Tenant Payment Performance Update through November 2022
We’re 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. During this time of year, we reflect on the wonderful moments we have experienced, which include our client relationship with you. Have a joyous holiday season! We would like to thank you for your enormous support and well wishes in this time of gratitude. These past few years during COVID have been a rollercoaster ride. Thanks for always being with us. Have a great holiday season!
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!
We are excited to say that despite many tenants asking for crazy amounts, we executed two Cash-for-Keys agreements this month. We regained possession of client properties faster than waiting months for court evictions and can now prep them for new, paying tenants.
Most of the suburban courts continue to make progress on getting back to normal eviction processing times.
Detroit’s 36th District Court though is still struggling. We’ve heard another excuse is due to the lack of enough clerks to process paperwork to support the judges. Also, the court announced it will be closed Friday, December 23, 2022, through Tuesday, December 27, 2022, and Friday, December 30, 2022, through Monday, January 2, 2023. The Court will be open. We don’t have any cases scheduled for those dates, so the impact on our clients will be minimal.
We’ve noticed an increase in tenants asking for court-ordered Payment Plans. While this may sound like a great development, judges are approving Payment Plans without verifying tenants can actually afford the payments or if the plans will pay off past-due rent before the current lease ends.
We have seen cases where tenants, whose leases end in a few months ask for payment plans where they want to pay an extra $100 a month for 24 months to pay off the balance. With their lease ending in a few months, do you think the tenant will actually continue to make those payments once they move out? This may force tough decisions on extending leases to try to collect past due balances – not a great strategy.
Also, from past experience, once the courts get involved, they favor the tenants on Payment Plan extensions and revisions. So, we’d prefer to avoid court-ordered Payment Plans.
Even though we heard the rumor that cases in Detroit were not going to be adjourned over and over again, it is still happening. In preparation for the holiday season, we have seen our cases get adjourned till the months of January to March to either allow the tenants time to find a way to pay the balance or allow them time to move. When our attorneys ask the judges why they are adjourning the cases so far out the response they get is that their dockets are simply that full.
A recent study claims 20% of Detroit tenants are currently dealing with eviction issues. Various pro-tenant organizations are lobbying for more legal assistance for these tenants. What’s astounding is that many of these organizations are arguing that tenants deserve to live in homes kept in good condition – regardless of whether they are paying rent or not!
This is obviously very short-sighted and assumes everything is the landlord’s fault. Where is the accountability for tenant actions when they destroy homes and make life choices that negatively affect their ability to pay rent? How can an owner be expected to pay their mortgage, property taxes, insurance, and maintenance on a rental property without a rental income?
Make sure you pay attention to this trend and voice your opinion LOUDLY to your government representatives!
GOVERNMENT AID FOR PAST-DUE TENANTS
Michigan shut down the CERA application website on June 30. Tenant applications will be processed until the program runs out of money. We were informed by our attorneys that CERA is paying out their final cases and it seems that unless the program receives additional funding, we may not see any more checks in January. As of now, what we know is CERA is not covering October rent and onwards. Tenants with active eviction cases will have to pay those months of rent or they can be evicted.
We have noticed that CERA organizations are approving applications, but then giving us the runaround when it comes to disbursing the funds. Despite following up with the organizations 3 times a week by phone call and email, it is hard to get a response. Emails are being ignored and when calling the organizations, they simply place us on hold for 30 minutes, and then the call drops. Even when getting ahold of a representative, they simply say we need to contact the caseworker or tell us the information we already know, the case is processing, and to be patient.
While there are still other programs offering rental assistance, it’s our understanding that these programs are just as badly backlogged as CERA. Please keep this in mind before recommending we research other programs for your past-due tenants.
TENANT APPLICANT SCREENING CHALLENGES
We continue to see different cases of application fraud. With each case we see, every applicant is becoming more creative with how they try to cover their fraudulent acts.
Tenants who are currently being evicted or recently evicted are trying to hide these by giving fake addresses or fake landlords. Why? Because they know the eviction may not show up on a background check.
When a tenant receives CERA for non-payment of rent, the courts enter a conditional dismissal. This document means the eviction is not on their record and does not show up when we pull our background check. Also, Legal Aid attorneys are negotiating deals that if the tenant vacates by a certain date, a conditional dismissal will be entered.
This makes it very challenging to get an accurate verification of rent payments for some tenants.
We have noticed a spike in tenants using fake addresses. We have seen more applicants claiming they have lived with relatives or giving completely random addresses that are not on their driver´s licenses or credit reports claiming they have lived there. When we ask why are there other addresses listed on their credit report or tax returns the applicants claim they only receive mail there but do not live there. Once we dig further, we see that the applicant was hiding an eviction.
Due to concerns about being accused of Fair Housing discrimination, and getting sued, we have to proceed carefully with every application we receive. As a result, it’s taking us longer to process each application.
RENT PAYMENT TRENDS 30-60-90+ Days Behind Update
We have seen that our numbers have maintained for the month of November. It is a great sign as we typically see a decrease in the number of tenants paying rent during the holiday season as they destine their rent payment towards other purchases. We hope this trend continues with the number of tenants paying rent as the holiday’s approach.
As you can see, the number of tenants paying full and partial rent had a tiny improvement in November. While we expect a decrease in December due to the holiday season, we hope to keep the decrease to a minimum.
We saw a slight increase in the number of tenants paying full rent. Last month we started a few more eviction cases. When the tenants saw that they were facing eviction if they did not pay, they contacted us to work out payment plans and we were able to help them get on track. We hope this trend continues as we continue with the holiday season.
Wayne County tenants appear to be already in “holiday mode” regarding their rent payments as we’re seeing a slight decrease in their November performance. Tenants in eviction status are seeing their cases adjourned to 2023 and are abusing the delay, choosing to spend their money elsewhere instead on their rent.