During COVID-19, Nonpayment of Rent Becomes a Huge Issue

As the COVID-19 crisis rolls on, the nonpayment of rent is becoming a critical issue in the multifamily industry. Unemployment numbers are astronomical. Many are waiting to receive government stimulus checks. And renters who struggle to pay their rent because of job loss or other economic hardship may be shielded by eviction moratoriums. Measures are in place in some areas to protect renters who are having a tough time scraping by. This can mean that even those who have rent money might choose to spend it on something else. Just because renters are capable of paying their landlord doesn’t mean they will. As stay-at-home mandates ease, cooped-up residents may be tempted to spend their money on deferred needs and desires rather than rent. Eviction bans increase the risk of nonpayment of rent As more than 30 million Americans filed for unemployment, short-term eviction bans (supported by the National Multifamily Housing Council) were set into place to protect delinquent renters. While April rents fared better than most expected, many industry leaders believe eviction bans will be extended, increasing the risk for apartment communities. “If renters aren't paying bills but remain at properties for long periods of time, it pushes enormous risk onto apartment owners and managers,” says RealPage Vice President Jay Parsons. “It could potentially lead to apartment owners being unable to pay bills, pay taxes or make payroll.” With the future uncertain, even new renters moving in now could present problems depending on what happens with COVID-19. And a failed lease typically causes $5,000-$10,000 in financial damage to a property, notes Matt Davis, senior vice president for financial services. The biggest problem is that unlike three months ago, operators can't offset risk with more revenue. So it’s more important than ever to move in renters who have shown a willingness to pay. RealPage AI Screening mitigates the risk of los...