On Tuesday September 1st, the Trump administration announced a temporary eviction moratorium through December 31st, 2020. Protesters around the country calling for free rent have gotten their wish. Property owners and managers are living their nightmare.
The new ban does not offer a way for landlords to collect their unpaid rent. Without any additional stimulus pay or unemployment relief, many landlords worry they will be left in financial ruin.
The eviction moratorium poses new threats to property owners. They must seek other ways to receive their rightful money. Proven collection agencies offer property owners the best solution.
The Eviction Moratorium
The August 8 executive order by President Trump enacted, through the Center of Disease Control (CDC), a temporary halt in residential evictions to prevent the further spread of COVID-19. The order only applies to those who expect to earn $99,000 or less this year or double that for those filing joint tax returns.
The emergency order claims that landlords who violate the Order will be subject to a $100,000 fine if the eviction does not result in death or a potentially a year of jail and a $250,000 fine if the eviction does result in a death. The agency is seemingly trying to prevent landlords defying the Order, something that happened with prevalence during the last eviction moratorium which ended in July.
Since the expiration of the CARES act in July, congress has been negotiating a similar act to help those struggling to pay rent. With a lack of progress in congressional negotiations, the Trump Administration passed the executive order, claiming to help “families overcome unprecedented challenges.”
The Threat to Property Owners
The eviction moratorium has led to large pushback from property owners and managers. Without laying out any way for property owners to get the money they need from their unpaid renters, landlords have claimed the brunt of the recession is being moved from renters to landlords without any true solution.
Landlords have already suffered greatly since the pandemic came to America in March. A study from Rentec Direct, a property management information and tenant screening firm, reveals that landlords received 29 percent less in rent in the first ten days of August than they did in the same period in March. The problem is no one seems to care.
Property owners and managers warn the public that without a way for landlords to receive the money they deserve, their will be a great negative impact to the entire residential housing market. Doug Bibby, president of the National Multifamily Housing Council, claims that “an eviction moratorium will ultimately harm the very people it aims to help by making it impossible for housing providers…to meet their financial needs and continue to provide shelter to their residents.”
How Property Owners Will Survive
Without the threat of eviction, it is inevitable that that unpaid rents and large amounts of debt to renters will follow. The rent money that landlords receive will continue to decrease after the Order, but the landlords’ expenses will not. Property owners must turn to alternative methods to receive the money they need.
Collection agencies with proven track records of recouping their clients’ money will be the most effective method for landlords. Within the past couple of months, property owners and managers have increasingly gone to collection agencies for help with rental arrears. Jonathan Abenson, CEO of Oxygen Recovery Group, shared with me that he “was pleasantly surprised at how successful we were in literally collecting hundreds of thousands of dollars in weeks, that otherwise would have remained unpaid. All of our clients rely on cash flow to pay mortgages and maintenance of the buildings. By collecting this rent money, we were literally ‘breathing Oxygen’ (pun intended) into their cashflow.”
In the upcoming months, rental arrears will pile up and property managers will increasingly seek the help of collection agencies. Abenson revealed that Oxygen Recovery helped “one landlord who shared with us over 50 tenants, with some very large balances. Within a few short weeks, we collected close to $70,000 with the clients’ fees only being about 6% of that.”