My Thoughts on the Eviction Moratorium

Last night the CDC issued a federal eviction moratorium through the end of the year. They have released a 37 page document outlining all of the guidelines. In the document they explain who is “covered” under the moratorium. Here are the definitions of anyone covered:

1.) The individual has used best efforts to obtain all available government assistance for rent or housing;

2.) The individual either (i) expects to earn no more than $99,000 in annual income for Calendar Year 2020 (or no more than $198,000 if filing a joint tax return),6 (ii) was not required to report any income in 2019 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check) pursuant to Section 2201 of the CARES Act;

3.) The individual is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or

4.) The individual is using best efforts to make timely partial payments that are as close to the full payment as the individual’s circumstances may permit, taking into account other non-discretionary expenses; and

5.) The eviction would likely render the individual homeless— or force the individual to move into and live in close quarters in a new congregate or shared living setting— because the individual has no other available housing options.

This morning I have been in contact with property managers in Minnesota and Augusta. It’s a scenario that has been somewhat expected although the actual definitions and guidelines are unknown. Currently we are awaiting guidance from attorneys to see how we will handle non-payment within the guidelines. I’ll have updates as those become more clear.

For now I can tell you that the fundamentals are still the same. We will manage these properties thoroughly and expect on time payment from tenants. These guidelines don’t forgive rent so it is not wise to not pay rent and we will continue to make that message clear. Our ability to place and keep good residents remains the highest priority so problems with non-payment don’t occur in the first place. Great management starts with placing great residents and providing great customer service.

This moratorium only applies to non-payment of rent evictions, and landlords can still file evictions for dangerous conduct, property damage, and certain lease violations. Nothing in this moratorium forgives any rent, or limits a landlord from charging late fees, or raising rent in accordance with the lease agreement.

We are playing the long game with our current properties and we have underwritten conservatively to account for things like this. We have a breakeven occupancy right now of 64% on our most recent acquisition Midtown Point Apartments. We took the complex at 94% occupancy so there is a lot of leeway. I will continue to stay in close contact with investors throughout the process.