On Aug. 26, 2021, the U.S. Supreme Court struck down the Centers for Disease Control and Prevention’s (CDC) eviction moratorium. Unfortunately, 89 percent of the $46.55 billion federal pandemic-related rental assistance that aids both tenants and landlords remains unspent.
Real estate agents are in a unique position to help both tenants and landlords reduce evictions while also helping landlords obtain the financial assistance many need.
According to the U.S. Census Bureau Household Pulse Survey, approximately 17 percent of renters are behind on their rent. The National Low Income Housing Coalition estimated that at the end of 2020, renters owed somewhere between $30 billion to $70 billion in back rent that millions of people would be unable to pay.
The flipside of the coin: The problem almost no one discusses
While our hearts go out to renters who cannot pay their rent, there has been little discussion of the plight faced by the mom-and-pop investors who own about 22.1 million rental properties, many of whom count on rental income to cover their basic household expenses.
The Brookings Institute reports approximately 40 percent of these residential property units are owned by individual investor landlords. About a third are owned by low-to moderate-income households. For landlord households earning less than $50,000 per year, their investment property “provides nearly 20 percent of their total household income.”
This shortfall in income for mom-and-pop landlords translates into depletion of their savings, necessary maintenance of their properties being delayed and possibly foreclosure on their investment property and/or their primary residence.
There is help for both tenants and landlords
The Emergency Rental Assistance Program (ERA1) and the American Rescue Plan Act of 2021 provided $46.55 billion in funding for rental assistance to households facing financial challenges due to the COVID-19 pandemic. Funds are available to both tenants and landlords, and can be used to cover rent, utilities and even the security deposits if the tenant is moving.
Unfortunately, bottlenecks at the state level are preventing tenants and landlords from receiving the assistance they desperately need. Specific challenges include:
- The complexity of filling out all the required forms, especially for those who do not speak English as their first language or who are unfamiliar with how to fill out the required government forms.
- According to USA Today, there have been numerous other problems distributing these funds as well: “Many states contracted third-party vendors to lead the programs, requiring lengthy procurement processes that delayed the initial rollout of money. Computer systems in several states malfunctioned, preventing renters from applying. Some states are forcing tenants to provide more documentation than required by federal law, which experts say has created unnecessary hurdles to get money out the door.”
- Applicants can only apply for three months of assistance at a time with a maximum of 12 months. While the 90-day assistance helps to avoid abuse, it also adds more time and bureaucratic red tape to the process.
The bottom line is the states were unprepared to handle the tremendous amount of money that they were expected to distribute, did not have adequate systems in place to handle the distribution, and were already understaffed due to many state and local government employees working remotely.
The result: Even those who have applied and are qualified are stuck in the pipeline waiting, often without any updates on where they stand in the process. Struggling tenants and landlords need help now. Here’s what you can do to help this situation become a win-win for both groups.
Help your business by helping tenants and landlords
Very few people realize that both federal programs intentionally engage landlords in the process. In fact, the payments are often made to the landlord with the provision that they will not engage in an eviction proceeding for a set amount of time after the rental assistance ends. Here’s what you can do:
- The most important step you can take is to let the investors in your area know there is relief available for both them and their tenants. Advise them that many of these programs encourage tenants and landlords to work together to find workable solutions for them both.
- Even if there are issues with the federally funded programs in your state, most states have local and state rental assistance programs as well. The National Association of Realtors (NAR) has put together a comprehensive list of the status of eviction and foreclosure moratoriums. On pages 7-8, you can click on your state or territory to find out more about the federal as well as the state and local programs that are available. This list also includes how to apply. Additional information about the federal rental assistance programs can be found on the CFPB site.
- Since the federal rental assistance programs often require the landlord to work with the tenant, copy the relevant information from the CFPB and NAR resources linked above. You can share this as part of your cold calling, print, and/or digital marketing campaigns. A simple campaign to use:
Are your tenants behind on their rent?
There is help available!
To learn more contact Sally Agent at: 888-555-1212
- If the investor is owner-occupying a two- to four-unit property, these are treated the same as single-family residences. This means the owners can apply for mortgage forbearance if they are having challenges due to tenants not paying their rent, if they have lost their job, or are facing other pandemic-related financial issues.
- Some of the iBuyer companies will purchase one- to two-unit investment properties, provided they meet the criteria. A good friend just sold his duplex here in Austin using OpenDoor and was very pleased with both the price and the simplicity of the process.
- Now that the eviction moratoriums have been lifted in most areas, many investors may be eager to sell their investment properties outright or do a 1031 Exchange since those tax benefits are still in effect for the time being.
- To locate investors, you can contact your local title company to obtain a list of owners who are not owner-occupying their property, use any of the AI or lead-generation services that will provide you with lists of owners meeting your criteria or REISource.com (a CoreLogic service) that charges on a per name basis.
One of the best ways to serve your clients and your community is to be a solution to their problems. Helping tenants and landlords work together to keep people in their homes and gain the assistance they need will earn you more referrals and positive press than almost anything else you can do to promote your business.
Bernice Ross, President and CEO of BrokerageUP and RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles. Learn about her broker/manager training programs designed for women, by women, at BrokerageUp.com and her new agent sales training at RealEstateCoach.com/newagent.