Eviction Ban Leaves Landlords Worried About Missed Payments And Their Bottom Line
Adrienne Roberts with The Detroit Free Press reports on what housing providers are doing to help residents navigate the economic ramifications of the coronavirus crisis.
Southwest Solutions, a Detroit nonprofit that offers a wide range of social services, manages 720 affordable apartments, and saw a 21% increase in late rent payments since the beginning of the stay home order.
The nonprofit serves a specific population — its tenants are income-restricted, and some have housing vouchers or subsidized housing, said Tim Thorland, executive director of Southwest Housing Solutions. But for the 70% of its tenants who pay rent each month, many are employed in the service industry or holdlower-level staff positions, he said.
“A lot of those jobs have been furloughed, and folks have been laid off as businesses close,” said Thorland. “With a low-income family, they don’t have a great deal in reserves to deal with a crisis of this magnitude.”
He and his team braced for losses of up to 30%, which would put $3.5 million in revenue at risk on an annual basis.
Thorland decided he would proactively reach out to tenants and encourage them to pay rent.
“What if they don’t pay rent and get behind, and in five months when things are back to normal, we never collect rent?,” he said.
So, he came up with a discount program. If a renter paid rent one month early, they’d get 10% off that month’s rent, 20% off for two months, and paying up to three months early offers renters 35% off.
Thorland said 15% of their tenants opted for the early payments, and he’s hopeful more will sign up.
“While it doesn’t make up for revenue, what is has done is allowed us to lock in an expectation on lost revenue that we can budget for, or fundraise against, or go back to lenders and investors with some credibility in expectations,” he said. “The other thing it does protect a segment of the population from future eviction.”
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