Many data outlets reported that 30% of renters were not able to pay rent in April, but a new report from LeaseLock shows a nominal decrease in payments in April compared to the first three months of the year. According to their data, payments in April were only down 5% compared to January through March for renters that pay in the first 6 days of the month. In fact, payments started stronger than usual on the first and then slowly declined over the next 6 days.
“There are a lot of doom-and-gloom headlines that 30% of renters didn’t pay April rent, and that isn’t what we are seeing in the data. As we are talking to our larger operators—and we have three of the top 10 operators in the US as clients—we are really only seeing a 5% to 10% decrease in rents collected,” Derek Merrill, CEO and co-founder of LeaseLock, tells GlobeSt.com. “That is through mid-April, and you are going to see more payments as deferral plans take hold. You will see some of the missing rent pick up toward the end of the month.”
In addition, there was also an increase in partial payments in April compared to previous months, which suggests that proactive landlord rent relief policies and communication with tenants was working to help boost up collections. Partial payments represented 60% of April rent payments, which is a 6% increase over the start of the year. “We saw a concerted effort by renters to make payments through the door,” Rochelle Bailis, VP of marketing at LeaseLock, tells GlobeSt.com. “Obviously, some of those are the natural first of the month, reliable renters. However, it also showed that the things that operators were doing in terms of reaching out proactively was working to support enters in making that payment. The overall increase in partial payments also suggests that at least some of those are from payment plans that owners developed to make the payments that they were able to.”
These proactive policies and the quick mobilization on the part of operators was likely more beneficial in mitigating rent loss than the CARES Act, at least initially. The CARES Act funding and expanded unemployment under the bill had not made its way in to bank accounts at the time of April rent payments. “I think that a lot of people still struggled, particularly with unemployment,” adds Merrill. “The reality of it was more psychological than direct cash in the account. I think the proactive resident relief support particularly from the enterprise multifamily owners that we deal with really helped the most. These owners wanted to help preserve occupancy and did things like deferred payment plans, and that was measured in the data. It was really nice to see that was how they reacted to this.”
That will really put a lot of pressure on May payments, which is really what landlords are watching now. “This was better than expected. Industry wide, everyone was very worried about the impact with so many people losing their jobs, particularly in markets with a lot of service jobs,” says Merrill. “The big surprise was that April was better than expected, but I think the question now is what will happen in May.”
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