Residents asking for state of emergency break

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Latest post from the Manufactured Housing Institute…

" Actions MHI is Taking to Ensure Federal Interventions Support Our Members

Mandated Paid Sick Leave

[MHI has joined with more than 100 organizations representing hundreds of thousands of businesses that employ millions of employees in various industries across the country to advocate for changes to the [“Families First Coronavirus Act” (H.R. 6201)]

The original House package included language requiring businesses with 500 or fewer employees to provide two weeks of paid sick leave at an employee’s full wages and an additional ten weeks of paid leave at 2/3 the employee’s pay rate. Such leave times include paid leave for taking care of children as a result of school closures and for any federal, state or local quarantines. The mandate would be in addition to any paid leave the employer already provides. The leave is for any covered absences between 15 days after the bill is signed into law and Dec 31, 2020. While the bill attempts to mitigate these costs through tax credits and refunds—and Secretary Mnuchin’s promise Sunday that Treasury will provide “advances” to small business—these payments to employers will not be immediate—and may not cover the full costs incurred. MHI is concerned that these will accelerate small and medium business closures, causing many Americans to lose employer-provided health benefits while straining the administrative and financial resources of state unemployment agencies.

Support for Rental Property Owners

MHI has also joined a coalition of housing groups urging Congress to provide direct federal rental assistance to families and individuals who suffer a loss of income during the crisis. The ability of rental property owners to satisfy their own financial obligations will most certainly also be impacted, so the coalition is arguing that relief should be granted to rental property owners to help ensure the continued viability of their properties. The coalition is arguing for emergency rental assistance funds to help families struggling to afford rent and utilities because of a pay cut or job loss associated with the coronavirus. In addition, the coalition is urging that any measure that allows for mortgage or other financial obligation (tax, insurance, etc.) forbearance, be extended to rental property owners.

Cash Flow for Small Businesses

MHI has joined a coalition of business groups to urge Congress to ensure that action is taken to help businesses survive the crisis to reduce their costs and increase their cash flow in the coming weeks. Suggestions include:

  • Immediately provide readily accessible, unsecured credit to employers of all sizes to ensure they have the cash to pay their workers, rent, and other costs during this crisis. While Congress, Treasury and the Federal Reserve have recently announced policies to increase the availability of credit to some employers, these policies need to be expanded to make certain they are comprehensive and that the credit is readily available to all operating businesses in the short term.

  • Suspend the filing of business returns and the payment of all business taxes to the federal government for the duration of the pandemic. These suspended taxes should include taxes owed for the 2019 Tax Year, estimated payments for 2020, and all payroll tax obligations. The suspension should be broad and apply to all businesses. When the pandemic is over, the repayment of any deferred taxes should be spread out over time.

  • Amend the Tax Code to, among other items, restore the ability of businesses to carryback any net operating losses against previous year tax payments; suspend the application of the Section 163(j) limitation on interest expense deductions for tax year 2020 to avoid penalizing businesses for borrowing during this crisis; and suspend the Section 461(l) loss limitation on pass-through businesses to allow businesses to full deduct any losses they incur this year."

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I don’t believe that applies to us:

I’m no legal scholar but I don’t think the executive branch of the federal government has the legal means to just stop evictions across the country.

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I had planned starting next month to raise the lot rents on a large newly purchased park by $75 and start charging water on top of that. I will now postpone that. My only concern now is that enough people will pay to cover this rather large mortgage and expenses. I have not yet contacted my bank to see if there is any way they will work with me on this new loan. My other parks I have enough reserves to wait this out for a while but who knows how long we will be impacted by this.

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These are tough times indeed and it will get worse before it gets better - I don’t think that is debatable. I’ve already started getting the phone calls from tenants who tell me they are out of work. Last year, Forbes reported that 78% of Americans live paycheck to paycheck. That is a scary metric.

Most certainly, the vast majority of our tenants fall into this category. Much like most of this country, my state of Pennsylvania has frozen evictions (we have one in the pipeline). The magistrate offices are closed and when they re-open, they will be swamped. Even if we, as operators, decided to file complaints against our non-paying tenants, the hearings will be delayed. Each operator will have to make “cases by case decisions on their tenants.

Personally, I will not be advertising payment plans but when tenants call me, I will be assuring them that we will “make arrangements.” 95% of my tenants are good - they wouldn’t be my tenants if they weren’t. I choose to work with them to get through this. Capital improvements will go on hold and we will be frugal with all expenses.

As operators, we have an opportunity to extend grace to our tenants in a difficult time. That doesn’t mean we should be sloppy with operations. But, I do think this is a “do as to others” moment.

Each owner will be forced with some tough decisions but this also may be an opportunity to demonstrate compassion and build some goodwill within our communities.

That being said, our banks have not cancelled our upcoming mortgage payments. I’m as worried as my teammates. But, we will get through it and hopefully our tenants will appreciate how we handled this crisis.

I wish you all the best and keep the great communication going. We need each other as much as our tenants need us right now.

Jon

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I commented on this in the epidemic forum - a letter might be a double-edged sword, inviting residents to try and get lower rents. Noel_S, would you be willing to share the letter with the specific wording you used?

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Good points Frank and Smith. I think in the end we are just limiting the rate of spread for the moment while a vaccine is developed/distributed. Eventually everyone will get the virus, but the larger impact will be economic.

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Sure, attached is a copy. draft of forbearance letter.pdf (90.5 KB)

I know it sounds crazy and I may just be gullible, but I actually don’t think many residents who can pay will try and game the system and bs the application and make up hardships and sign their name to it. Plus, once the main deterrent I have as a landlord is gone (evictions), this gives me some small leverage still by promising fee waivers for people who play within the system.

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Before anyone does anything I would urge them to factually examine exactly which resident occupations are currently impacted by Covid-19. Here would be a quick list:

  1. Wait staff at in-dining restaurants.
  2. Bartenders.
  3. Casino staff.
  4. Sports venue concession and cleaning staff.

Then overlay that onto your resident base and see who is not impacted, namely:

  1. Those on social security.
  2. Those on disability.
  3. Those in every other industry besides what I’ve listed above.

So how many people are you really talking about in your property that suddenly can’t pay rent as a result of Covid-19? In most parks, the answer is not many.

Sure, there may be other employers that shut in the future due to the California shut-down or other aftermath of Covid-19. But that has not happened yet, and will be based on how long this lasts and what government subsidies are issued – none of which anyone knows at this point.

Then, on top of that, you have $1,000 checks going out for April to everyone regardless of whether they are impacted or not.

While none of us want to lose a single existing resident, there may be steps possible to save the tenant who has overnight lost employment and is aggressively trying to find a new job. But there will also be cases of residents who lose the job and have no desire to replace it, or even lost the job not because of Covid-19 but other reasons. And there will be those who aggressively try to game the system. Any concession needs to be on a case-by-case basis based on the facts and with proper vetting of those facts.

Just think through the precedent before you do anything, as well as the impact to your property and commitments. Don’t let the media frenzy convince you that the affordable housing industry is in the same predicament as the Las Vegas strip.

The British World War II mantra of “Stay Calm and Carry On” is a pretty good strategy right now. As far as I’m concerned, affordable housing is an “essential” industry and will only increase in demand and importance as Covid-19 takes shape. Our phone is still ringing off the hook and customers are still moving in. We’re not in the airline, lodging and dining industries and our reality is completely different than others right now.

We should all remain cautious, make moves to shore up liquidity, watch the actual stats, become voracious readers of factual content from reliable sources, and make smart decisions.

We will all know a whole lot more after the April and May rent cycles, as well as the government’s moves in the coming weeks.

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The calming words are great Frank. I agree that it’s good to emphasize that we’re in one of the better industries to be in right now. By years end, it’s very likely this has mostly resolved and normalcy will have returned.

California is now on full lockdown in an attempt to staunch exponential growth of infections, with factories and all non essential businesses closed. It seems very plausible that most other states could be 1-3 weeks behind. Being excessively proactive and overacting is poor strategy, but being proactive and planning ahead for what could happen seems wise as well.

This too will ultimately run its course , and I’d sure as heck rather be running an affordable housing community than a restaurant right now.

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Noel_S, thanks for sharing. Please keep us updated on the response - I’d be very interested to know your experience and lessons learned as this could be something we could implement in 2-4 weeks time.

Our notice that I am printing off and giving to site managers to post today is as follows:

Coronavirus Update for Tenants

  • Please conduct park business by phone when possible
    • Call site manager first before meeting in-person
  • Minimize non-essential contact
  • In-unit repairs will be limited to those that are essential to maintain a habitable place for tenants and keep the park running
  • Work on the common space (mowing, trash pick-up) will continue as normal
  • Please consult the Jackson (Sylva) or Buncombe (Candler) County Department of Health websites for information on local response and testing options

You are still required to pay rent as normal. No exceptions.

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Im going to go out on a limb here and ive pretty much 100% agreed with frank always. I don’t think this statement particularly takes into account all the people who are effected or about to be effected and the ripples that come with it.

For the record, im not an economist (and I might look silly since I think thats franks major) , not health person but if you look at so many of the paths it has gone in different areas, there is some predictability . It seems everyone is taking the approach , I want to try and save the foot (economy ) and the leg (life) and no one wants to cut the foot off to save the leg. Mabye take the toe off, then the next one etc… but I dont know what the run is in the mean time.

And I dont know if thats the answer, I just feel that the “potential exposure” to the whole economic machine and how this is penetrating.

Hotels are shutting down, retail brick and stick shutting down , businesses are cutting back jobs , restaurants ( some seem to be shutting down ) I dont know what the curve is for some places if the pick up take out how that compares to their normal sales ( or staff operations ) and then you have the variable , essential business keeps getting infected when its open. Its like this horrid spiral that wont stop. It doesn’t seem like there is an hour that goes by where you hear about someone else getting impacted in a way you may not have thought.

I am NOT trying to express fear, my hope is the variable of social distancing and reducing non essential weights in heavy here. One of the most fascinating things I think is the doubling rate ( which I dont know if it will continue - hopefully not…)

Check out this video, I know everyone knows about flattening the curve , the Lilly pad example to see how long it takes to show up in bulk., What This Chart Actually Means for COVID-19 - YouTube. Not the whole video just start at minute 2:30 watch for 1 minute until 3:30 for some perspective .

The reason I want to share this with my RE folks here is there are some bright minds, who all know about the magic of compound interest and this seems right in line with it on a shorter time span.

Again, I dont know how this plays out, but I will use the term , "potential exposure " seems very significant while I hope this is not the case, It seems like many aren’t seeing this to the “potential” degree it can be. I think rents getting paid will be the smallest problem.

And future @Marvel_Equity I hope you come back here in one month and say, man im a sucker and I need a good punch in the shoulder…

Look at where we were 9 days ago. 9 Days ago , can you imagine what has happened in that time? What does 9 days from now look like.

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I seen a huge fast food franchise owner on CNBC today.

He had Burger Kings and sales are running at 85% yoy
He also has Popeyes which are running 100% yoy (but had been growing fast).

At this point no layoffs planned.

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I just read about the largest landlord group in California call for rent freezes, not a decrease or forgiveness of rent. I think announcing a decision to not increase rents would be a good motion towards tenants that we are considering their situation, but still being able to cash flow through the crisis.

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During a situation such as this you do not make commitments or promises to tenants. no rent freeze, no decreases, no forgiveness. Nothing you may end up having to live with once the situation has passed.
Keep in mind that if your tenants are living pay check to pay check and they fall behind in rent they will be digging themselves into a whole they can not get out of. You will end up writing it off or evicting down the road.

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Thank you for mentioning the positive.

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IMHO… I think it’s best at this point to just wait a bit. I don’t think it’s ever wise to make a decision without all the facts… which no one has at this point… or in the midst of emotions. SO… I personally will just wait and watch for a bit longer and see how this works itself out.

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For each of our cities, we have created an “Assistance” flyer that lists every type of assistance in that city available that we can locate (food, rent, transitional housing, emergency funds, heater repair, transportation, etc, etc). They take a little time to put together but well worth it.

We locate these resources through web searches, multiple phone calls, and asking each agencies/nonprofits about referrals to other other agencies, etc. They are all very helpful and love the idea that a landlord would provide this. Some cities have their own flyers/lists already put together.

A copy of this flyer goes out with late notices or given to anyone who comes forth and lets us know they are facing hardships. Most tenants actively seek help which helps them help themselves. My managers always have copies available.

For this pandemic every home in each park received a copy of this flyer along with a letter with basic info that is known about the virus as well contact information for unemployment. We encouraged anyone who has seen a layoff to contact unemployment immediately and not to wait, it also included when applicants could expect payment (as reported by the unemployment office). This was not a cheap print job, but I believe it is money well spent. This provides tenants with a means to help themselves, and hopefully they will do so quickly and not leave the park holding the bag.

In that letter (since this might be a bigger issue now than normal) we reminded tenants of what does and does not go into the sewer. Also let them know that a hand-held bidet is cheaper then a 12 pack of toilet paper!

We do have a pre-existing Rent payment plan, we did not mention it in our letter. All of our residents know about and understand it is for emergency use only. This only is suggested as a last ditch effort when people are at the end of their rope.

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All my tenants will be paying full rent as usual. If this were not the case I would be sending notices out reminding them that they have a responsibility to pay full rent as usual. Unlike the U.S. all our tenants that may become unemployment will receive money from the government, unemployment, family assistance etc.
It is important to inform tenants that do receive assistance that their first priority is rent. Those that do not receive assistance will need to be managed case by case. My biggest concern would be that if they don’t pay they will likely never pay.

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My property manager of my long-term rentals put this page on his site with info of resources for renters to get help (rather than help from landlords). Might be an idea to do the same or send an email/flyer with similar info. How to Deal with Rent, and Stress During the COVID-19 Crisis

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Hi Ash2740,

Just checking in now that some time has past by. How did you manage with your newest park since your original post about your situation?

Marijuana Vandyck