WHOSE JOB IS IT ANYWAY!?
KRS Holdings Said, “Ours!”… On-Target
to Deliver $800K to Clients & Tenants
Please! Don’t interpret the title to this month’s article as the lead-in to a KRS Holdings “puff-piece”. Our intent is to underscore the vital collaborative relationship necessary to the success of both landlords and tenants.
So, what triggered this necessity for real estate rental investors and their renters to collaborate? Yup, money!
The Spark – COVID-19
It’s no secret … the pandemic hit many residential renters hard … particularly in curtailed wages and often permanent job loss. That financial strain manifested itself in the inability to remain current in paying rent.
In late summer, to protect the public health and slow the spread of COVID-19, the Center for Disease Control (CDC) issued an order that protects residential tenants who qualify and have fallen behind on rent from being evicted until 2021.
The original federal moratorium expired on the last day of 2020. That date has now been extended to January 31, 2021, unless extended, modified or rescinded.
These moves by the feds spawned a major challenge for Virginia landlords … how to avoid an eviction tsunami. With the original CDC expiration date on the horizon, last summer lawmakers for the Commonwealth extended eviction protections that expired as of December 31, 2020. Of more financial relief significance, Governor Ralph Northam signed the Rent & Mortgage Relief Program (RMRP).
Commonwealth of Virginia Actions
Governor Northam signed the RMRP into law in July of 2020 to support and ensure housing stability across the Commonwealth during the coronavirus pandemic. For landlords and tenants that qualify, financial assistance is available for rent or mortgage payments past due beginning April 1, 2020.
Response from renters to non-recourse money was dismal! Ninety days after inception, less than 12% of the available RMRP funds were distributed. Tenants were intimidated by the complexity of completing the six-page application and supportive documentation. Result … limited to no action was initiated by renters.
This unintended consequence triggered an important change to the RMRP. The amended rules permitted Virginia landlords to apply for assistance on behalf of tenants who owe back rent. That “permission” was escalated to a requirement.
While applications initiated by landlords to help tenants qualify for the RMRP increased, but not with significant exertions to secure RMRP funding. While some landlords have stepped up to the challenge, it has not been a landslide event. Why?
Apparently, there are two explanations. First, many – maybe most – landlords are unaware of the revised “must-help” provision. Second, many of those “in-the-know” are taking a finger-pointing position that it’s the tenants’ responsibility, not theirs. In short, a demonstrated unwillingness to be proactive and address the problem.
Meanwhile, the pandemic continues its months-long assault on residential rent payments. Landlords are financially burdened when rents are in arrears … and tenants endure increased stress at being late, plus the threat of eviction.
So, “Whose job is it?” Our answer, “Who cares who does the work, if everybody wins! If nobody does the work, everybody loses!”
KRS Holdings Approach to The Problem
KRS Holdings is both a professional property management firm, as well as a fellow residential rental investor. That means we face the same challenges in dealing with the ravages of the pandemic for our clients as well as our investment portfolio. Our RMRP relief strategy is to exercise leadership to help tenants navigate the application bureaucracy and free up funds to pay rent. It’s a win-win!
The preparatory step to being proactive was to become certified to assist tenants in seeking RMRP assistance. That was an investment of two weeks to complete the qualification process.
While awaiting certification approval from Virginia Housing, we initiated audits to identify those tenants of our clients and our own who are 30 days or more in arrears … our target audience for RMRP financial relief.
We assigned a Team to contact the tenant, explain the potential for relief from the financial burden of past rents due and protection from the threat of eviction. Then, in a collaborative effort, our Team works with the tenant to complete the dreaded six-page application … a one-hour process. In a 320-hour period, our efforts were rewarded with 371 completed applications.
As of this writing, about 200 of the applications have been approved with $654,000 collected. The deadline for application submissions is January 25, 2021. With those applications currently in the approval pipeline and others awaiting submission, we project our efforts to yield at least $800,000 in financial relief.
Said another way, KRS Holdings has been at least a partial “bread-winner” for several hundred Virginia households … with a corresponding benefit to our property management clients and tenants in our rental units.
Focusing on the “win” … on-target to deliver $800K in cash rewards.
Not a bad payoff … both financially and emotionally for all.