Just a Landlord

I am hearing from more and more owners who are not paying their mortgages, utilities, and even fire insurance because they can’t, due to uncollected rent.  Maintenance was the first casualty.  

If you are facing similar problems and would be willing to share with your elected officials and or the media, please email me. Tim[at]ApartmentsMilwaukee.com

https://www.cnn.com/2020/12/17/success/landlords-struggling-rent-eviction/index.html

If landlords are struggling, tenants will also be affected as home maintenance slides.

“I’m seeing landlords who can’t pay for trash removal,” Gray said. “We’re getting ‘no heat’ calls. They aren’t paying real estate taxes. They aren’t paying their mortgage.”

For the typical landlord in trouble, which he said is someone who bought their property in the last five years and is leveraged to the hilt, there are no reserves. “Despite tenant protection laws, these landlords don’t have the cash reserves, nor the equity in their building to get loans,” he said. “With the moratoriums, they’re taking hit after hit.”

Some landlords, he said, are being paid less and seeing the wear and tear on their property increase as grown children or friends double up after losing their own housing. Routine maintenance that was supposed to take place this year has in some cases been delayed or canceled because landlords just don’t have the money, said Gray.

“They can legislate the need to do timely repairs,” he said. “But for many landlords, there is no money.”

Before the COVID crisis, I was unaware that pre-filing eviction mediation was an option and only vaguely aware that mediation was an option during an eviction case. Many of our evictions resulted in stipulated dismissals, as do 46% of the evictions in Milwaukee County.

We learned of Mediate Milwaukee simultaneously through the Apartment Association’s collaborative work with Community Advocates, Legal Aid, and Legal Action; as well as my staff researching information for our tenant resource page at apartmentsmilwaukee.com/r/

Near the end of the moratorium, my company tried Mediate Milwaukee with two tenants that were three or more months behind in rent.

The resulting agreements were similar to what we would have accepted in a stipulated dismissal, with the added benefit of someone knowledgeable being there to help the tenant navigate funding options and assistance applications.

Based on our initial positive results, Affordable Rental Associates implemented a new internal policy. Before filing an eviction for non-payment, we refer the tenants to Mediate Milwaukee. Mediation first is now a standard business practice and will continue beyond the COVID crisis and moratoriums.

Pre-filing mediation benefits everyone. 

• Tenants avoid having an eviction on their record, often with similar or more extended payment agreements than they would receive in a stipulated dismissal. 
• Landlords benefit as they avoid the cost of eviction, and tenants who work with Mediate can better navigate funding options that allow them to stay in the unit, avoiding vacancies and rerenting costs to owners. 
• The Court benefits by a reduction in caseload, many of which are ultimately settled by stipulation.
• We all benefit from the reduction in conflict. It was pleasantly surprising that some previously rude tenants became polite to my staff during mediation.
• Plus, tenants and owners who enter into mediation will avoid the need to debate in Court whether a CDC declaration is factual.
• Where needed, we have utilized Mediate Milwaukee to re-engage with tenants when issues arise with compliance with an agreement, often stabilizing the situation.

If mediation is explored early in the delinquency, there is little to no downside for the property owner. There are also, albeit lesser, benefits to both parties with post-filing mediation. Nonetheless, it can often result in a continued tenancy or at least a more agreeable move-out. While court-connected mediation will continue to be of value to all parties, the real opportunity for change is to promote pre-filing mediation as the first option to eviction for the Milwaukee rental owner community. It could cause a paradigm shift for the benefit of all. 

The Apartment Association of Southeastern WI, which I’ve been a board member of for over three decades, has become a strong proponent of mediation benefits. We had a general membership meeting on October 1st to encourage owners to try mediation as an alternative to eviction.

There have also been many recent articles on the use of mediation for eviction prevention in other communities. One that I found interesting was https://citymonitor.ai/housing/what-is-eviction-mediation

A member wrote on the free Apartment Association listserv wrote:

I have a single family in Milwaukee county that the tenants are late almost every month. Usually I work with them but they haven’t been answering my calls. Can I give a 5 day notice to pay or vacate?
I’m not really sure what’s legal with the eviction moratorium.

CARES ACT: If the property has a federally backed mortgage or you are receiving Section 8, you are probably prohibited from serving a notice until at least 1/1/21. You would need to serve a 30 day notice for any money due in 2020.

CDC Moratorium: Judge Conley, who is in charge of evictions in Milwaukee County, has recently ruled that the moratorium does not prohibit serving a notice or filing an eviction even if you received the CDC Declaration.

If your property is not covered CARES or CDC you can serve notices and file evictions.

But … Have you considered attempting meditation?

We tried pre filing mediation before the WI moratorium ended. In our experience it delivered results similar to what you would get in a stipulated dismissal, but with far less confrontation and the added benefit of the mediator helping the tenant apply for assistance. We had a number of cases that would have resulted in displacement, but were positively resolve because of mediation.

In fact this has worked so well that we implemented a policy that we attempt mediation for all non payment situation prior to filing. Our company policy of pre filing mediation will remain in effect even after the COVID crises ends, because it works.

Mediate Milwaukee 414-939-8800 or emailing apply@mediatemilwaukee.com.

Two must view videos.  They tell our story well and the quality of the video work is great.

Have your own story that you want to share?  Send me your contact info to tim@apartmentsmilwaukee.com and I’ll put you in touch with Nick Sakalis, who produced these.  

Household debt was at a moderate level relative to income before the public health shock, but many households have lost jobs and seen their earnings fall. As many households continue to struggle, loan defaults may rise, leading to material losses.  

https://www.federalreserve.gov/publications/files/financial-stability-report-20201109.pdf

A well thought out comment on the post moratorium housing crisis

https://www.citywatchla.com/index.php/cw/los-angeles/20564-landlords-are-not-the-devil

The government’s destruction of small landlords in 2020 will be calamitous for tenants in 2021 and beyond. There will likely be an outbreak of foreclosures and sell-offs by those who are unable to endure the eviction-moratorium storm. When the small landlords disappear, so does much of the affordable housing. Corporate investors, real estate conglomerates, and Wall Street vultures will swoop down for the kill, snapping up properties, remodeling them, and raising rents. In the end, communities will be left with fewer economical rentals, and the chasm between the rich and poor will be a little wider. 

Working with County Exec David Crowley, the Apartment Association of Southeastern WI, the Wisconsin Apartment Association, the WI Bankers Association, The Wisconsin Realtor Association, Legal Aid, Community Advocates, the Credit Union League, and the WI Counties Association sent a joint letter urging Congress and the Senate to address the need for immediate rent assistance to prevent a housing and government crisis

Great to read the ABA’s position.  Well written, but one would expect no less from the president of the ABA. The ABA is asking for $100B in rent assistance.

https://www.nytimes.com/2020/09/27/opinion/letters/covid-congress-tenants-landlords.html

The president of the American Bar Association urges congressional action “to prevent housing instability.” 

Landlord tenant

Owners and tenants are two sides of the same coin. We need our tenants to succeed, and the tenants need housing to succeed. People that portray landlords and tenants as opposing forces do so to increase their own political and power base, not because it is truthful.

Immediate action:

If the rent is being paid there is no need for eviction moratoriums. We need to reach out to our members and urge them to write every politician out there, from the President to the local dogcatcher, asking for emergency rent funding.

The NAA has a tool to allow people to write their Congressperson and Senators without knowing who represents them. (Many folks do not pay attention to politics)

Moratoriums

The moratoriums without rent assistance will destroy the viability of much of the rental housing, causing owners to fail financially, which in turn will adversely impact municipal budgets and future housing choices for tomorrow’s tenants. Lower valued housing will be abandoned on a scale far greater than what we saw in 2008. Large corporate owners will buy up the middle as they did in the aftermath of 2008.

The Census finds that rental units generate $1,196 per unit per year in wages. Then you must factor in the local income multiplier, the property taxes paid, and everything else, and we are a huge part of the local economy. More on the economic impact of rental housing.

The Census also found that last month 16% of tenants nationwide did not pay rent. They previously reported that owners on average receive 7% of gross rent in return for their efforts and investments. If the gross rent is off by 16%, leaving the owner to decide who doesn’t get paid this month. In Milwaukee, the city eats two to four times the rent that an owner receives in good times. AASEW letter to Milwaukee Mayor Barrett on the need to include owners in the dialog on housing issues:

I spoke to an owner a week ago who had a March eviction canceled because the property was covered by the CARES act. That tenant told his neighbors that his attorney said they could not be evicted. April five more joined in, leaving six of eight tenants not paying now for six months. He is now facing foreclosure and personal financial hardship. He wants to give the building to the bank, hoping they do not go after his home and his retirement savings. The bank said they will not take a deed in lieu of foreclosure. I told him to hire an attorney. He said he has no money left.

A long term solution:

Housing at the lower end of the rent scale has always been fragile as tenants are one paycheck away from failing. The long term answer is portable housing vouchers, similar to FoodShare, that tenants can use to rent the home of their choice. Note this is not the same as Section 8, but instead like food stamps

https://shepherdexpress.com/news/features/the-new-eviction-moratorium-is-half-the-solution-but-is-it-e/#/questions

This issue will affect both parties. Heiner Giese, an attorney with Apartment Association of Southeastern Wisconsin (AASEW) says, “The question is, how are these people going to get paid? Will people lose their housing? What will landlords do in the meantime about municipal water bills, taxes, insurance or maintenance.”