This is the most frequent question our brokers are being asked. We’ve been communicating with Chicagoland apartment owners, checking in to see how they are doing and to learn more about the state of the Chicagoland mid-market apartment market. We’ve found many ideas for rent support or relief, identified top investor concerns, and asked about property management during a time when all residents are home.
Rent Support or Relief
Overall, all landlords are providing some form of rent support or relief. Our brokers have heard of many ways landlords are working with and supporting their tenants during this pandemic, from emailing residents the appropriate links to resources and services available to more robust offerings.
“Any rent relief given is usually accompanied by proof of hardship from the tenant,” said Marco Cesario. “The majority of my clients have provided detailed information on the different types of rental assistance programs that are available along with information for unemployment and companies who are hiring.”
“Most landlords I’ve talked to are offering a delay in the payment,” said Jack Petrando. “They’re giving their tenants more time to come up with the money.”
We’ve seen many landlords negotiate with their tenants. It has mostly been on a case-by-case basis requiring proof of hardship.
“I’ve seen owners do a “pay me what you can” offer or abatement for one to two months but the tenant would have to extend the lease accordingly to make up the abatement,” said Cesario.
“There are some landlords offering rent discounts, no late fees and delayed rent payment for those with a proven hardship, and then asking tenants to sign a nondisclosure agreement,” said Michael D’Agostino. “Since residents are unable to use the pool, workout room and other amenities, some are offering amenity discounts.”
“Most clients I’ve spoken with are trying to develop a payment plan for those few tenants who need it,” said Rick Ofman. “Some are allowing tenants to pay half at the first of the month and half in the middle. Another client is helping tenants by forgiving a month’s rent in total by asking for only half a month’s rent in the middle of the month for April and May. About 95% of my clients’ tenants have paid rent though in April.”
There have been a few sweeping discounts and rent freezes in the market.
“Some owners have reduced May rents by 20%,” said Kyle Sissell.
“I’ve heard some buildings offering free laundry for the next two months,” said Cesario. “And everyone I’ve spoken with is waiving late fees for May and June.”
Top Apartment Investor Concerns
The top concern on investor’s minds is rent collections for May. Additional, frequently cited concerns include:
- Organized rent strikes
- Being able to pay their mortgage and other apartment related bills
- The overall economy and tenants getting jobs back
- Uncertainty – not knowing when the market will pick back up and how long this will last
Management During COVID-19
With all of the residents at home, we have been asking our clients if management has become more involved. Interesting, in most cases, resident requests are down.
“As most tenants are staying home, one would expect more maintenance requests, but I’ve heard quite the opposite,” said Ofman. “Maybe there are fewer requests because tenants don’t want anyone in their homes. Another reason could be that some landlords have said only emergency requests will be honored, and that has led to a few debates on what constitutes an emergency.”
“For small issues that a tenant can fix themselves, many landlords have asked the tenants to take care of it and submit a reimbursement request to management,” said Cesario. “The goal here is to minimize the maintenance staff’s interactions with residents.”
“Where management has become more involved is in sanitation and cleaning. Most owners have ramped up disinfecting and cleaning schedules,” said Ofman. “For the most part, it seems open communication between landlords and tenants paired with a shared sense of responsibility to do one’s part in this crisis has resulted in a peaceful albeit a quite anxious month for everyone.”
As we approach the first of May, the market is certainly anxious. Now more than ever, clients have relied on maintaining effective communication with brokers to understand their market-area dynamics. We will be publishing more articles in the coming weeks, sharing insight and real examples from the mid-market.