People Post is a space for opinion pieces, letters to the editor and guest submissions from members of the Long Beach community. The following is an op-ed submitted by Robert Fox, a Long Beach-based real estate broker, property manager, community advocate and candidate for the city’s 2nd District City Council seat, and does not necessarily reflect the views of the Long Beach Post.
The pandemic we are experiencing has cut the blinders off of what were once hardcore “truths.” We will no longer live in a land of plenty, where there is neither a never-ending supply of tenants, nor a never-ending supply of jobs for those who want them. That reality no longer exists. The federal government estimates a 35% to 42% percent unemployment rate nationwide as the result of this crisis.
Restaurants, bars, gyms, salons, mechanics, maintenance, offices, and most service jobs are gone. We will be in this “lockdown” situation for a long, long time.
We do know some things. No one can keep a restaurant open without paying rent. No one will rehire a complete staff at the snap of a finger. Most large and small businesses will have a recovery curve which may last months or years. Most people will not have the income to eat out every night.
We’ve had two recessions in my lifetime: The Great Recession in 2008 was caused by mortgage fraud. The big recession of 1991 was due to military downsizing. We are up against the same issues, and worse, and we must learn from our past. We must do what it takes to survive this upcoming global depression.
Housing providers purchase apartments to make money. They also have obligations, mortgages, taxes, parcel taxes, maintenance, management, vacancy rates, etc. If all goes well, they do make money.
Renters need a place to live. In exchange for rental payment, they get a roof over their heads, maintenance of the property, security, safety and quality of life.
Both parties are dependent upon the other. We are in a symbiotic relationship of survival.
In this crisis, we already have landlords giving “Three Day Notices to Pay Rent or Quit” to tenants regardless of the city’s moratorium upon rental payments. Some even have the temerity to demand late fees. I can assure you this method is the absolute worst thing a housing provider could do.
In the very near future, landlords will thank their lucky stars that they even have a tenant.
Tenants are fearful and feel threatened by these misguided housing providers. Fear always breeds dislike and hatred and will fuel the fires of discontent.
It doesn’t have to be this way. I suggest a simple and effective solution for everyone involved. Let every housing provider write a kind letter to the tenant with these terms. The rental amount due and owing will be delayed. No late fees will be assessed. Once the pandemic has passed, and people are going back to work, then we can start expecting rent again. In the meantime, if the rent were $1,450 for instance, then let the renter pay that amount over 14½ months. Make sure the tenant can afford the extra $100 per month per this agreement, and if not, negotiate an amount they can.
This is what is called finding a win/win solution. Renters, please be open to solutions with your landlord, for if we cannot find common ground, all will lose the housing we have.
Now I am going to get REAL with landlords and housing providers.
Why should you write such an agreement? Right now, the courts are mostly closed. They will remain closed for most likely three months or more. Even if you wanted to enforce an unlawful detainer, you wouldn’t get a court date until next year. Giving a three-day notice right now only inflames the tenant and creates bad blood.
When one files a notice it includes all the back rent so why would you act so insistently in such a tragic time? You come off in court looking like a vampire. If you come to court with such bad blood, I can assure you the case will not go well. The tendency will be to rule on the side of understanding and compassion. You will lose. And I can assure you, although you think your case is solid, and even if you were granted a money judgment how would you collect? One cannot squeeze blood from a turnip.
The ACLU and other tenant organizations are fully aware of what is going on. They will have advisories all over the place and will guide targeted tenants through the process requesting court delays, depositions, discovery, requests for jury trial. That is about 12 months of sustained paperwork with no rent. It will cost you at least $10,000 in attorney’s fees alone plus lost rent.
This is simple mathematics.
And if you did get your property back, how much would it cost you to rehab it? The angry tenant will have no incentive to keep the place clean. I would estimate the damage to be equal to your hard heartedness. Let’s estimate the most conservative costs to remake the unit at $3,500 to $5,000.
How many months will the unit be vacant?
Most fools in 1992 thought they would get the same rent as before. A costly mistake. In real estate when you overprice a listing, you end up following the market downward. Eventually, everyone wonders why the price keeps dropping as if there were something wrong with the place. It becomes a dead listing and the lack of income becomes a noose around your neck.
You will have to look for new tenants and your lower rent significantly.
You will have to lower your rental standards just to get tenants. There will be a glut of units on the market as people don’t get their jobs back and move.
If you had negotiated with your tenant and came out with an agreement you both were happy with, those costs would be saved.
How many months of rent (lowered) would it take you to catch up financially? You never could.
My point is simple. If you do not listen to reason in this time of trouble you will lose.
With no money to pay your mortgages, taxes, etc., your property will be foreclosed either by the bank or by the state.
In conclusion, everyone has a vested interest in making negotiations regarding rent, and you had better start by being polite. If you have sent a letter out already then write another one dismissing the previous one.
Yes, you own the land, but without the tenant, you will not own it for long.
Our big argument about rent control is over.
Our new conversation will be about rental survival and everyone will be included.
If you are a landlord or a tenant in Long Beach in need of mediation, or if you are a landlord who would like a copy of my template for a letter to economically distressed tenants, feel free to contact me. I can be reached at [email protected] I would be very happy to lend a helping hand.
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