. Overall, these adjustments and added safety measures happening in all industries are making it safer for people to go to work and to spend money. Thus, tenants should once again be able to make timely rent payments if all goes well.

Evictions and Moratorium Extension

A big part of people not paying their rent has been due to other necessary expenses like food, clothing, childcare, and healthcare. However, with no possible eviction threat, there have been a significant number of renters across the country that are opting not to pay their rent, even if they could.

Nevertheless, with the protection provided by the Cares Act moratorium on evictions officially ending August 24, many renters are beginning to change their tune. As you know, the federal act provided coverage against late fees and evictions until July 25. After July 25, landlords were permitted to send tenants/renters a 30-day notice to vacate. That said, you still cannot file an eviction till August 24, but the threat of eviction will once again be real for renters and tenants. Note, if you outright own your building or purchased your rental property without the backing of federal programs, and do not accept government assistance like Section 8, then this act never applied to you.

Of course, regardless of whether or not you were legally bound by the Cares Act moratorium, as a landlord, you do not want to jump the gun and start evicting any and everyone who is late on a few rent payments later this month. Rather, many property owners are being encouraged by various housing organizations and advocates to work out more reasonable payment plans if at all possible.

The reality is that vacancies are up, rent is cheaper, and many are still unemployed. As a result, there is only a small number of people looking for apartments or mobile homes for rent right now. Thus, it is going to be up to you as the property manager to decide if receiving some or a portion of the rent due is better than no rent at all. This is a tough decision to make as landlords have bills, overhead expenses, and the basics to pay for too. Therefore, the government needs to truly consider that an end to eviction moratoriums without further aid or an additional stimulus relief package will likely create even more problems down the road.

Reduction of Unemployment Benefits

Along those same lines, the $600 a week benefit stopped, for those who qualified for it, less than a month ago. Once again, this puts people who were already struggling to stay on top of their bills into a precarious situation. Consequently, another stimulus package and reinstatement of at least a portion of the COVID-19 related unemployment benefits ($400 a week) is going to need to happen, if there is any real hope of keeping the economy going.

Suppose things go according to plan, and another stimulus package occurs, or benefits are reinstated. In that case, landlords and property managers will likely see a lower percentage of people failing to pay their rent in the months ahead. That said, the future will still likely be filled with payment installment plans if things continue as they now are, in 2021.

Lack of Benefits

Another area of contention during this pandemic has been the lack of unemployment benefits available. The sad truth is that many people who applied for unemployment when this all began, or when they lost their jobs due to COVID-19, have yet to receive any funds for various reasons. It is safe to say that these are the tenants and renters who are likely in dire straits right now.

In the months ahead, these are the people who will likely be the hardest to evict or work out a viable payment plan with if the Cares Act eviction moratorium officially expires at the end of August. Thus, another moratorium, or even a bailout, could be a possibility later on this year. Alternatively, if no federal assistance or unemployment enhancement occurs, then roughly 40% of renters/tenants in the US will likely need to be evicted. The truth is it really could go either way with the current administration.

Moving Forward

Obviously, it is tough to say with certainty that things will get better or that both the economy and real estate industry will bounce back in the months ahead. Yet, if the things that need to happen occur, then there is a strong likelihood that we will rebound as a whole.

Right now, as a landlord or property manager, all you can do is follow the CDC guidelines and find the best way to navigate the fall out of COVID-19. This essentially means that you can expect to get even more creative when it comes to installment agreements for unpaid rent and that you will have to make some tough decisions in regard to who you should evict.

The silver lining here is that as an industry, we have managed to stay afloat and quickly adapt without a moment’s notice. Thus, there should be no reason why the real estate and rental industry cannot find a way through these uncertain times.

Final Note

Ultimately, COVID-19 has delivered a major blow to the entire world and has hit the US, especially hard. That being said, there is still time to turn things around if we all work together. Remember, only a small portion of renters are failing to pay their rent, thus with a few adjustments, you will likely make it through 2020.