[REN #898] Rentals: More People are Paying Rent in May than April

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More People are Paying Rent in May than April, Real Estate News for Investors Podcast Episode #898

A national rent tracker for apartments shows that May rent collection is better than April. That’s not what many people expected given the massive number of job losses and efforts by a small number of activists encouraging a rent strike. Property teams within our own network are also reporting good results for single-family rentals.

The National Multifamily Housing Council says, by May 6th, 80.2% of tenants had made a full or partial payment on their rent. (1) Last month, only 78% of tenants had done so. The survey included 11.4 million apartment households and was done the first week of May.

Good National Numbers

MatrixYardi Systems vice president, Jeff Adler, says, “By and large, these are pretty good national numbers.” He says, “We’re not out of the woods in any respect. We’re sort of just entering the woods.”
Renters who lost their jobs in April but hadn’t received their stimulus checks yet, may have had an easier time paying their rent in May. As the economy opens back up, many people will be able to return to their jobs, but there’s uncertainty with how the second half of this story will unfold.

If you look at the NMHC’s graph comparing paid rents for April in 2019 to paid rents in April of this year, the percentage was 97.7% in 2019 and 94.6% in 2020. There’s concern about whether renters will have more trouble with the rent if this situation continues. The Council’s president, Doug Bibby, says they are in favor of including $100 billion for direct renter assistance in the next pandemic relief package.

Single-Family Rent Collection

The 15 property managers within our national network are also reporting strong May rent collections. The rent collection rate for all of them was greater than 90% for April. And, they expect the same for May.
The property manager from Cincinnati reported that May rent collection is better than normal. About a week into the month, the collection rate is typically around 63% to 66% but this month, it hit 74%. She says it’s probably because tenants were offered a 5% discount if they paid early. That not only shows an interest in the discount, but an ability to pay, as well.

In Dallas, the story is pretty much the same. The property manager there says, May was better than April and only down slightly from a long-time average. The average for the 5th of the month is about 87% and was at 85% on May 5th of this year. The paid rents also include partial payments and tenants who’ve been placed on payment plans.

Rent Strikes Are Not Legal

The property management companies in our network met on a zoom call in mid-March, to help each other with ideas on how to handle the impending crisis.  They decided on a few very important steps.

  1. Set up payment plans for people who were experiencing financial hardship
  2. Give tenants a list of options, including available job opportunities, how to collect government stimulus checks, local charitable donations, and unemployment options.
  3. Offer a 5% discount for those who pay April, May, and June rents in advance (if approved by the landlord).
  4. Let tenants know that even with eviction moratoriums in place, the tenant would still get evicted at some point and have a ding on their credit. This would make it more difficult to find a place to rent later. And, if they wanted to stay, they would have to make up the payments they missed.
  5. Letting them know a rent strike, which has been trending on social media as #CancelRent, would be illegal.
  6. Letting tenants know the rent is still due but there will be enough support over the coming months to help.

The idea of a holding a “rent strike” started trending nationally on social media but the Southern California Rental Housing Association responded to activists quickly.  Executive director Alan Pentico said, “We are greatly concerned about the discussions taking place of a potential rent strike, which would be not only illegal, but devastating for small, independent operators in the rental housing industry.” He said, “Non-payment of rent could unfairly hurt the people who work in our rental housing industry and would damage our housing supply, both now and in the future.”

The association’s president Kendra Bork said, “Everyone loses in a rent strike – not just the landlord.”
If you are a small landlord and would like to learn more about this rent strike movement among tenants, you’ll find an article on our website.

Links:

(1) National Multifamily Housing Council

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