Tristar launched its Eviction Lab a few years ago to forensically look at the rent roll of our apartments and evaluate delinquent tenants. Conventional practice is to hit the “Evict Button” as fiduciary for our investors, so we can maximize collections when a tenant is delinquent. However, our investors, for the most part, are supportive compassionate capitalists who want to see community change, so we are privileged to be able to be more patient in our collection efforts. Why? – to reduce student transiency caused by evictions and stabilize communities. Stability leads to better education and brighter futures for kids, less crime and more trust…it’s that simple. And the multiplier effect is immense, as children stay in the same school and communities have the ability to grow in support of each other.
In the United States, it is rare that tenants in affordable rental communities have more than one month’s savings for emergencies. They usually live from paycheck to paycheck. Consequently, sudden disruptions to the paycheck of good people can put their families in peril. An eviction damages one’s credit report and can create a nightmare of problems going forward. It’s easy to judge people who can’t pay rent.
Though the Eviction lab, we found a resident who received an opportunity to go to a competitive job to make more money (good for a landlord!!); but they were behind in rent. The new job delayed her paycheck, but the future was bright. She had been in our community for several years. What was the right thing to do? We worked with her to make up for the rent delay, so she could make the transfer to her new job smoothly. Mind you, the right thing to do is not always the easy path.
What have we learned through the Eviction Lab:
Not All delinquent Renters are bad People – they are human and have twists in the road like we all do. When your property management staff can tell you the personal situation, it is in your best interest to help (more below) if the tenant is proactive;
Some Delinquent Renters are bad people – in a blog we wrote last year, we discussed the “professional tenant” – these are people who know how to work the system, to dodge evictions and to exploit the owners. We have tenants like these running business in our apartments, subleasing their apartments to others for higher rent and never moving in, creating flop houses serving many people or just moving in with no intention of moving out. They are clever in their application, creating a false narrative of their ability to pay rent and their jobs. We have one tenant who hasn’t paid rent in 18 months -the eviction moratorium shielded her for most of that time- but there are tricks they pull to keep from being evicted that are problematic to good landlords. One of the larger affordable owners in town is selling their portfolio in Atlanta: “the tenants in Atlanta know how to work the system to avoid rent, and the government is too slow to act to enforce landlord rights.”
Cost of Eviction – a bad tenant can be costly. When bad tenants leave, they don’t sweep up and turn off the lights. They often take out their life frustrations on the walls, the appliances and sometimes the plumbing. Our average turn cost for a bad tenant is about $5,000 per unit. Take the loss of 6-8 months to evict a tenant and the cost to turn it around, and you have almost 1 -1.5 years of rent from some bad characters;
Housekeeping – somewhere along the line, many of our tenants didn’t learn housekeeping skills. Why do we care? If you leave food on the counter or your trash outside the door for days on end (instead of taking it to the dumpster) – roaches and rodents will find the smorgasbord. A tenant interpretation of their rights is that it is the landlord’s job to solve infestations. No amount of bug spray or rodent traps will thwart an infestation unless a tenant does their job to clean their units. We have one poor housekeeping tenant that is causing us to shut down several units to exterminate behind the walls…a problem created by one bad tenant.
In the local paper this month was an article on affordable housing that asked the question of “Why won’t Landlords take Vouchers?” A voucher is a government subsidy of the market rent to the landlord in exchange for leasing to people who can’t afford market rent. The article had a quote from a local professor at Georgia State that said landlords refused vouchers due to racism. We are on the Atlanta Housing Authority’s project-based voucher program for two (2) of our communities. What we have learned from a few owners are valid reasons why some landlords don’t accept vouchers (found from our experience in asking our competitors). Maybe there is a solution in these responses to action that will create change:
Administrative paperwork - by HUD and other agencies with compliance measures that are time consuming with no economic reimbursement. A typical subsidy application and compliance can take 6-8 hours per tenant per year…if everything goes smoothly.
Extra Capital Cost – housekeeping and damage issues discussed in the article are common with voucher tenants. So, it can be more costly to accept vouchers.
Social Needs – we created the nonprofit Star-C to provide free after school programs, healthcare and other wraparound services for our residents. Voucher tenants need so much more help, and the lack of resources can bring their troubles to apartment communities. There is such a need for vocational (job resources) support, mental assistance and other resources that just aren’t available.
The Eviction Lab- has been an informal think-tank to create change in affordable housing for residents that needed a second chance. The result of this effort was an “Eviction Scholarship” that was launched at the beginning of COVID in partnership with Star-C (www.star-c.org). It was launched as a $50,000 crowd funding initiative to give deserving tenants 1-2 months of rent forgiveness. What it turned into was an $12 million dollar eviction relief fund that helped over 450 properties.
Small steps can lead to big change!
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