U.S. Multifamily Tenants Owe $70B in Unpaid Rent
Apartment investments are still an attractive bet, but income pressures are mounting on some properties.
January 19, 2021 | Bendix Anderson | Wealth Management Real Estate
Renters have racked up a stunning $70 billion in unpaid rent since the start of the economic crisis cause by the coronavirus, according to an analysis of Census data by Moody’s Analytics. And that pain is not evenly spread. Top tier properties tend to have tenants who have been less affected by the pandemic and who have been able to continue to pay regularly. Meanwhile class-B and class-C apartments, where residents have been more likely to have hours cut or lost their jobs entirely, have increasingly struggling to collect rents, especially as the federal government was slow to extend further aid after initial rounds of legislation helped keep many Americans afloat throughout the first half of 2020.
A relief package passed by Congress in late December includes $25 billion in rental assistance, $600 direct payments to individuals who qualify and a reinstatement of some extra unemployment benefits. Those measures should all help tenants, but observers are looking to the Biden administration’s proposed $1.9 trillion in additional COVID-19 relief as necessary help to struggling Americans.
Though most renters at professionally-managed apartment properties are still paying rent, many smaller and lower tier apartment properties are facing more serious problems. The investors who own these properties are often vulnerable and the properties themselves are often too small to attract institutional capital.
