Rent Strike/Rent Cancelation Due To COVID-19

Rent Canceled

I’ll start off this blog by saying that I understand that many people, who have been laid off or have been furloughed, simply cannot afford to pay their rent during the COVID-19 pandemic. But, the idea that property owners can simply afford to lose that rental income for one month, let alone 2 or 3 months, is complete nonsense. Even the largest of communities will struggle financially, even with mortgages being ‘canceled’. The costs involved in providing rental housing are significant, providing rental homes is not a high margin industry, like many people seem to believe based on comments I’ve seen on social media.

I work for a company that manages thousands of single-family homes, apartment home communities, and senior living communities. I can assure you that profits for owners are very low, maybe 10 – 20% of the total rent is profit. A large chunk of the rent you pay is put back into the community in maintenance, staffing, and running costs, our vendors still expect to be paid, utility companies still expect their money.

As a property management company, we are not unsympathetic, we understand, it’s a crappy situation all around, so we are encouraging our residents to talk to us, to pay what you can, and arrange a payment plan to pay off any arrears over a period of time, maybe an even longer period with a lease extension. Just ignoring the problem or straight up saying “we are not paying, and you cannot evict us” is not the best way to deal with it. Rental home communities and its residents are in a symbiotic relationship, we equally need each other, working together will provide the best outcome for everyone involved.

The rent cancellation that Rep. Alexandria Ocasio-Cortez is pushing is super irresponsible. Owners will be put in a precarious position, where they cannot provide the basic ‘service’ of apartment/home rentals. No rent, means no staff to run the onsite offices, no maintenance staff to maintain the property for everyone’s safety, no money to pay water bills, meaning no running water for residents, if water is included in the rental rate, also, no trash collection, this is just the tip of the iceberg, if rent is canceled.

The knock-on effect, essential business or not, is that without rental income, owners and management companies will have no option but to furlough office and maintenance staff, creating an even bigger problem with unemployment, more people without the income to pay their own rent or mortgages. And, there are a lot of people employed in the multi-family industry, myself included, rent cancelation is definitely not a solution that works for everyone, especially if multi-family communities go bankrupt.

Rep. Ilhan Omar has proposed a House bill that would cancel rent from April 1, to 30 days after the national state of emergency ends, which would not work for the reasons outlined above. The difference is that the bill would offer assistance to owners of rental properties, but with strings attached, such as agreeing to not raise rents for five years and abide by “just cause” eviction rules to qualify for assistance.

Ultimately, rental properties are a business, and like any business, without customers buying the product, in this case, an apartment, townhome, or house, the business goes into administration, with the potential of going out of business altogether, reducing the pool of available homes, which will disproportionately affect lower-income residents as these low-income, non-HUD property’s margins are small to start with.

As I eluded to earlier, the only real solution is for the government to help every American that needs financial help due to the current global pandemic, a single $1,200 stimulus check is not going to cut it. My rent is $925, which takes 77% of that stimulus check, how will that help next month? And in some cities, that $1,200 would not cover a single month’s rent. But, let’s be honest, most of our representatives and senators are more concerned with socialism for multi-billion dollar companies, who just got a massive tax break from Congress, which they used to buy back their own stocks to artificially boost their stock prices.

The message I hear from Washington to the American people is “you’re on your own”. I’m not worried about any bill for rent cancelation passing in the US Senate, or even pass the Democrat-controlled House. This pandemic has proved just how broken the US is for everyday Americans, and from what I can see, our government has no interest in changing that, wanting to continue with the same old corrupt system, in other countries, we call the US political funding system, bribery, expecting congresspeople taking money from the interests they regulate, to vote in favor of bills that benefit Americans is laughable.

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