April rent collections may have been better than initially reported. While many data outlets released early reports indicating a 30% drop in April rent payments, new research from LeaseLock shows only a nominal decrease in April compared to the first three months of the year. According to the data, payments in the first six days of April decreased 5% compared to the same period in January through March. In fact, payments started stronger than usual on the first and then slowly declined over the six-day period.
“There are a lot of doom-and-gloom headlines that 30% of renters didn’t pay April rent, and that isn’t what we are seeing in the data. As we are talking to our larger operators—and we have three of the top 10 operators in the US as clients—we are really only seeing a 5% to 10% decrease in rents collected,” Derek Merrill, CEO and co-founder of LeaseLock, tells GlobeSt.com, adding that rent payments should increase through the end of the month. “You are going to see more payments as deferral plans take hold. You will see some of the missing rent pick up toward the end of the month.”
The LeaseLock data includes partial rent payments. These payments did increase in April compared to previous months, suggesting proactive landlord rent relief policies and communication with tenants was working to help boost collections. “We saw a concerted effort by renters to make payments,” Rochelle Bailis, VP of marketing at LeaseLock, tells GlobeSt.com. “Obviously, some of those are the natural first of the month, reliable renters. However, it also showed that the things that operators were doing in terms of reaching out proactively was working to support renters in making that payment.” Partial payments increased 6% over the start of the year nationally, but most notably in Los Angeles and Seattle, which were early to adopt shelter-in-place restrictions.
In April, the quick mobilization on the part of operators was likely more beneficial in mitigating rent loss than the CARES Act. The funding and expanded unemployment under the bill had not made its way in to bank accounts at the time of April rent payments. “I think that a lot of people still struggled, particularly with unemployment,” adds Merrill. “The reality of it was more psychological than direct cash in the account. I think the proactive resident relief support particularly from enterprise multifamily owners really helped the most. These owners wanted to help preserve occupancy and did things like deferred payment plans, and that was measured in the data. It was really nice to see that was how they reacted to this.”
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Ultimately, April may simply be too soon to see big jump in non-payment. May and June will be more telling in terms of real rent loss. “The sudden jump in unemployment happened in the second half of March, so in terms of timing, the April rent deadline wasn’t in as much danger as May 1,” says Bailis. “If someone has been unemployed and unable to get an unemployment check over the course of April, then we might see a stronger effect. That reinforces that the proactive measures operators are taking is the most important move landlords can take in a situation like this.”
Merrill is encouraged by rent performance in April, but is far from enthusiastic about future rent collections. “This was better than expected. Industry wide, everyone was very worried about the impact with so many people losing their jobs, particularly in markets with a lot of service jobs,” says Merrill. “The big surprise was that April was better than expected, but I think the question now is what will happen in May.”