Tenant Payment Performance Update through March 2022

2022-04-04

Tenant Payment Performance Update through March 2022

This is our 24th month providing our clients with this data! To keep the graph reasonable, we’ve decided to limit it to the last 24 months of data.

We’re still not aware of any other local management company sending their clients these types of updates. Please let us know if you hear of another company doing so. 

Please be sure to share this with anyone you know interested in real estate investing or looking for a better property manager, so they can see what they are missing!

EVICTIONS UPDATE

Most of the eviction courts in Metro Detroit are almost back to normal timelines! We’re seeing most cases addressed in under 90-days and many in 60-days.

Detroit’s 36th District Court is still fairly behind though – and it does NOT appear to be due to caseload. Judges in this court are still being very tenant-friendly unfortunately, and adjourning eviction cases for months. We just had a March case adjourned until July! Our attorneys are disgusted with the actions of this court and are filing complaints with the judicial board.

GOVERNMENT AID FOR PAST DUE TENANTS

Michigan has allotted an additional $140 million for the COVID Emergency Rental Assistance (CERA) program. Eligibility requirements have also been updated:

  • All cases approved on or after January 1, 2022, must have rental arrears dating between March 3, 2020, and December 20, 2021.
  • Applicants must have a Michigan State Identification Card 
  • Applicants must provide 2020 or 2021 income tax documents or two weeks of proof of income to qualify

So, if a tenant had no rent arrears as of December 20, 2021, they will not be approved for CERA funds. We expect some challenges with the application of this new policy.

We have gotten several owners a 2nd round of CERA funds for their tenants, but we don’t think that will be allowed much longer. 

TENANT APPLICANT SCREENING CHALLENGES

Applicants continue to get creative with their application information.

We’ve started requiring a recent utility bill to validate an applicant’s residency listed on their application. Now applicants are cutting and pasting names or addresses on the utility bills they’re submitting to us. So, we’ve figured out how to validate an electric bill with the utility company to catch this fraud.

And applicants and owners wonder why it takes us so long to process a rental application!

WARNING: due to all these fraudulent applications and the coming displacement of nonpaying tenants, we expect some challenges this year in how long It will take to find new tenants for some Class B and many Class C vacant properties. We’ll probably get a LOT of applications, but most will be denied. So, please understand and be a bit more patient this year!

RENT PAYMENT TRENDS 30-60-90+ Days Behind

Our data below has hit the 24-month mark! 

We saw an improvement in March payment performance in every category – except those tenants more than 90-days behind. As we’ve been warned, most of these tenants are so far behind they will just have to be evicted.

Macomb County: The numbers improved for the 2nd consecutive month. We’ve actually evicted a few tenants and look forward to resolving the remaining nonpaying tenants by the end of this month.

Oakland County:  A lot of improvement during March and we look forward to resolving the remaining eviction cases. The majority of our problem tenants in Oakland County are in the City of Pontiac, which is more similar to Detroit than the rest of the area.

Wayne County: Back on track with improving numbers everywhere except tenants that are paying zero rent. We don’t anticipate any solution with these tenants except eviction. Unfortunately, Detroit’s 36th District Court, as we mentioned above, is making this a challenge.

 

SLUMTENANTS & RENTAL BANKRUPTCY

We’ve had a number of property owners ask us to try to work out payment plans with tenants, some of whom haven’t paid rent in 12+ months, so have large past due balances. Most of these tenants will not cooperate with the CERA funds application process. So, we suspect most of them can actually afford to pay their rent, but deliberately abused the Eviction Moratorium and chose not to pay. 

We’ve had zero success pursuing these tenants.

The reason is that it’s going to be cheaper for them to move and skip out on their past due to balances! Why? Because the U.S. court systems, politicians, and advocacy groups allow it. Tenants can, in effect, file “Rental Bankruptcy” and walk away from their rent balances with little or no repercussions. 

Yes, they will have challenges finding new landlords to accept them, but seems like there will always be a slumlord that will. 

Of course, the politicians and media only focus on slumlords, never slum tenants.

 Again, please refer us to others you know interested in real estate investing or that are looking for a better property manager!

 

 

 

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