Economic Pressures Are Rising On Mom And Pop Rental Owners
NOEL KING, HOST:
Millions of people in this country are behind on their rent payments because of the pandemic, and as a result, many landlords with smaller properties are struggling to pay their bills, too. Here's Chris Nichols of CapRadio in Sacramento.
CHRIS NICHOLS, BYLINE: Before the pandemic, Ravi Kahlon (ph) and her husband, Raja Jagadeesan (ph), owned six rental properties, including some duplexes in Sacramento and the Bay Area.
RAVI KAHLON: So we have a room here that you can look at.
NICHOLS: They say their goal is to provide housing the community can afford. But after the economy shut down, four of their nine tenants stopped paying rent entirely.
KAHLON: September we didn't get rent. October we didn't - November, December, January, February...
RAJA JAGADEESAN: March.
KAHLON: ...March. So that's $28,000 in just one county.
NICHOLS: Without this revenue, the couple says they used personal savings to pay for repairs, property taxes and their mortgages. But Jagadeesan says that approach just isn't sustainable.
JAGADEESAN: We want to provide clean, safe housing for people, I mean, we need to at least make the numbers work out.
NICHOLS: More than a year into the pandemic, the bills are continuing to pile up for small landlords, who own nearly half the rental units in America and often provide housing that's affordable for middle- and lower-income renters. But as of this month, landlords still can't ask courts to remove tenants who aren't paying. That's because the federal government recently extended its eviction moratorium through the end of July. California continued its eviction ban through the end of September. But many renters can apply for 100% back rent, which will ease the situation somewhat.
(SOUNDBITE OF RALLY)
UNIDENTIFIED PERSON: What do we want?
UNIDENTIFIED PEOPLE: No evictions.
UNIDENTIFIED PERSON: When do we want it?
UNIDENTIFIED PEOPLE: Now.
NICHOLS: At rallies like this one in Sacramento this spring, tenant advocates pushed for the bans to stay in place. They say they're needed because just a fraction of the billions of dollars in state and federal rent relief has gone out to those affected by COVID-19. But economists say the eviction ban puts a huge weight on small landlords, especially those whose rental income has dried up. Given the red-hot real estate market, they say some might just sell and get out of the rental business altogether.
JEFF TUCKER: Homes are selling very quickly, almost no matter what condition they're in.
NICHOLS: That's Zillow senior economist Jeff Tucker.
TUCKER: And therefore, that is a tempting window of opportunity, especially for a small-time landlord, to cash out and sell that home.
NICHOLS: Those sales are happening, but not to other mom and pop owners, says Russell Lowery, who heads the California Rental Housing Association, which represents landlords.
RUSSELL LOWERY: We believe we're shifting the landlord mix from smaller to corporate.
NICHOLS: That shift could mean fewer entry-level rental options. Renter advocates like Shanti Singh of Tenants Together say they also want to avoid more corporate ownership, which can be less forgiving to renters.
SHANTI SINGH: We definitely don't want to see a further consolidation of property in the hands of corporate landlords. We have been fighting that.
NICHOLS: Back in Sacramento, small landlord Raja Jagadeesan says he and his wife ended up selling half their properties. He says they couldn't make the numbers work.
JAGADEESAN: We're not getting any rent from property X, but we are bleeding money every month. And so then we have to make those hard decisions, like I think we have to sell. And that happened not once, not twice, but three times.
NICHOLS: He says one went to a young couple who plan to live at the home, taking it off the rental market. Another went to an investor, who Jagadeesan says will likely slap some paint on it and then raise the rent.
For NPR News, I'm Chris Nichols in Sacramento.
(SOUNDBITE OF SOUND SCIENTISTS' "MAY 6") Transcript provided by NPR, Copyright NPR.