Apartment landlords say they are not getting all their money despite high rent collection rates during the coronavirus pandemic.
Residents are opting out of fees for amenities, sticking owners with charges for credit card payments and taking advantage of concessions such as free months of rent and waived move-in charges, said rental executives in a webinar sponsored by the National Multifamily Housing Council, the advocacy group based in Washington, D.C.
“Certain elements of the revenue stream are just not getting collected,” said Robert Grealy, executive vice president of operations for Kettler, the McLean, Virginia, developer of apartments up and down the East Coast. The firm owns and manages about 20,000 units. Grealy joined apartment management executives Tuesday to discuss NMHC’s rent-tracker program, which collects payment data from over 11 million units nationwide.
Revenue shortfalls could disrupt the finances for apartment investors big and small. Many commercial mortgages, of course, require more than just covering the monthly payment. They require that the recipient of the loan achieve certain occupancy levels, rent minimums and other fundamentals.
According to NMHC’s survey, 92.2% of renters paid their rent this month by June 20. That’s identical to last year’s rent collection, and up from the 90% payment rate at the same time last month. The data is in line with rates of collection seen since NMHC began tracking rent in April.
And apartment executives in webinars have pointed out that those rosy numbers are posted despite unemployment claims of more than 44 million Americans, many of whom are low-wage service workers who overwhelmingly rent.
The data is provided to NMHC by five apartment management software companies — Entrata, ResMan, Yardi Matrix, RealPage and MRI Software — that handle bookkeeping and rent collection duties for some of the country’s biggest apartment players.
Grealy said his company, which has about 50% of its holdings in top-notch apartment complexes such as Town Trelago in Maitland, Florida, and the rest in Class B and Class C properties, is seeing steady payments starting to waver at older, less-swank properties.
But for months, NMHC and the software firms have fretted over what they might be missing: smaller properties that don’t use their services, and those in secondary markets.
The coronavirus has turned multifamily market expectations upside down.
“As we’ve seen, the pandemic doesn’t seem to be letting up,” said Jeff Adler of Yardi Matrix. “But core cities are really the ones that are under pressure.”
New York, Boston, Los Angeles and San Francisco are seeing rents plummet, according to experts. “In the gateway cities, you’re seeing really deep cuts,” said Greg Willett of RealPage.
There has also been concern that the extra $2,400 per month that the federal government has poured into the unemployed population is masking the problems tenants have.
And landlords are getting ready to kick people out when moratoriums on evictions expire.
“Asking rents are down 5%. And they continue to slide,” said Grealy, noting Kettler is trying sign more leases than vacancies in preparation for nonpayment.
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