April rent collection was better than expected, but May rent collection is still a concern, according to research presented in a recent National Apartment Association webinar.
Mindy Price of J. Turner Research presented during the webinar and said, “We undertook a multifamily-leader survey to determine the impact of Covid-19 on rent collection. In the survey of 678 participants, 58 percent of those were mid-to- top-level management.”
The results compared April to March rent collection; 56 percent said they saw a decline, 38 percent said it stayed the same and 5 percent said it was higher.
Price said overall April rent collections were better than expected, and “We’re not hearing all that doom-and-gloom that some of the national media outlets have been reporting on. However, there is a consensus about the unknowns of May rent collection.”
So, how much was the decline in rent?
The survey showed that of the 56 percent who said they had a rent decline, the average decline in rent payments amounted to about 12 percent.
However, Price pointed out that “we’ve got a couple of conflicting events that are going on right now,” leaving open questions.
- First, six weeks into this pandemic with people are being laid off, what impact is that going to have?
- Second, many of those have applied for unemployment, stimulus checks are hitting the banks and money is getting into people’s hands, but what’s going to be their priority?
“That’s really the unsolved question,” Price said.
Payment options question
The survey also asked about what type of payment options property managers were offering. Price said there were different rent payments and payment plans being offered, along with waivers of late fees.
“Then there are also some discounts for early-payment options and also early incentives. If somebody pays early, they’re getting a percentage off of their rent, or if they’re paying early, they’re getting entered into drawings for free rent. Some are doing, if you pay early, you’re just getting some free rent.
“We’ve also heard of some discounts that have been offered, such as small discounts if you pay on time between the first and this date. We’ve heard about restaurant gift cards,” Price said.
She also pointed out that some unemployment is paid out weekly.
“So you’ve got your resident receiving that money weekly. Well, what about setting up a payment plan so that you can receive their rent dollars weekly? Just a suggestion,” she said.
Communication has to go along with rent payment options
Price pointed out that the survey showed different forms of payment used, from ACH withdrawals to checks, then money orders and credit cards. She said that responses showed that 32 percent are still paying by check.
“Well, there are companies that are trying to move over to no in-person payments, right? No forms of paper payments. The problem with of those is that the companies are sending out letters, paper letters stating they’re moving to virtual payments or online payments. And so the residents are complaining saying, ‘Wait, so what you’re saying is your paper is better, safer than ours?’
She said consistency in the message is important, so if no in-person payments “is something that you’re moving towards, you want to make sure you’re sending that information any other way using social text, email, but not by paper.
“April was better than anticipated and we hope the same for May,” Price said. She added they will be doing follow-up surveys to report more on this in the future.