#LandlordLife Newsletter Issue 3 - Page 2

GOING FORWARD AS A LANDLORD IN SOUTHERN CALIFORNIA N ew lease agreements fell substantially in April, with tenants opting to sit on current leaseholds until the dust from the COVID-19 pandemic begins to settle. With millions of household incomes impacted by COVID-19, the pandemic has out-of-work tenants across the nation rallying for rental relief. Some tenants have made it clear to landlords that they will not pay May rent regardless of Government regulation on this issue. Because interest rates are so low, investors with capacity are avidly sourcing new rental investments amid pandemic markets. On the other hand, many landlords are making the decision to dispose of rental properties altogether, saving having to navigate the turmoil that lies ahead. NATIONAL RENT RELIEF The effects of the pandemic have left millions with insufficient income to pay basic living expenses. With quarantine requirements and workplace closures putting much of the labor force out of work for the foreseeable future, the collection of April rent has proven a challenge for some landlords. On average, 20 percent of the tenant population is unable to pay rent on time each month, according to a National Multifamily Housing Council survey of 13.4 million housing units. According to the same survey, 31 percent of tenants were unable to pay rent on time in the first week of April. Some tenants in arrears have refused to leave, aware that removing them will be difficult under the circumstances. Several states and regions have already implemented eviction bans for the duration of the pandemic. For example, the City of Los Angeles has implemented a temporary ban on the eviction of all tenants, both commercial and residential, unable to pay due to circumstances surrounding the coronavirus. Tenants will have 12 months following the end of the state of emergency to repay any overdue rent. Los Angeles has also implemented a temporary ban on evictions for certain other reasons not directly related to COVID-19. There has been mass rallying pushing the government to enact rental relief on a national scale for at least the month of April. Rent strikes have been organized throughout the United States where groups of tenants have collectively withheld their rental payments and made demands. This trend—originally coordinated by activists—has gained traction in Los Angeles. At this time, rent strikers are targeting loopholes in the eviction legislation that enable landlords to evict for reasons other than nonpayment, like remodeling or withdrawing the unit from the rental market. Activists are pushing legislators to temporarily ban all evictions regardless of the reason. If further action is taken to stop rental payments completely, landlords stand to lose a minimum of one month’s income on all rental units. REAL ESTATE AS AN INVESTMENT Most tenants believe that, for the investor, the risk of loss should be with the property owner, not the property user. Some landlords tend to disagree. In situations where the COVID-19 pandemic has impacted a commercial tenant’s ability to pay on an investment property, the nature of the landlord-tenant and tenant-property relationships should be assessed from a business-to-business standpoint. What are the obligations of the lessor and the lessee?