We get it…no one feels bad for landlords…but maybe we should consider what they represent and how hurting them really hurts everyone.
I’ve always thought the word landlord had a bad sound to it. When you hear it, it conjures bad memories from movies like Braveheart, where the king grants the Nobleman rights over the land and they commence in terrorizing the Scots. Or maybe for you it’s Monty Python. Muddy towns with carts of dead people milling around. Could be a fat guy in a tux or a sweaty southern plantation owner. Horrible English Lords ruling over starving peasants and swollen southerners selling the children of their slaves in Uncle Tom’s Cabin are what we see. Well, of course the reason it feels so medieval, is because it is. During feudal times, lower nobility would own land and use it to generate income. The practice itself wasn’t bad but for some reason all the people we hear about who did it, were. More modern portrayals bring to mind the “projects” like the tenement houses in the Bronx. You know, the ones you pass under when you head toward the GWB. It may not be the oldest profession in the world, but it’s been around a while and there’s no doubt landlords have a bad rap! So why don’t we see these folks for what most of them really are? Hard working, hustling, strong Americans.
I became a landlord by accident, not by design. I stumbled upon a way to solve a problem for a young family and at the same time, solve my own problem. They needed a place to live and I couldn’t sell my house for the price I thought it was worth. I compromised and decided to rent it. Later, as I maintained the rental and simultaneously continued paying my mortgage and taxes, I saw that there was potential in repeating the venture. Like many of the examples I’ve listed above and countless others I’ve heard about, not all landlords are good at what they do. Not all landlords are well intentioned, and many do not care about their tenants. It’s documented well enough and while the stories may be juicier, I want to let you know a little bit about what most of the landlords I know are up to and what they’ve been forced to contend with lately, as we collectively navigate through the COVID Pandemic.
Landlords are trying to protect themselves and their tenants against real COVID hardships. Many of us (landlords and tenants) have lost jobs, had decreased work hours and suffered extreme emotional and material loss. Sickness and suffering should not be penalized by eviction. Good landlords do not want to evict tenants who are suffering! We are people too. The people we rent to ARE THE INVESTMENT. The relationships are symbiotic and at their best, mutually beneficial.
Many landlords are employed with W2 jobs themselves. Many have “Mom & Pop” style small businesses and are counting on their rental property to produce wealth for their families over a long period time. Small time landlords are suffering terribly now, right alongside their tenants. Neither group should be penalized with financial devastation, especially as the result of executive orders, illegal mandates or controllable administrative failures. Tenants need to pledge to do their part and landlords need to do the same. It sounds cliché by now but…like it or not…we ARE in this together.
Of course, varying groups of people have been affected by COVID differently. As this illness ravages many of our communities, the unfortunate truth is, we must find ways to continue to conduct our businesses with moral fortitude and the highest standards. Handling tenant groups who many times right along with their landlords are struggling, means we must work harder than ever to find solutions.
Four Basic COVID Rent Categories
Mostly Unaffected — For tenants, this is the group that is paying their way as they always have. Either through good financial planning, strong employment or luck, they are able to fulfill their responsibilities in every way as tenants. For landlords, the ones who are mostly unaffected may not have COVID affected tenants, may have smaller tenant bases or may be exclusive types of landlords who rent to groups that have been most unaffected. As an example, the student rental market has not yet been hit as hard as the market rate rental market where I am in Central NY.
Real COVID Hardship — This group of tenants is struggling to keep up with their responsibilities. Some have COVID hardships and they need to be cared for and worked with. Many have lost jobs temporarily or permanently and will struggle to dig out from the debt they are now incurring. Many landlords themselves are now in this group. While options like skipping mortgage payments and taking federally backed loans were available, in many cases landlords have not been able to make tax or utility payments and are also falling deeper and deeper into personal debt. Without relief in the form of direct abatement of taxes, utilities and grants, these landlords will very likely fail as small business owners. This prospect is especially greater if the property owner was debt-leveraged before the pandemic or less than optimally diversified. The real tragedy is that much of this could have been avoided but we’re on a trajectory for much longer term issues — which I’ll go into later.
Fearful but Managing — For tenants, this group is characterized by not having a current COVID hardship. These tenants have the ability to pay their rent but are scared to — for fear that the bottom will fall out again. This is the group property owners must work to relate with the most. Landlords must be over communicative, compassionate and simply…human. Personal contact in the form of phone calls and Zoom meetings can be an invaluable tool to let these tenants know you care about them and are looking out for them. As landlords slip into fear and despair, dealing with tenants who they know can pay rent but won’t, becomes increasingly challenging.
The Takers — These folks were probably always headed towards being a problem, pandemic or not. They are usually a product of poor upbringing, low education, systemic disadvantage, prejudice, addiction, abuse and the like. My personal experience is that the folks who tend to end up in this group are usually already sick in some way and this happened long before they lived in your building. They can be managed as tenants, but they take the most work. Unfortunately, they were the first to see an opportunity to take advantage of eviction bans. Many can be saved but many are rule breakers, law breakers, nonpayers, and property damagers. Many in this group were already heading toward eviction but due to eviction bans, have now gotten away with living in your buildings for over a year, rent free. This is the group that poses the greatest risk to the safety and wellbeing of the most people. Tragic.
Real American Landlords
So, think about the last group, The Takers, in relation to the real landlords in the US. What about the guys who started with one rental house (like me) and through years of hard work and countless hours of blood, sweat and tears (true story) have built themselves a business to be proud of? What about the teacher who can’t pay his own mortgage because through an eviction ban, someone is taking advantage of him? What about the bus driver who decided to make a better life for herself by buying and fixing up old houses for rentals who was about to retire? Do these pictures still look like medieval England or slave plantations to you? Most landlords are just everyday Americans trying to get by.
According to a HUD study done in 2015, the number of individual investor landlords, “… in the United States there are between 10 million and 11 million individual investor landlords managing an average of two units each, many with just one unit.”
Small landlords in the US, in addition to providing housing to non-homeowners, contribute billions of dollars in real estate taxes, hundreds of thousands of jobs and billions of dollars in mostly small local business revenue. They are mostly regular, everyday people and for nearly a year in many states, they have been stripped of their rights. They have lost the ability to control and manage their personal property, a right, which has been illegally taken from them.
An example is in New York, where Governor Andrew Cuomo has administered several executive orders preventing small local landlords from managing their own personal property. In Executive Order №202.81: Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency, the Governor has effectively stopped all eviction proceedings for nonpayment, holdover and other reasons. In addition, while New Yorkers may still sue in small claims court, if defendants do not show up, no judgements can be awarded. As a result of these orders, even if you wanted to argue about their validity, the fact remains that you cannot get a day in court. At the county level the courts refuse to hear cases or give court dates. Even after you pay all the fees, submit all necessary paperwork and serve process, the courts are simply not hearing cases.
There’s a little-used document I found somewhere online known in ancient times as, “The Constitution of the United States.” This document is apparently used in government and has several amendments to it, which if you live in NY, you’ve probably never heard of. One of them is the Fifth Amendment and it has a bit in it called: The Takings Clause. The Takings Clause states that the government cannot take over land or mandate its use without compensation. To quote, “…nor shall private property be taken for public use without just compensation.” This means that banning eviction, a.k.a. taking personal property for public use free of charge is illegal. This is exactly what’s been happening for nearly a full year in NY! How can we allow this to continue with no end in sight!!??
To prepare you, none of what you’ve read so far is the worst part…
Here’s a real picture of the life of two people, two of my (former) tenants, who we’ll call Mary and Nate. Mary and Nate are young professionals and ideal candidates for renters. They rented a large three-bedroom apartment on the second floor of a six unit apartment building in the hopes of continuing their pursuit of life, liberty and happiness. They moved in and very early on, they started experiencing problems. Not with the apartment but with their neighbors. The issues escalated in frequency and severity with the tenants below. Loud music all hours of the night, garbage strewn everywhere, no regard or respect for anyone or anything. Mary and Nate soon realized that despite all of their calls to the landlord, the cops and even the city code office, they were at the mercy of some horrible people. As it turns out, in addition to not paying rent for the previous nine months under the pretense of COVID hardships, their neighbors had illegally sublet their apartment in order to start their new business venture — an afterhours night club — in the building.
So, after weeks of sleepless nights and myriad complaints, Mary and Nate were at their wits’ end. They told me that for the sake of sanity and their safety, the had no choice but to move out. Can I blame them? Once they were lost, we saw the writing on the wall (next to the the graffiti). THIS IS NOT ONLY ABOUT LANDLORDS! If landlords can no longer manage their properties, other tenants are the ones who get hurt. A few bad actors who have been allowed to wreak havoc on their neighbors without recourse are spinning delicately balanced communities out of control.
Not only are good landlords losing good tenants, many are already changing the ways they do business. New York is experiencing communist-style mandates on personal property that our Constitution was designed to protect. The result? The people the mandates were designed to protect will be the ones who are hurt the most in the long run.
With no options left, what will landlords do? Will they hire more people to go and fix more issues and make improvements on their properties? Will they decide to go deeper into debt to make sure they pay their taxes and their water bills on time, despite government agencies that won’t budge on a single late fee? Will they get calls letting them know that that the cities decided to abate the payment of their taxes and utilities because they did not allow them to collect rent or change tenants? Will they go out of their way to handle maintenance calls and fix issues on their properties? Yes, some will…but let’s be honest, most won’t. Most will attempt to decrease expenses, cut costs and try to raise revenue in order save their businesses.
Most people react poorly when they are squeezed to the breaking point. Add frustration and no money to the mix and what happens here won’t be hard to predict. We are already seeing the evidence of this pressure where I live, especially in the low-income brackets. We can expect stressed landlords who have been backed into corners to do a lot of things before they go out of business — and all of them will hurt our communities.
7 Ways Renters Will Suffer as The Result of Eviction Bans
1. Raised Rents. With a growing percentage of units not paying, landlords will raise the rent on the rest of the tenant base to try and recoup the loss. If they market new rentals, the rents will start out much higher than before.
2. Tightened Screening — Knowing that at-risk tenants pose an exponentially greater risk than they did in the past, in the new climate landlords will begin mitigating that risk through any means necessary. Most will follow the laws, but others won’t. New rental applicants who were on the fence before, will not be accepted. Exceptions that used to be tolerable, will be no longer.
3. Raised Income Requirements — Knowing that income requirements are not currently protected, landlords will use them to weed out riskier tenants. This will eliminate subsidized programs and public welfare programs from acceptable applicant pools. Many more tenants will hear, “We’re sorry, while we’d love to rent to you, you do not meet our minimum income requirements.”
4. Deferred Maintenance — Landlords who cannot collect rent, do not have money to put back into their properties. If it can wait, it will. Things that used to be handled same day, will be handled same week, maybe. Buildings will ache in every way from safety to aesthetics. Towns, cities and tenants will all endure blighting properties and shabby landscapes.
5. Hiring Less — Landlords who used to hire work out to local community contractors and workers will no longer be able to do so. Skilled labor will be sent to unskilled handymen. Maybe the landlords will put their tool belts back on and as a result their attention to their businesses will diminish.
6. Buying Less — When landlords hire less, and spend less on repairs, less money goes back into the communities. The hardware shop will not see their business, the sandwich shop will no longer see the workers in for lunch. Landlords will also most likely reserve cash for issues rather than spend on new property and improvements.
7. Providing Less Housing — From experience, a landlord scarred by a horrible tenant does not want that to repeat. Many are already removing apartments from the market because we cannot house people next to ‘the takers,’ tenants who are taking advantage of the fact that they can’t be evicted. Landlords will pay the Takers to leave or wait until they can be evicted. Right now though, there are some great people out there who are not being given the choice to live in some of my best apartments.
As the “Takers” group gets bigger — which it will because we cannot evict them — all roads point to an increased amount of stress on renters and tenants. The rental community is the group at-large that will pay higher prices in the long run, hurt the most and ultimately lose economic opportunity. Furthermore, in case you’ve never looked at how disproportionately suffering is dispensed in our country, the ones who will suffer most are the already economically challenged and the people of color. Systemic racism and prejudice are real things and they manifest in every marketplace, including rentals. Failed policy always ends up hurting the ones who are already hurt, more.
Make no bones about it, some landlords will go out of business before they increase anyone’s pain — but that also increases pain! Other landlords will stay in business, but things will get worse for tenants and the rental market. Others still, will be just fine but will learn from the trend and strive to protect themselves from falling into riskier categories in the future. All of this hurts our tenants and future renters! All of this disproportionally affects low income brackets and people of color.
Landlords are not saints, but they are also not evil Feudal Lords. Whatever your experience or your sentiment toward them, the evidence supporting the fact that they are hardworking, every day Americans is clear. If none of that matters, fine, look at the people who rent apartments then. On balance they are hardworking members of the community that just want to be left to quietly enjoy the apartments they pay for. By taking away landlords’ Constitutional rights to control the way their own personal property is managed, we are directly contributing to the disadvantage of our communities’ most at-risk groups and making it increasingly more difficult for them to succeed.
Local and state officials must recognize the following:
A. COVID Hardship — Tenants with true COVID hardships MUST be protected. COVID hardships at the tenant level must be proven and supported. Not everyone is suffering COVID hardship.
B. COVID Hardships do not give license to cause nuisance, break laws, jeopardize public health or infringe upon the safety of other tenants. Evictions for cause or holdover must be heard.
C. Taxes — Landlord who were prevented from collecting rent through COVID hardships must be released from tax burdens during the time of THEIR HARDSHIP. All fees and penalties must be abated.
D. Rental Reimbursement — Landlords must be recompensed for lost rent during the time of their COVID hardships.
You can also reach out to me directly: Dave Drew — email@example.com