In early March, we began surveying our landlords and renters to get a better understanding of their changing needs as COVID-19 began to impact every part of our lives. We continued to survey each group throughout all of 2020. Our goal was to gain a deeper understanding of what they might need to continue renting and moving within the U.S. While we initially saw a decline in renting activity, by mid-April it was clear renters were on the move, and our hypothesis was that the needs of both landlords and renters may have changed.
As the pandemic continued, and eviction moratoriums were put in place, the focus of our surveys shifted, and in the latter half of the year we started gathering more information around rent payment trends, both from landlords and renters, income and mortgage trends, evictions, vacancy trends, and communication.
TurboTenant’s main survey participant is the independent landlord. HUD estimates that “mom and pop/individual investor landlords” own 22.7 million rental units in the United States, nearly half of the 48.7 million rental unit market. According to Bob Pinnegar, CEO of the National Apartment Association, “Most of the rental housing we have in this country is provided by individuals who are simply running a small business and trying to stay afloat and survive.” Our mission is to empower these independent landlords to create welcoming rental experiences through positive interactions with their tenants – that was our guiding principle this past year, even in the midst of a difficult and changing world. The data included in this report not only helped us fulfill that mission, but it provided valuable insights into the ways both independent landlords and renters were impacted by the COVID-19 pandemic in 2020. We also aim to be part of the larger conversation related to rent and mortgage relief and to come to the table backed with data about the real-world experiences of landlords and renters.
Understanding rent payment trends was one of the top goals when surveying landlords and renters throughout 2020. Earlier in the year, Moody’s Analytics estimated that $70 billion in back rent would be due at the end of the year with renters owing an average of $5,850 per household. If renters were behind on rent, we wanted to understand how landlords were able to pay their mortgages and other rental related expenses while also unable to evict tenants for nonpayment of rent.
Our Hypothesis:
We expected to see fewer landlords receiving full rent payments as the year went on and an increase in the number of partial payments, payment plans, or other compensations.
What the Data Showed:
As expected, the percentage of landlords reporting full rent payments started to fall as the year progressed. Inversely, the percent of landlords who reported receiving no rent payments increased with the most landlords reporting no rent in December. Partial payments were not as widely accepted throughout the year, but in August there was an uptick of about 4% from July of landlords reporting partial payments; that number fluctuated between 9-10% the rest of 2020. Additionally, very few landlords chose to cancel rent. The percentage of landlords who reported canceling rent decreased at the end of the year as financial challenges mounted with the absence of rent relief. The rent payment data ultimately shows more landlords were accepting partial payments at the end of the year and renters were either paying the full rent amount or as much of the rent as they could. At the same time, the number of renters making no payments continued to increase.
Key Takeaways
In November and December, 41% and 37% of landlords reported they did not receive the full rent amount. Most landlords reported setting up a payment plan with their tenants. The survey also gave them the option to fill in their answer, which is noted in the “Other” bucket. Common themes were – leaving the property vacant, waiting, and still negotiating with the tenant.
We also wanted to understand how landlords in different communities were being impacted. As well as what type of landlord was hit the hardest.
Our Hypothesis:
As larger cities were more likely to be COVID-19 hotspots, we believed urban landlords would be suffering the most and that smaller independent landlords were also being hit hard. This is due to the fact that 72% of landlords reported having a mortgage on at least one of their rental properties and rent payments do not cover all expenses associated with rentals.
What the Data Showed:
Our hypothesis was correct, smaller independent landlords with only 1-4 rental units were hit the hardest with the most missed rent payments; yet, they were also the group who reported the most full rent payments. Secondly, landlords located in suburban communities reported more full rent payments than those in urban communities. When it came to state-specific data, the state reporting the most nonpayments varied from month-to-month, possibly due to changing local and state COVID-19 restrictions where non-essential workers were unable to work.
In surveying renters, we asked questions relating to how confident they were in paying next month’s rent as well as how they were paying rent.
Our Hypothesis:
With the economic strife, limited jobs, and a dominant discussion of evictions in the U.S., we believed renter’s confidence in paying next month’s rent would be low and continue dropping throughout the year. Next, with social distancing in practice and most landlords running their business entirely online, we believed more tenants would be paying their rent online.
What the Data Showed:
Renters who were surveyed throughout the year maintained an overwhelmingly positive response when asked if they were confident they could pay the next month’s rent. While the number of renters who were unsure if they would be able to pay rent increased at the end of the year, it still only hovered at 10%.
When it came to how renters were paying, traditional forms of collecting rent, such as cash and checks, were still very popular. If renters paid online, it was more likely to be through a money transfer such as an ACH payment, rent payment platform, or digital wallet. Credit cards, which typically can offer more flexibility, were not commonly used. From this, we conclude landlords were not very worried about how they got paid but more concerned about getting paid, and that landlords most likely wanted to offer as much flexibility to renters when it came to the method of rent payments.
Multiple studies, including The New England Journal of Medicine, have shown that COVID-19 disproportionately affects Black and Latinx populations when it comes to infection and hospitalization rates. According to the Joint Center for Housing Studies of Harvard University (JCHS), “People of color head just over two-thirds of households in high-rental neighborhoods, or about twice their share of all households.” Furthermore, JCHS states households hit the hardest with job loss were then more cost-burdened – the majority of these groups were households of color, lower-income households, and renters. With more data on how the pandemic was disproportionately affecting people of color, we asked demographic-based questions in the last part of 2020 to see if the same trends existed with our renters and landlords.
We believed renters who identified as Black/African American and Latinx would report less full payments at the end of 2020 because of COVID-19 affecting these populations disproportionately both health-wise and in job loss.
As expected, the common trends relating to race and ethnicity being disproportionately affected by the pandemic did reflect in our survey results. White/Caucasian renter households were able to make more full payments with 90% reporting they paid all of their rent in December – on the other hand, only 70% of Black/African American renter households were able to make full rent payments. More Black/African American households reported making partial payments at 15% while only 4% of White/Caucasian renter households made partial payments. However, the gap between renters who did not make any rent payments was smaller with 6% of White/Caucasian households unable to pay rent and 8% of Black/African American households unable to pay rent. There was no significant data when it came to Latinx renter households, but based on other reports, we believe this group would follow the trends of having more difficulty paying rent.
In November, renter households making less than $50,000 annually were financially impacted the most, with 69% reporting they made full rent payments, 12% made partial rent payments, and 18% were unable to make a rent payment in November.
Households making between $50,000 and $75,000 annually fared slightly better, with 79% reporting full payments, 11% reporting partial payments, and 10% were unable to make a rent payment in November.
Households in the $75,000 annual income bucket either did or did not make a rent payment, with 93% reporting full payments, and 7% reporting no rent payments in November.
December reporting was up from the previous month. Households with annual incomes between $50,000 and $75,000 showed the most improvement, with 92% reporting full payments, 6% reporting partial payments, and just 2% reporting they were unable to pay rent in December.
Households making less than $50,000 also reported an increase in the number of full payments moving from 69% in November, to 73% in December. Partial payments were at 17%, and the number of renters who were unable to pay any of their rent dropped from 18% to 10% in December.
The $75,000 to $100,000 range reported a slight decrease in the number of full payments in December at 90%, and 10% reporting they were unable to make a rent payment.
In November, 20% of renters reported having to take on additional debt to pay for their rent, that percentage increased to 22% in December.
Our surveys asked both renters and landlords questions centered around income, more specifically, forbearance, emergency funds, and the percentage of income landlords receive from their rental units.
Independent landlords might not be able to meet the financial obligations of their rental units if tenants are unable to pay. Both landlords and renters would have to dip into savings or emergency funds to continue to meet their financial obligations in the absence of mortgage and rent relief.
The percentage of landlords reporting they had gone into forbearance stayed relatively steady throughout the reporting period and hovered just around or below 5%, with December reporting the lowest month at 3.7%.
The percentage of landlords reporting they had to dip into savings or emergency funds to help pay their rental property mortgage or other expenses related to their investment property was over 30% for all reporting periods and peaked in December at 35%.
With non-payment of rent increasing as the year progressed, we wanted to understand how much of our landlord’s income was dependent on their rental cash flow. Month over month reporting was fairly similar. However, in December the highest number of landlords, 39%, reported more than 75% of their income comes from rental properties – this was a jump from November where the highest percentage of landlords, 46%, reported less than 25% of their income comes from rental properties.
Tenant screening is an essential part of a landlord’s rental process in order to protect their rentals and their business. Tenant screening typically includes a criminal background check, credit report, and eviction history on a renter who has submitted a rental application for a property. This enables landlords to make informed and confident decisions when choosing a tenant for their property. With the massive wave of unemployment and financial hardship throughout the country, we surveyed landlords to understand if their tenant screening criteria had changed during the pandemic and whether they implemented more or less strict renting criteria.
Without an option to evict tenants for nonpayment of rent due to eviction moratoriums, landlords would implement more stringent tenant screening criteria to ensure they had tenants who could afford to pay rent and pay it on time. Alternatively, in urban areas where renters were more likely to move from, landlords would have to implement less stringent screening criteria in order to fill vacancies.
Twenty-five percent of landlords reported making their tenant screening criteria more strict, such as raising the credit score limit, during the pandemic. At the same time, many landlords reported leaving it the same – if they needed to fill a vacancy, landlords did not want to limit their options even further. The majority of landlords surveyed required a credit score of 600 or higher which is below the national average of 711.
To understand communication trends, we surveyed renters asking if they had experienced an increase or decrease in the amount of contact they had with their landlord. We also wanted to understand what channels were most frequently used, and if those trends changed throughout the year.
With job loss and other pandemic related fallout, more communication between landlords and renters would be necessary to come up with payment plans, negotiate rent, and so forth – this communication would most likely be done virtually.
Constant and positive communication between landlords and tenants has historically been a difficult task. Throughout the year, the majority of renters reported communication with their landlord had stayed the same during the pandemic. Virtual methods were the most popular form of communication with texting taking the lead. Also, more renters reported in-person contact with their landlord at the end of the year even as the pandemic was reaching all-time highs in the U.S. Overall, even with unusual and difficult circumstances, landlord-tenant communication did not change as much as expected.
The pandemic ultimately changed many renters living situations either temporarily or permanently – this gave way to rent pricing trends fluctuating throughout the year with some significantly dropping or increasing more than others. We collaborated with Rental Beast, a database of nearly nine million rental listings, to provide average rent pricing for one-bedroom, two-bedroom, and three-bedroom rentals in different cities in the U.S. throughout 2020.
The economic impact of the COVID-19 pandemic is acutely illustrated by data included in this report. How that impact will continue to play out in 2021 is yet to be determined. Our goal in the coming months is to continue to survey our landlords and renters to deepen our understanding of those effects, and provide solutions and support to help mitigate long-term financial hardship for both landlords and renters. We will continue to publish our findings on a monthly basis.
Starting in March of 2020, we began sending monthly surveys to our active landlord and renter bases. Topics range from rent payments, rental processes, moving trends, and eviction trends. Surveys are conducted using Google Forms. All data is for general analytical use only. Individual responses are confidential, and we do not share the identity publicly or with third parties. Find out more about our methodology and guidelines for using the data. For access to the data or to discuss a collaboration, please email [email protected].
Rental Beast provides the most comprehensive view of the rental marketplace, arming decision-makers with the clear and current rental listing information needed to make informed business decisions. By applying a combination of proprietary technology and local expertise, Rental Beast maintains a highly accurate national database of nearly nine million single-family and multifamily rental properties not found on any Multiple Listing Service. With more than 50 distinct data elements sourced directly from property owners and managers, the Rental Beast dataset is fulfillment grade and built to service all facets of a rental transaction, ensuring the most current, reliable information is applied to rental comp reports, automated valuation models, and custom data requests.
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