For landlords, the effect on their businesses depends on several factors, including whether they have a mortgage and the amount of reserves they've set aside to handle unexpected expenses at their properties.
Irma Vargas, the chief financial officer at property management firm RST & Associates, said that of the company's clients, those with one to four units have been the hardest-hit.
The firm's clients on average have nine to 12 units, and those owners should be able to hang on to their properties even though more are turning to savings to pay the property tax, Vargas said.
About 7% of the 3,200 units that RST manages in L.A. County have a tenant who is behind, she said.
If an owner with just a handful of units happens to have a nonpaying tenant, that's a bigger bite out of revenue than it is for someone with dozens of units — a category of property owner that was also better off before the pandemic, the University of Pennsylvania survey showed.
Before March 2020, 4% of owners with more than 30 units reported problems with paying the mortgage, compared with 7.3% of owners with six to 30 units and 10% of owners with five or fewer units.
Vargas said two of her clients who own a few units each had to sell their respective properties recently because they couldn't afford to keep them. "The little small mom-and-pops are getting burned on this one," she said.
National delinquency rates spotlight the differences among property owners of different sizes.
According to the Mortgage Bankers Assn., delinquency rates for all multifamily loan balances — a figure that will be skewed toward larger properties — was 1.8% last month, lower than other commercial loans for hotel, retail and office properties.
Meanwhile, about 9% of loans for properties with two to four units were delinquent in October, several percentage points higher than the rate for single-family homes, according to data firm Black Knight.
If small property owners go under, the implications for them and their tenants could be wide-ranging.
Many small owners say they bought their units for rental income in retirement after years of saving, and their later years could grow more difficult if their main income is upended.
Their inability to hold on to their properties also raises the prospect of a scenario that housing activists have feared from the pandemic's earliest days: that large corporations and investment funds will scoop up distressed housing en masse, similar to how Wall Street firms acquired tens of thousands of single-family homes in the wake of the 2008 financial crisis.
That doesn't appear to be happening, but the stress is building. Nearly 31% of landlords nationwide said they felt increased pressure to sell during the pandemic, according to an October survey by real estate firm Avail.
For some, losing business properties risks a backslide from the economic mobility that getting into the housing market once promised — a particularly painful development for Black Americans whom the government once barred from access to homeownership.
"We are going to have to sell," Rowe said. "That means we cannot pass this property down.... There will be no generational wealth to continue in our family."
After moving in with her 85-year-old mother to help care for her, Rowe worried about bringing COVID-19 home and stopped working her usual job as a physician assistant. She said she has burned through savings to cover the mortgage and repairs at the Mid-City triplex after the tenant stopped paying rent there.
With cash tight and no income from the property, Rowe said she is scrambling to pay for the supportive care her mother needs after a heart attack. Offloading the triplex looks increasingly necessary. "It's devastating," she said.
Even some landlords with less immediate financial pressures are taking a hit.
Jef Vander Borght, 69, owns two fourplexes in Burbank and Glendale, Calif., with his wife that they bought roughly 20 years ago to help them through retirement.
Vander Borght, a retired architect and former Burbank mayor, said his tenants had fallen more than $12,000 behind in rent since last spring. He understands they have lost work and can't pay in full, and doesn't want to evict them. He criticized governments as failing to adequately help struggling residents and in turn him, citing a tenant of his who got help from a county program for the first time last month.
The local aid reduced the debt he is owed to around $7,000.
"I never, ever imagined we would be in a position just to be told to house people for free and 'good luck getting help — help will eventually appear,' " he said.
An improving economy and the flow of significant rent relief money could improve fortunes for both landlords and tenants in coming months. The two federal stimulus bills passed since December allocate about $50 billion to help tenants nationwide pay rent, with that money set to automatically go to landlords.
A lot rests on the relief being enough and doled out properly.
The city of Los Angeles last week opened applications to its $235.5-million rent relief program, funded through the federal stimulus. Officials don't think the money will be enough to help everyone in need and are picking applications at random.
Some landlords are already heading toward the exits, and not just those who are in immediate financial jeopardy.
David Haas, managing broker with Ernst and Haas Management Co., said he has clients selling preemptively. The Long Beach, Calif., firm specializes in managing one- to four-unit properties for mom-and-pop owners.
They are "liquidating because of the fear of the laws that are protecting only tenants," Haas said, "fear that their tenant could go into default and they won't be able to do anything."©2021 Los Angeles Times. Visit at latimes.com. Distributed by Tribune Content Agency, LLC.