Landlords of Color Hit Hardest as COVID-19 Cuts Into Rental Payments

Real Estate

Landlords of color are finding themselves especially hard hit by the economics of COVID-19, according to a new survey by the Urban Institute in partnership with Avail.

Black and Hispanic landlords are more likely to be struggling to pay their mortgages than white landlords, and they are more likely to take a mortgage forbearance, according to the report. They are also more likely to offer their tenants a rent payment plan in an attempt to keep people in their homes.

While nearly 12% of landlords with a mortgage are in forbearance, those landlords are disproportionately Black and Hispanic, according to the survey. Nearly 20% of Black landlords have at least one property in forbearance, followed by 14% of Hispanic and 9% of white landlords.

“Half the landlords surveyed said they did not know whether their servicers offered forbearance,” according to the survey. “Nearly two-thirds of white landlords said they decided against forbearance because they can make their mortgage payments. Less than half of Black and Hispanic landlords said the same.”

Landlords reported pulling from savings or emergency funds to help weather the crisis, with 41% of Black landlords, 35% of Hispanic landlords, and 34% of white landlords tapping those sources. About 16% of all landlords found government aid helpful.

“Many landlords were reluctant to accept the forbearance option because they would still need to pay back the deferred mortgage payment once the forbearance period ends, and they were uncertain about whether their tenants would be in a better financial position to repay their rents in the future,” according to the survey.

The findings indicate more help is needed to support landlords, especially those who own fewer properties and will be more affected by tenants inability to pay.

“The extension of eviction moratoriums will help tenants stay in their homes longer, but for many landlords who are struggling to make their mortgage payments and are disproportionately people of color, there needs to be additional policies to alleviate their financial burdens,” according to the Urban Institute.

More than a third of landlords reported earning a majority of their income from rental properties, which compounds the issues for landlords of color.

“…Black and Hispanic landlords have lower incomes, own fewer properties, and are more likely to have a mortgage than own their building outright,” according to the survey. “As a result, Black and Hispanic landlords are more likely to struggle to make their mortgage payments.”

Black and Hispanic landlords are also more likely to only own one rental property.

“Owning fewer properties makes it harder to diversify risk and increases the financial volatility of rental income when a crisis hits,” according to the survey.

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