Rent Collection For Mid-Market Multifamily Looks Solid For Spring, But Summer Could Be Another Story
The unprecedented number of job losses this spring unsettled the multifamily industry, and stakeholders are hungry for data on rent payment. A survey of more than 11.5 million units conducted by National Multifamily Housing Council found 84% of renters made full or partial rent payment by mid-April, and now a local survey has brought some additional good news.
According to Essex Realty Group, 64% of Chicagoland multifamily property owners and managers reported collecting more than 90% of the rent owed for April, while another 32% collected between 70% and 90%. The company surveyed regional property owners and managers who together are responsible for more than 35,000 units, most in Class-B and Class-C buildings scattered across Chicago and its suburbs.
“When businesses started to shut down in mid-March, I think most people thought at best 50% to 60% of the rent would be paid,” Essex principal Steven Livaditis said.
In the first few days of April, that’s roughly where things stood, but after that first weekend, more rental payments started to flow.
“All of a sudden, most owners were at 75% to 85% levels, and right now, for the month of May, we’re on par at those same levels,” he said.
The company will soon release the results of a follow-up survey on May rent collections.
Most renters also did not need a payment plan to get through this first rough patch, Essex found. Only a handful of owners said they have had more than 10% of their renters ask for some form of rental payment plan or adjustment.
At the onset of the crisis, Livaditis said, many landlords began making sure tenants knew how important rental payments were to not only paying off mortgages but keeping buildings safe and maintained.
“Tenants seem responsive to that, and the general attitude seems to be that ‘this is the first bill that should be paid,’” he said.
The overall numbers are so far encouraging to potential investors in the middle-market multifamily sector. Of those surveyed by Essex, 40% said they were more likely to buy such properties in the post-crisis era than they were a few months ago. Another 38% said they were just as likely to buy, and 15% said the crisis made further investments less likely.
“People need a roof over their heads, so there is always going to be demand, and there are more people who can afford a $1,200 rent than a $3,000 rent,” Livaditis said.
Uncertainty grows when owners are asked to look beyond May. About 28% of owners surveyed told Essex they expected to either collect less than 80% of the rent for May, were not sure or preferred not to answer. That group expanded to around 47% when asked about June.