Aug 26

Last night the Supreme Court ruled that the CDC eviction moratorium is invalid.

What should you do now as a rental property owner?

Little should change with or without the CDC moratorium. It remains in the owners’ and renters’ best interest to work together to get the ERAP funding. The only reason to evict for nonpayment at this time is if the renter refuses to apply for ERAP or does not qualify due to no loss of income. In Milwaukee or Waukesha Counties, they can apply at Community Advocates. City of Milwaukee residents can also apply at SDC

If the renter is refusing to apply, try Mediate Milwaukee or call (414) 939-8800. It will only delay for a few days and often provides superior results to eviction as renters often stay and pay. If the renter refuses this as well, then eviction is probably the only option, but it should be the last option.

Remember that in Milwaukee County less than 2.4% of eviction judgments are paid within 5 years, less than 7/10ths of 1% within 18 months. So rushing to court only stops future losses, it seldom results in recovering past rent.

Aug 06

Little should change with or without the CDC moratorium. It remains in the owners’ and renters’ best interest to work together to get the ERAP funding. The only reason to evict for nonpayment at this time is if the renter refuses to apply for ERAP or does not qualify due to no loss of income. In Milwaukee or Waukesha Counties, they can apply at Community Advocates. City of Milwaukee residents can also apply at SDC

If the renter is refusing to apply, send them to Mediate Milwaukee https://www.mediatewisconsin.org or call (414) 939-8800. If the renter refuses this as well, then eviction is probably the only option, but it should be the last option. Remember that in Milwaukee County less than 2.4% of eviction judgments are paid within 5 years, less than 7/10ths of 1% within 18 months. So rushing to court only stops future losses, it seldom results in recovering past rent.

The current CDC order addresses this issue at page 14, explicitly permitting challenges to improper declarations. Milwaukee County Court previously was requiring a motion hearing to challenge the dec. With the new CDC order, and if owners state the challenge to the declaration in the initial pleading/complaint, the Court should hear the challenge without the extra delay of a motion hearing.

The new CDC order at page 14:

This Order does not preclude a landlord challenging the truthfulness of a tenant’s, lessee’s, or resident’s declaration in court, as permitted under state or local law.

Jun 18

The Guardian has a longer, but interesting article on the end of the CDC moratorium. I recommend reading it

Unpaid rent is a large problem. The article of course looks at this from the renter perspective, but the $50-100B of unpaid rent currently has only impacted owners due to the moratoriums.

In mid-May, 7.49 million US adults said they were not current on rent or mortgage payments and had slight or no confidence they could make next month’s payment, according to the Census Bureau’s Household Pulse Survey.

So far, the eviction moratorium has kept many of these families housed. There were 1.55m fewer eviction cases last year than would be filed in a typical year, according to an estimate by the Eviction Lab.

Without the moratorium, they will need access to the $46.55bn in rental assistance allocated by the government to help renters and landlords – though its distribution got off to a slow start.

The Guardian

The federal aid favors rural states, with few renters over urban areas. The taxpayers’ money should be distributed where the need is, not on political lines. This is a point that Heiner and I agree with Peter Hepburn of the Eviction Lab. We all need to urge Congress to fix this.

And Hepburn has found that because of the way the assistance is being allocated, more money will be available in small, rural states than in larger, urban states.

Black and Latino renters, particularly women, are disproportionately at risk of eviction and face more uncertainty as the moratorium expires.

“It was a series of omissions and mistakes that taken jointly result in a really inefficient and inequitable distribution of this money,” Hepburn said. “I don’t know that that was done with any sort of intent to disadvantage communities of color but I think it inevitably does.”

Geographically the evictions crisis will also be unevenly distributed.

In Wyoming, households can collect more than $5,167 in rental aid, while in New York’s expensive renter markets, households will have access to $766, according to his analysis.

Jun 05

As a rental property owner, it is in your self interest to work with the renter, secure Emergency Housing Assistance, and get the back rent paid.  If you evict, you no longer will be able to recover the unpaid rent through these programs.  

Only 7/10th of 1% of eviction judgments are paid within the first year, over five years that number is only 2.4%.   Smart money says, encourage your nonpaying renters to apply for Community Advocates or SDC ERAP funds. 

Rental Assistance Process | How to Apply for Rent Assistance | Community Advocates in Milwaukee WIor
Milwaukee Emergency Rental Assistance | Social Development Commission

There is an upside though to the moratorium ending, whether that end is next week or in three weeks, in that eviction, or the threat of eviction can be used to compel renters who refuse to apply for aid to do so.  Of course, there are also a few renters who are not paying and do not qualify for assistance because they have not been financially impacted by the COVID financial crisis. 

https://www.cnn.com/2021/06/03/politics/supreme-court-realtors-eviction-moratorium/index.html

The Realtor groups asked the justices to step in — on an emergency basis — arguing that “Congress never gave the CDC the staggering amount of power it now claims.”

They argue that the moratorium has resulted in “over $13 billion in unpaid rent per month.”

Apr 25

This one-hour Harvard webinar is a well-done,  “must watch”  if you are interested in the negative impact of the COVID economic crisis on housing. 
 https://www.youtube.com/watch?v=5Ke2xkZwwYA

Apr 09

HT Tristan Pettit

This WaPo article is a good read, should read piece. The bottom line is if the rent is paid evictions for nonpayment stop, eliminating the need for moratoriums.

There was a need for stopgap measures at the beginning. Today everyone would be best served by effectively using the money that is currently available to pay for the housing of people who truly are in need.

The idea is to get the money to renters before courts nationwide begin processing evictions again.

“We are running the Emergency Rental Assistance Program every day like we’re going to lose the moratorium tomorrow,” said a Treasury Department official, who spoke on the condition of anonymity to discuss the program before any formal announcements.

Washington Post The $50 billion race to save America’s renters from eviction

Dec 22


https://www.jsonline.com/story/news/2020/12/22/landlords-tenants-say-rent-assistance-needed-part-eviction-ban/3932908001/

“I  don’t think a landlord should be expected to shoulder the burden of taking care of a property for several months or a year,” when a tenant stops paying rent, said Dawn Anastasi, a landlord who owns 18 properties on the northwest side of Milwaukee. “It’s not the tenant’s fault, but it’s not the landlord’s fault either.”

Even with the rent assistance, landlords will be left holding the bag for much of the unpaid rent, predicted Tim Ballering, treasurer of the Apartment Association of Southeastern Wisconsin.

“The unpaid rent will never be paid, let’s be honest about that,” Ballering said, noting that even when a tenant is evicted the landlord seldom collects the past due rent. 

As a result, Ballering, who is also a landlord, predicted a spike in the number of local landlords who sell their properties to large absentee rental companies.

“Is that a good thing or a bad thing?” Ballering asked. “That depends on your views. Do you think that the small American farmer being driven out by large corporate farmers is a good thing?”

Heiner Giese, attorney for the association, said the $25 billion in rent assistance will be helpful though he agreed it would likely only last a couple of months.

Giese noted that the federal bill will allow landlords to file for rent assistance, unlike other rent assistance programs that require the tenant to apply

Giese, who is also a landlord, said he has seen cases where tenants signed the required CDC declaration that protected them from eviction but then did not apply for any rent assistance.

“They would just say he’s going to evict me anyway, so screw it,” Giese said.

Dec 20

How do landlords think unemployed people will pay rent?:

…an average of 8% of renters don’t pay rent in normal times. During the coronavirus crisis to date, that share has gone up to 15 to 20% of renters not paying.

“But generally, I think we need a better approach instead of just pitting owners versus tenants,” he says. Both the tenants and landlords need some larger, holistic fix from the government that acknowledges that there just isn’t as much money flowing through the system as there should be.

Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, Moody’s Analytics warns. Last month, 9 million renters said they were behind on rent, according to a Census Bureau survey.   

The over $70 Billion in unpaid rent, as reported by Moody’s will cripple many housing providers and will cause a housing crisis that will impact both tenants and municipalities for years, if not decades.  In May of 2020 Milwaukee property values finally recovered from the 2008 Great Recession. 

Less than 2.5% of rent judgments are paid in Milwaukee County five years after the eviction.  And eviction judgments represent only a small fraction of the unpaid rent.  In surveying owners, we see on a high end 42% of their lost rent is included in eviction judgments, with most owners reporting less than 10%.  Some owners never pursue money judgments. So the million dollars a month in eviction judgments represent somewhere between $28.5 million to $100 million a year in money that should go into housing but does not.  I peg the number at least to be $48 Million a year in lost rent in one county.  This is just insane. 

The right answer is for the government to step up to the plate and create a portable housing voucher to cover a portion, to all, of the rent /housing costs for people below a certain income, similar to food stamps.

Instead, the government pits tenants against landlords in a zero-sum game where one must lose for the other to win. In the end, this makes housing more expensive or limits choices.

This has been a problem long before COVID. In 1991 I was interviewed by the New York Times on evictions. I asked the reporter, “On $574 a month, how do you buy tennis shoes for the kids, clean shirts for school, and still pay your rent?” Nothing has changed much since then. $574 was the AFDC (now W2) payment amount. Twenty years later in an NYT interview, my comment was basically the same:

“On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Mr. Ballering said.” 
https://www.nytimes.com/2010/02/19/us/19evict.html 

Some suggest canceling mortgages and rents, thinking that this equivalent and will prevent the economic failure of housing.  Sadly, it will not.

The average mortgage payment is 36-39% of gross income. The average owner earns 7-9% of gross income for their investment of capital, financial risks, and physical efforts.  If you stop mortgage and rent payments, as well as prevent owners from being paid for their investment and efforts, there is still 52-57% of gross rent that is needed to cover other operating costs such as sewer, water, property taxes, maintenance, insurance, etc.

In Milwaukee, for most properties, the City takes a far bigger cut of the rent in property taxes, and sewer/water bills, than the owner gets to keep.

If you read the Brookings report, you will see this plus the “local economic multiplier” effect of wages and other monies expended by owners.

The Census Bureau reported in 2018 that, on average, every unit generates almost $1,200 in wages. Those wages, the property tax money, etc, circulate throughout the community many times over.

Here’s what scholars believe will happen if there is a moratorium without rental assistance; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3641859 It goes into the economic impact on housing and the cost borne by other current and future tenants. It is an informative read.

Dec 19

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.”

Dec 13

The Apartment Association of Southeastern WI, with 24 other organizations, joined Milwaukee County Exec David Crowley in urging the Wisconsin Congressional Delegation to approve a meaningful relief package to ensure the viability of communities and housing.  

Moody’s was reporting last week that unpaid rent may reach $69.9 Billion by the end of this month, an amount that will devastate rental housing for years or decades. The only solution is Federal rental and economic assistance to help those who have lost their income due to the COVID economic crises. 

If after reading the letter included below, you agree with it, please write your Congressperson and Senator. It is easy using democracy.io


WISCONSIN COALITION SUPPORTS IMMEDIATE COVID RELIEF

December 9, 2020

Dear Members of the Wisconsin Congressional Delegation,

We write today to ask for your support in securing bi-partisan legislation that provides critical additional assistance to communities throughout our state, including local and tribal governments, businesses, non-profits, and first responders to address the ongoing public health and economic impacts of the COVID-19 pandemic.

We sincerely appreciate the previous three relief measures enacted by Congress and executive action by the President, However, the public health and economic impacts of the pandemic continue to grow. As a result, an immediate and unified response that provides additional support is critical to supporting efforts to contain the virus and mitigate the consequences of this unprecedented crisis.

As members of a diverse coalition of leaders in our state, we can attest to the severe economic and public health impacts facing our members, economies, and the communities we support. Without additional federal financial support, the immediate negative consequences will be significant, and will be compounded by severe long-lasting effects. Additional federal aid will enable a continued joint response from the public and private sector, and supporting partnerships between local governments, businesses, and their communities to mitigate the economic, health, and public safety impacts of COVID-19.

For example, Milwaukee County recognized the value of these partnerships early in the pandemic. In addition to direct virus mitigation and recovery measures, the County partnered with businesses and non-profits to address the collateral damage inflicted by the pandemic, especially to communities of color. This partnership resulted in Milwaukee County utilizing roughly one-third of its direct CARES Act allocation to immediately address housing and foreclosure needs, issue small businesses grants, and partner with community groups to address mental health and food assistance needs.

This unprecedented situation requires action at scale with the problem. Addressing the issue now with bold solutions will prevent larger systemic economic damage. To enhance the fiscal responsibility of this legislation, reasonable guardrails could require COVID-19 relief dollars be tied to the public health, economic, and community impacts of COVID-19, ensuring resources are utilized in the most effective and efficient manner possible.

As evidenced by the diversity of the groups who have signed on to this letter, the effect of delaying further relief will have second- and third-level impacts on business, property owners, and a multitude of other industries throughout the state.

We sincerely appreciate your earlier efforts to assist our communities in addressing this crisis. However, we request further action – a bi-partisan solution that provides additional resources to address the public health and economic impacts of this pandemic. Our businesses, employees, and communities depend on the continued support of our federal government in these trying times.

Respectfully,

Apartment Association of South-Central Wisconsin, Inc.
Apartment Association of South Eastern Wisconsin, Inc.
Children’s Wisconsin – Milwaukee Hospital
Commercial Association of REALTORS Wisconsin
Community Advocates, Inc.
Cooperative Network
David Lubar
Feeding America Eastern Wisconsin
Greater Milwaukee Committee
Manpower Group
League of Municipalities
Legal Aid Society of Milwaukee
Metropolitan Milwaukee Association of Commerce
Milwaukee County Commission on Aging
Milwaukee County Executive David Crowley
NAIOP Wisconsin
Potawatomi Tribe
Visit Milwaukee
Wisconsin Apartment Association
Wisconsin Bankers Association
Wisconsin Counties Association
Wisconsin Credit Union League
Wisconsin Mortgage Bankers Association
Wisconsin REALTORS Association
Wisconsin Restaurant Association

preload preload preload