Small Landlord Economic Relief – Lacking!

Arnold Epstein likes to say you can tell how good a landlord he is based on relationships. The 75-year-old retired property owner, who rents a handful of properties in Beverly Hills and Chatsworth in Los Angeles County, has one tenant who’s been with him for 26 years, and another 8. 

But like so many other small landlords across the country, the coronavirus, and the economic fallout from the pandemic and public health response, has left him reeling, and feeling that years of being good don’t matter. Ever since one of his 5 tenants stopped paying rent in March, when the county’s eviction moratorium took effect, both his business and personal income have been impacted. He doesn’t have a pension—”rent is my pension”—so rental income, along with social security and a small IRA fund, pay his bills. 

“I want people to be happy, but the city is passing all these laws to help renters, and what are they doing for me? I just want my rent, but I don’t want lawsuits or to cause waves.” 

Arnold Epstein – Retired property owner

Epstein’s situation—feeling trapped by dwindling income, yet unable to take any steps to replace non-paying tenants or get financial assistance—sounds familiar to many mom-and-pop landlords trying to survive the current unprecedented wave of unemployment. With 40 million Americans out of work as of late May, and varying degrees of rent protection initiatives and legislation in action or under consideration, unfortunate tenants who have lost income or jobs have found some degree of assistance. But small landlords, who lack that level of support, feel left out from economic relief. 

“Other problems we collectively fix and share the burden,” says Shaya Lowenstein, another Los Angeles-area landlord. “There’s not one other situation where one group of people is being asked to take the entire burden.” 

According to data from the Apartment Association of Greater Los Angeles (AAGLA), 80 percent of apartment owners across the nation are considered small, mom-and-pop owners. Other estimates suggest there are 8 million individual landlords in the U.S. who own between one and 10 properties, which accounts for half the country’s rental properties, which house 48 million renters. The problem, says AAGLA executive director Dan Yukelson, is that they’re often struggling through this crisis just like their renters, having lost jobs and income. But whereas other small business owners can turn to federal programs like the Paycheck Protection Program from the recent stimulus, or the Economic Injury Disaster Loan program overseen by the Small Business Association, landlords don’t qualify, and don’t have other programs tailored to their needs – small landlord economic relief lacks the support they desperately need.

“Many of our members are struggling and feel they have no recourse to improve their situation. They can only go to their lenders and ask for loan forbearances. But with many in dire straits today, they fear that it’ll ruin their credit.”

Yukelson, AAGLA Executive Director

Yukelson and others point to the broad misperceptions of landlords in the popular imagination as one reason why they aren’t part of the government’s effort to support those impacted by the pandemic. Part of this perception goes back to Marxist writing and philosophy, according to Emily Hamilton, director of the Urbanity Project at the Mercatus Center at George Mason University, which “has given people the idea that in general, landlords are a wealthy, greedy group, a group worth vilifying, and potentially make worse off through public policy.” 

Landlords, as a group, are in a better position to weather a financial downturn, Hamilton says. But that doesn’t mean they’re not at risk. Often, renters think of the relatively small number of large property firms or mega landlords, or look at the rent they’re paying, and the mortgage payment a landlord may make, and believe the difference is all profit, discounting expenses such as maintenance costs, property taxes, unforeseen repairs, and operations. 

“Really high rates of unemployment and falling demand due to falling income is hurting just about every industry, landlords included,” Hamilton says. “When vacancies start exceeding the budget landlords set aside to cover them, typically one month a year per unit, then property owners will start to hit their breaking points. Like many, I’ve been surprised at how much rent landlords have been collecting through this crisis. But I’m pessimistic, and think they’ll take a much bigger hit in the coming months.” 

How can small landlords find financial relief? While there are fears of forbearance, specifically setting up a payment plan where multiple months of mortgage payments come due at the same time, it’s worth talking with lenders to see if there are any options available (for instance, those with Fannie or Freddie backed loans qualify for a one-year payment holiday). Other landlords have done their best to trim operations and maintenance costs, though that can only bring limited relief. There have also been local efforts to include landlords into small business assistance programs, such as the Chicago Small Business Resiliency Fund. But most landlords and landlord groups suggest working with tenants to collect partial or delayed payments. 

“We suggest that our members be professional, not bombastic, show some empathy for people’s situations, and try to negotiate partial payments,” says Yukelson. “We ask them to tread lightly. The main thing is being empathetic and trying to work together. Making sure renters see the pain you’re going through as a landlord, too, can help.” 

Yukelson says there have been proposals floated on the state level in California, and by different scholars and policymakers, to explore rental relief funds, which would create long-term programs that provide government relief to landlords and help renters repay missed rent over longer periods of time. But those are just in the proposal stages right now. 

For now, the best thing for landlords to do is try to negotiate with tenants, and maintain open communication. Lowenstein says that he’s even offered discounts to tenants, as long as they pay the first of the month, and the majority have been able to pull through and catch up on back rent. 

“It’s important to humanize yourself,” he says. “We tend to get painted in a negative picture by politicians, that there’s some conglomerate of wealthy landlords. Myself and my partner, we own 24 units, we’re not sitting on billions of dollars. When people get a handle on that, most have been very receptive.”