Will more people be able to pay rent this month because of the $900 billion COVID-19 relief package, which translates to $600 stimulus checks for individuals? Or is it not enough to make a difference? What trends can landlords expect to see in terms of rent payment because of the second round of stimulus checks and rent relief programs?
The NAR applauds rental assistance
Getting an extra $600 is probably not enough to make much difference when it comes to paying the rent. But the National Association of Realtors (NAR) is most excited about the $25 billion in rental assistance funded through the Coronavirus Relief Fund and administered by the Department of Treasury. The program runs through September 2022.
This assistance should help mom-and-pop landlords by allowing them to apply for funds on behalf of their tenants. What this means for you landlords is that you can apply for funds if your tenant is in arrears on rental payments, utilities, and "other expenses related to housing."
How rent relief works for tenants
Tenants who are experiencing financial hardship because of the coronavirus, perhaps due to losing their job or receiving less pay from their job, are eligible for rent relief. And we're talking a lot of tenants: about 12.4 million people, or one in six, reported being behind on rent.
The qualifications are that household income must not be more than 80% of the area's median income, and the applicant needs to be at risk of experiencing homelessness. Households with incomes that do not exceed 50% of median income get priority access to funds.
Tenants can apply for rent relief to their state or local government, or landlords can apply for it on behalf of their tenants. If granted, funds will be sent directly to the landlord. Or if landlords prefer, they can get the money from tenants instead of from the administering entity; the tenant would request to receive the money and then would pay you. You may be able to get up to 12 months, and in some cases, 15 months of rent payments from this program.
Government red tape
As with most government relief programs, some people get funds later rather than sooner. Because this is a state-by-state issue, how soon you'll get rent relief funds on behalf of your tenants largely depends on where your properties are located. According to CNBC, as of late December 2020, not all states were set up to disperse funds. But that changes daily.
As a landlord myself, I tried out the process of getting rent relief. Here's how the process is working for my particular jurisdiction.
- Landlords or tenants must apply through their local county.
- There's a list of about 15 organizations that are accepting applications for my area.
- I contacted three organizations available to me, but none of those three are currently taking applications. One place told me to check back at the end of the month, as they might be taking more applications then.
- I then contacted Legal Aid. The advice for tenants or landlords who call on behalf of their tenants is to ask whether the various local organizations coordinate efforts to provide funding; they often do. The other advice was to ask an organization that is not taking applications at this time as to when they might start again.
The Millionacres bottom line
The COVID-19 stimulus package can absolutely help tenants struggling to pay rent and utilities due to pandemic hardships. The tough part is getting access to the funds. As a landlord, I tried for about 30 minutes with no luck. It appears that persistence may be the key to receiving funding.