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Press Release
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Marin Voice: Urging compassion, education for landlords, tenants during COVID-19 crisis
Any way that you look at the COVID-19 crisis, there is one glaring conclusion: this is not normal. In an age when technology draws the world together, we are being asked to stay apart and isolate ourselves for good reason. It is affecting how we work, how we live and, for some, if we live.As a married couple with two young children and a decade-old business (Foundation Homes Property Management), we are like many of our neighbors in what we face daily. But because our business is property management and because we manage over $150 million worth of higher-end residential rental homes in Marin for clients, we are at the forefront of one of the more important “life” questions that today’s tenants face: Can I afford to continue living in Marin? Pertinent pre-COVID, it’s certainly coming up now with business closures and layoffs. On one hand, at least for the next several months, all tenant evictions have been banned, except in very extreme conditions, in California. This is good news for tenants who have been affected by COVID and need the protection. On the other hand, this is quite bad news for mom-and-pop landlords and small-scale investors who depend on rental income to meet their mortgages and other financial obligations. As in the previous recession, even our well-heeled clients face difficult decisions if their tenants stop paying rent for months: cover the mortgage “out of pocket” and divert funds away from their own families or be forced to walk away from the property. Either way, rent deferment and eviction stays are not something that can be navigated without knowledge of the regulations and guidance for both owners and tenants. We are fielding many questions from our self-managing clients seeking advice on how to handle rent deferral requests. We are also finding many tenants not fully understanding that rent is being deferred – not forgiven. Without a deferment agreement in place, a lump sum payment will be due. By deferring, tenants are essentially just incurring months of rental debt. We’ve encouraged our management clients to show compassion towards their tenants who have legitimately lost jobs or income. We’ve seen some incredible generosity and we’re proud of the resolutions our property managers, our residents and our clients have reached in complex situations. Yet confusion remains with changing legislative guidelines continuing to complicate the situation. Another concern: AB 1482, statewide rent control, took effect at the beginning of 2020. While it seems a distant concern now, an upcoming deadline to notify tenants of the exemption is not on the radar of many DIY landlords. Many will miss the deadline, not serve the required notice and end up placing their exempt property under rent control. This will complicate things in the event of a rent deferral agreement or possible future eviction. To help combat consumer confusion in the industry, we are producing weekly market videos for landlords. We are hosting a weekly (Thursdays at 3 p.m.) live Q&A webinar, advising local landlords about the effect of new regulations on residential rentals, and advice for owner/tenant relationships as the state manages its response to the COVID-19 virus and local shelter-in-place restrictions. We want to make sure that clients understand the continually changing implications and their responsibilities to their tenants. Practically every day brings new laws and executive orders from local, state and national officials. We encourage other real estate firms and DIY landlords to be sympathetic to the plight of their tenants. For the past five years, we have conducted a quarterly rent study which is useful in making market predictions. Right now, we’re seeing about a 10-20% market drop in rental pricing. The higher priced the property, the larger the value change. We expect it to get worse before it gets better, though we have still been renting a handful of properties. Our bottom line, however, is more than an economic conclusion. We need to work together, owners, tenants and the real estate community to survive the storm because while it might not be normal, it is reality. Marin residents Christopher Barrow and Darcy-Alkus Barrow are co-founders of Kentfield-based Foundation Homes Property Management. |