Jon Zemke’s chief concern has been keeping his tenants calm.
He and his wife, Kristin Lukowski, rent out 12 properties to around 30 tenants in Woodbridge, New Center, North Corktown, and the University District. They go from $525 per month for an affordable unit to $1,650 for a two-bedroom flat.
About two weeks ago, prior to Gov. Gretchen Whitmer’s executive order temporarily suspending evictions, Zemke sent out an email to his tenants that said, “We are not going to evict anyone while this is going on or assess any late fees. If you can’t pay your rent on time we will do everything we can to work with you. If you can pay in a timely manner please do so. We still have mortgages, insurance, workers, etc. to pay and every little bit helps in a time like this.”
In response to the novel coronavirus (COVID-19) pandemic, the state of Michigan has shut off large sectors of the economy. In addition to a moratorium on evictions, Whitmer signed a “stay-at-home” order closing all nonessential businesses and directing people not to leave the house, for work or other reasons, except when absolutely necessary.
Millions in the United States have applied for unemployment in recent weeks and are wondering how they’ll afford rent. Landlords are wondering the same thing.
Zemke and Lukowski, like everyone else, expect to suffer financially. Even after receiving unemployment benefits, some renters won’t be able to afford rent. Others, like a substitute teacher who isn’t eligible for unemployment, simply won’t be able to pay in the coming months. (Though the burden will be somewhat alleviated if congress passes a $2 trillion coronavirus stimulus bill that includes additional unemployment benefits.)
They’ve nonetheless been reassuring their tenants. Zemke says that if a renter has nowhere else to go, even after the moratorium on evictions has lifted, they won’t evict them. “When everything else is chaos, private landlords right now have an opportunity to be the one steady thing in people’s lives,” Zemke says.
Curbed Detroit reached out to landlords and property managers across Detroit for this article. But in a situation with so much uncertainty and no blueprints, few were willing to talk on the record about their approach to tenants behind on rent.
Larger property owners are still assessing the situation. Bedrock Detroit, which owns hundreds of rental units, said through a spokesperson that, “it’s working to address the concerns of its residential tenants,” but declined to go into detail. Bedrock did recently suspend rent for its small business tenants for the next three months.
The Platform, which recently opened the 231-unit The Boulevard in New Center, also said through a spokesperson that, “We care deeply for the tenants who choose to call our properties home. But as of right now, we have not seen any significant requests for help with rent.” The Platform added that it would know more on the first of the month and that it too is seeking assistance for its small business tenants.
Larger development firms also tend to own properties in greater downtown, where rents are higher and tenants have higher median incomes.
There will likely be less stability for renters outside the urban core. Sterling Howard is the managing director of Silver Capital Group, which owns 134 single-family rental homes mostly in northwest Detroit, whose average rent is around $1,000. Some of his tenants, of which around 15 to 20 percent qualify as low-income, have already said they’ll have trouble paying rent.
But for the majority, he expects rent to be paid at the first of the month. “From a landlord’s perspective, we’re in the same boat as renters,” Howard says. “We have property management staff, maintenance staff, we’re continuing to service emergency repairs. At the same time, we have expenses associated with this business—mortgage, taxes, insurance. And those companies thus far have not offered any type of abatement or restructuring of our loans. All of those bills are still due. It is imperative that we collect rent to sustain the business.”
Howard and Zemke both note that evicting a tenant likely wouldn’t make sense even if they could. Turning over a unit can be expensive and there’s almost no one waiting to sign a new lease.
As such, Howard is taking rent challenges on a case-by-case basis and will try to work to keep tenants. “We’ll give more leniency to long-term residents who have a history of paying on time, but have encountered legitimate financial hardship,” he says. “I’m willing to restructure a lease with that person.”
Though he also admits that he can’t simply abate everyone’s rent and may have a different approach for tenants “who were delinquent even before COVID.”
For both landlords and renters, the overriding variable is time. The longer the economic uncertainty lasts, the fewer rent checks will come in. While there’s also a moratorium on some mortgage and tax foreclosure, that too is temporary. “It is this great unknown that gives me anxiety and keeps me up at night,” Howard says.