Smaller Landlords Remain Optimistic

SAN FRANCISCO—Industry professionals continue to keep a watchful eye on rent payments, which are indicative of the multifamily market’s health during the health crisis. Numerous studies are being released on a weekly and monthly basis to keep up with the percentage of payments received by landlords.

According to the National Multifamily Housing Council, 80% of households paid all or partial rent in May compared to 85% in April. Moreover, the Mortgage Bankers Association reported that 8.16% of all loans were in forbearance as of mid-May as landlords of all sizes try to get ahead of a protracted scenario involving nonpayments of rent.

The latest Stessa report further examined mortgage forbearance and changes to future investing strategy. The report exploring how COVID-19 is impacting the real estate market is based on proprietary and survey data from tens of thousands of US landlords and real estate investors.

One big takeaway from the Stessa report: even though many renters aren’t paying (nearly 20% loss of rental income since March), investors see nothing but opportunity. Nearly 70% plan to keep or even increase investments in rental real estate.

It’s clear that the COVID-19 crisis will impact real estate cash flows for the short term but smaller landlords remain optimistic about the asset class long term despite the current challenges. Many believe the current environment will lead to opportunities for portfolio expansions during the next 12 months.

Landlords must have a plan in place with multiple scenarios addressed in order to weather the COVID crisis. Communication with individual tenants to understand each need and struggle is critical to the longevity of the real estate industry, Stessa observes.

Stessa was founded in 2016 and is headquartered in San Francisco. It was acquired by Jones Lang LaSalle in 2018.