The COVID-19 pandemic has hit renters hard nationwide, with data from the US Census Bureau and the National Multifamily Housing Council showing that millions have missed rent payments or lack confidence in their ability to pay future rents. We also know that renters of colors are struggling more to make their rental payments. But there is little public information about how this country’s 8 million independent landlords are managing.
Avail, a platform that helps do-it-yourself, mom-and-pop landlords manage units and collect rent for 53,000 properties, periodically surveys its landlords and tenants. We worked with Avail to develop questions for its August survey to understand how landlords are managing this crisis and to identify racial and ethnic differences.
We found that Black and Hispanic landlords are struggling to pay their mortgages more than white landlords and are more apt to take mortgage forbearance. Despite the struggles, Black and Hispanic landlords are more likely to offer their tenants a rent payment plan, suggesting these landlords are dedicated to keeping their tenants.
Black and Hispanic landlords are struggling to pay their mortgages
More than one-third of the landlords surveyed earn the majority of their income from their rental properties, but Black and Hispanic landlords have lower incomes, own fewer properties, and are more likely to have a mortgage than own their building outright. As a result, Black and Hispanic landlords are more likely to struggle to make their mortgage payments.
There is a 10 percentage-point gap between the shares of white and Black landlords with incomes below $75,000 and a slightly smaller gap between white and Hispanic landlords. Nearly half of Hispanic landlords own only one property and 40 percent of Black landlords own only one property (versus 32 percent of white landlords). White landlords have five or more properties more often as well.
Owning fewer properties makes it harder to diversify risk and increases the financial volatility of rental income when a crisis hits.
More Black and Hispanic landlords have mortgages than white landlords, which puts them in a more precarious financial position when their tenants struggle to pay their rent on time. The Avail survey found that Black and Hispanic landlords are more likely to own two-to-four-unit buildings, which often house less affluent tenants and tenants with jobs at higher risk of layoffs because of the pandemic.
Black and Hispanic landlords are more likely to use the forbearance option
Although only 12 percent of landlords with a mortgage are in forbearance, these landlords are disproportionately Black and Hispanic, reflecting their less stable financial situation compared with white landlords. About 20 percent of Black landlords, 14 percent of Hispanic landlords, and 9 percent of white landlords have at least one mortgage in forbearance.
Half the landlords surveyed said they did not know whether their servicers offered forbearance. Nearly two-thirds of white landlords said they decided against forbearance because they can make their mortgage payments. Less than half of Black and Hispanic landlords said the same.
Among those not struggling to make their mortgage payments, 64 percent didn’t know whether their servicers allowed forbearance, but only 24 percent of those who are struggling financially said they didn’t know their options. Black and Hispanic landlords were more likely than white landlords to know their forbearance options, with 61 percent and 59 percent aware of that option versus 46 percent of white landlords.
Forty-eight percent of Black borrowers and 35 percent of Hispanic borrowers have federally backed mortgages versus 32 percent of white landlords. Even though all federally backed mortgages provide forbearance, 42 percent of those with federally backed mortgages said they did not know whether their servicers provide forbearance, and 11 percent said that their servicers do not provided forbearance, suggesting that greater outreach and communication about available options could help struggling landlords.
Black and Hispanic landlords are more likely to assist their tenants
Even with an unsteady financial situation, more Black and Hispanic landlords offered rent payment plans to their tenants than white landlords. Overall, 38 percent of landlords offered rent payment plans to their tenants, with 61 percent of tenants accepting the offers.
Many landlords offered a changed payment schedule, with other popular options including discounted or deferred rent, which 16 percent and 21 percent of landlords found helpful. Not many landlords forgave tenants’ rent.
Pulling from savings or emergency funds was the most common response among landlords for what has helped them weather the crisis, with 41 percent of Black landlords, 35 percent of Hispanic landlords, and 34 percent of white landlords tapping this source. About 16 percent of all landlords found government aid helpful.
Many landlords were reluctant to accept the forbearance option because they would still need to pay back the deferred mortgage payment once the forbearance period ends, and they were uncertain about whether their tenants would be in a better financial position to repay their rents in the future.
Struggling landlords need more government support
With the expiration of the extra $600 a week in federal unemployment benefits at the end of July, we will likely see an increase in the number of renters who cannot pay their rent. The inability to pay rent will affect mom-and-pop landlords with fewer than 10 rental units, who own slightly more than half of all rental units. Without government support for rental payments, by direct payment to either the tenant or the landlord, these small operators may not be able to continue making their mortgage payments and keep their tenants housed.
The extension of eviction moratoriums will help tenants stay in their homes longer, but for many landlords who are struggling to make their mortgage payments and are disproportionately people of color, there needs to be additional policies to alleviate their financial burdens.