I want to give you an update on the status of Covid-19 housing policies. However, I want to be candid and tell you that I wish I had more to say than I do – or at least something better to say than I do. But here goes…
Currently, we are into the third month of the 90-day Non-Eviction Order as mandated by Oregon Governor Kate Brown.
The statistics have been that about 15-to-17 percent of tenants have not paid rent in either April or in May, statewide, and our company has seen the same. It is predicted that the number of non-payments will increase in June, as many tenants who have paid at first, have used up their resources.
At our company, we have tenants from all income brackets who cannot pay rent, from housing voucher contributions of $400 per month up to leases more than $2,500 per month. Business owners that rent housing and are unable to work are just as affected (sometimes even more affected) than tenants who work at minimum wage jobs.
Tenant Debt is Mounting
As the tenants’ debt mounts and the economy continues to tank, it does not take a lot of imagination to see that many people will not be in a position to repay the delinquencies even in the six-month period that they were granted by the state.
Additionally, it should be understood by everyone here that the governor and State Legislature are aware of this dynamic and they are no doubt crafting some plan that they will announce at some point.
My guess is that they will toss a small bone to owners, while new restrictions may be imposed on them that provide even more protection for vulnerable tenants.
So, What Are We Doing About All of This?
The truth is that we don’t have many tools at our disposal here. We have reached out to all of our non-paying residents and asked them to fill out and sign our Covid-19 Deferral Plan – which simply spells out the terms they would agree to repay the back-rent owed. About 50 percent of the tenants have signed this and 50 percent have not.
Our working plan (after the 90-day ban is lifted) is to contact those tenants who did not sign the agreement and did not pay part or all of the rent, and let them know we need to make those arrangements or they would face the prospect of an eviction for non-payment. Then if they didn’t sign it we would send the FED (Forced Entry Detainer).
Where This Could Get Complicated
But here’s where it is going to get complicated, because I suspect that either:
- The state will forbid evicting anyone for non-payment of rent during the quarantine period, (so that messaging will be moot) and/or
- Even for those who legitimately could be evicted – the courts will be 90 days backlogged as they have been closed for the last two months to all but extreme cases, essentially not hearing any rental related issues. So the entire process will be prolonged and the losses from continued non-payment of rent would mount.
It will be at this point in time that rental property owners will be at ground zero of the pandemic (much as restaurants and retail stores were at the beginning).
It will be at this time that we begin the bartering and negotiating and risk management with all of our tenants and clients. It will be at this time that we will need to create new policies and procedures to address unforeseen issues. (Remember, we are still dealing with state and local rent restrictions and housing regulations limiting everything we do more and making the process ever more complicated.)
DISCLAIMER: I may be wrong and it may all work out okay. I feel a little like an oceanfront homeowner boarding up for an approaching hurricane, while my neighbors are having a barbeque.
Difficult for Staff at Our Property Management Company
The strain on our property management company from the pandemic has taken a toll.
We hired new staff in February for staff that left in January, but they were gone by March for their inability to work and our inability to properly train them.
However – we hired a key manager, who has brought incredible resources to bear.
This month, we have just formed a new portfolio team as we are actually anticipating a growth surge due to the complexities of managing residential properties at this time.
I am personally going to manage this group of properties as well to make sure we get it right. We will continue to outsource most of our maintenance to companies that are geared and prepped to operate in an on-going health crisis. My political days are on hold for now and if you want to see that messaging go to my website at gogarcia.org.
We Are a Relationship Business
Our business is built on relationships with owners, with tenants and vendors.
Our product is problem solving and communication. Whenever a crisis occurs, those who are able to, go to work. Often, those people are called on to work harder. It is time for us in the residential property industry to go to work and help all of those who are affected (tenants and landlords) with the best advice and perspectives and resources we can locate and offer.
In closing, it is still too early to know who will or will not pay rent this month. Please know we are carefully watching it and getting ready to do what is needed.
Ron Garcia, principal broker and owner of The Garcia Group Residential Property Management in Portland. He is past president of the Rental Housing Alliance, Oregon and a (former) candidate for Oregon’s House of Representatives. He can be reached at [email protected].