Protecting the Real Estate Ecosystem: A Recap of our 2nd Virtual Roundtable
“Well first I’d begin by trying not to make that large of a distinction between the obligations that renters have to their property owners and managers and the obligations that those property owners and managers have to their lenders. The health of our entire ecosystem is in danger right now, and that’s the message we’ve been trying to carry to our federal policy makers within the administration and in Congress since the beginning of this crisis.” -Kimble Ratliff, VP of Gov. Affairs for the National Multifamily Housing Council
About two weeks ago we convened a panel of leaders from City and State Governments and the National Multifamily Housing Council at our second Rhino Live Virtual Roundtable, to open another dialogue about how collaboration can create solutions during COVID-19. We heard from:
The panel consisted of leaders who’d worked together in the past as well as leaders who were meeting for the first time.
The topic of conversation was similar to our first roundtable:
How can leaders and groups across sectors work together to address the challenges that COVID-19 has introduced to the real estate industry.
We continued to explore many of the ideas presented in our first conversation, including private-public partnership between government and businesses, ways to promote property owners and their residents working together (as well as policy to protect those relationships), and the need for solutions to come from both sides of the political aisle.
Something that resurfaced in our second roundtable was how fundamentally unique the problems facing multifamily housing are. Real estate stakeholders have been forced to consider a different set of obligations entirely compared to other industries. Our panelists provided further insight around the hardship that multifamily specifically has experienced to this point, as well as the path to solutions. Here are a few points that we think property owners will find useful as we prepare for the coming months:
The numbers that show the true spread of material hardship across multifamily won’t be fully available until May and June.
“For an industry like rental housing that requires so many directions of cashflow at specific points each month, the data from March and April only goes as far as to prove how abstract the challenges of COVID-19 actually are. We’ll all have to stay open to learning about what’s to come because every month will continue to be different for the foreseeable future. And so what we’re facing as an industry — and I say this from the perspective of renters as well as property owners and managers — is that our hardship is going to be delayed but decidedly inevitable. What we’re seeing now in the data is that our slide may be a bit more gradual, but it is absolutely coming. This is also not 2008, and we have to remember that there’s really no blueprint for the economic crisis we’re going through right now.”
Everyone is affected, but solutions still need to be tailored.
“While it’s true and important to remember that everyone is going through this together, there are unique challenges facing renters who have to pay rent when compared to owners who are responsible for mortgage payments. This needs to be reflected in whatever policy solution we come up with. A mortgage forbearance can generally involve tacking on 1 to 3 payments that may be disrupted from now through August on the end of a 30 year mortgage. It’s a relatively simple fix and most mortgage servicers are accustomed to doing it during crises, like in the case of hurricanes for example. Property owners can and should ask for this type of solution directly if it suits them. On the renter side, it’s a little bit more challenging because if three months of rent are deferred, there is no backend of a lease to tack that money onto. Moreover, three months of rent being due at any one point is very likely a burden that most renter households are not going to be able to afford.”
Not every owner can provide rent payment plans for residents. But if you can, you should.
“Negotiating rent is really the number one thing that’s been happening among a lot of my constituents, that and payment plans between property managers and their residents. And some landlords are actually excusing payments for individuals that have a multi-year lease agreement, so they’re waiving a month or two until the shelter in place order has been relaxed.”
Make sure residents are equipped with the right knowledge.
“It’s really about educating residents. Unfortunately, we see a lot of people who don’t know how certain processes work. There are tons of people that are now going through these negative impacts of COVID-19 that have never dealt with housing issues before. They’ve never faced an eviction, they’ve never been homeless before, they’ve never had to talk about rent payment plans, they just don’t know how to navigate the system. So we provide our residents with resources, I’ve created videos just to educate our tenants.”
This is bigger than the side you stand on.
“Frankly, most landlords don’t want to bounce everybody into the street. Most renters don’t want to shirk their obligations either. They want to pay rent. They want to be working. Everyone is suffering through this moment of hiatus. The more we can try to find those spaces of common struggle, the more we can work across the aisle, across different levels of government, and with both the industry and consumers, the quicker we’ll find the best solutions. If we can do that, we will make it through this. This is a time when we need actual problem-solvers who are thinking in the long term and not just symbolic, political flag waving.”
Housing supports essential workers.
“Stakeholders across real estate must work together to find solutions because real estate serves as a support system for so many who perform essential services. Doctors and nurses shouldn’t be experiencing housing insecurity right now. Nor should teachers or first responders. The quicker we find sustainable solutions, the more we can support those who are supporting others on the frontlines of this crisis.”