Brooklyn landlord Ting had hoped to replace the roof of his prewar brick Brownsville apartment building this year. Instead, he’s using the money saved for that renovation to stay afloat after three of his four tenants didn’t pay rent in May. But Ting, a contractor who is himself out of work, says he’s more frustrated with the government than with his tenants.
“Obviously everyone is enduring a difficult time right now,” says Ting, who asked that his last name be withheld for privacy reasons. All of his tenants who didn’t pay in May, he says, were still waiting on unemployment checks after losing their jobs. “I can’t go on without paying my mortgage, but I don’t want to kick out my tenants either. We need relief, and we need [the government] to redirect it to the people who actually need it the most.”
For many, the term landlord conjures images of high-powered real-estate executives who manage hundreds of buildings and see their tenants as mere numbers on a spreadsheet. But smaller landlords, who own one or a handful of properties, often operate on slim margins and—unlike their larger counterparts—lack the cash reserves or access to credit to weather a prolonged economic pause as a result of the novel coronavirus pandemic.
Even before COVID-19 struck New York City, Ting was barely eking out a profit. His costs include mortgage payments, electric, water and sewage, and heating and can be as much as $6,000 per month depending on the time of year. Add unexpected repairs to that pile, and most months Ting says he is making just $300 in profits. Now, he’s operating at a “super-deficit” with a lack of rent coming in. And if he didn’t happen to have money saved for renovating the roof, he’d be eating into his personal savings, which may happen anyway.
Those tight profit margins highlight the economic chasm between New York City’s varied landlords and the financial hardships they’re now facing, from those like Ting, to some of the city’s largest landlords like Vornado Realty Trust—which earned a net income just shy of $5 million for the first quarter of this year—to the myriad property owners in between. When it comes to the question of rent relief, those on the smaller end of that spectrum are coming to find they have more in common with tenants than with larger landlords.
The city’s real estate is dominated by giants like the LeFraks, the Dursts, and the Rudins. But in reality, New Yorkers are as likely to live in an apartment operated by a landlord who owns only one or a small number of buildings. And many of these smaller, older properties tend to be rent stabilized, which generally applies to apartments in properties with six or more units constructed before 1974.
The Community Housing Improvement Program (CHIP) says 80 percent of its 4,000 rent-stabilized members own less than 1,000 rental units, from owners of small family buildings to a mix of multifamily complexes. But in May, roughly 25 percent of CHIP’s residential tenants did not pay rent, up from about 20 percent in April, according to a survey of its members. Of the landlords questioned, who run about 100,000 apartments, an additional 64 percent of retail ground-floor tenants did not make rent in May.
Those numbers paint a grim picture for the city’s small landlords that may actually be bleaker because the group did not differentiate between full and partial rent payments.
“It’s just stunning,” says Jay Martin, the executive director of CHIP, on the loss of rental income for small landlords. “It’s a huge part of their business that has just evaporated and probably won’t be back for a while.”
Joanna Wong is among those grappling with that loss of residential and commercial rental income. Wong, who is a member of CHIP, runs (and lives in) a 30-unit apartment building in Manhattan’s Chinatown that has been in her family for about 40 years, along with a six-unit building in Brooklyn’s Sunset Park. Both buildings include ground-floor retail space, but those businesses have been largely inactive because of the state’s stay-at-home order. Most tenants paid in April, but May became a patchwork of working with renters on payment plans, discounts, and mulling month-to-month leases.
Wong describes half her tenants as currently “at risk.”
“Right now I’m trying not to drown,” she says. “It’s so hard to plan because we all don’t know how long this is going to last. There’s so much uncertainty on both sides.” She says she believes that renters and small landlords are essentially “in the same boat” and is frustrated with the them-versus-us narrative she’s heard from both sides of the aisle.
Mariko Osanai rents a one-bedroom apartment in Wong’s Sunset Park building, where she lives with her 7-year-old son. After losing her income as a hairstylist in mid-March, Osanai says she negotiated a partial-payment plan for April and May in which Wong waived a portion of the rent and also used some of Osanai’s security deposit.
“I have to say, I’m very grateful and lucky that my landlord has a good heart,” says Osanai, who believes the state and federal government should offer equal support to tenants and small-property owners. “But for the people who aren’t as lucky, it’s not like anyone asked for this. You don’t have any choices.”
Some tenants argue that renters and small landlords alike shouldn’t be left holding the bag. Patricia Keaton, who recently lost her job as an events planner, has lived in a one-bedroom Woodside apartment for three years. Days before April’s rent was due, her landlords, a mother-daughter duo who own the four-story apartment building and one other in the neighborhood, called to check in and ultimately worked out a partial-payment plan.
“It was a tough conversation because we all have bills to pay, and this is no one’s fault,” says Keaton, who notes that her father owns a small apartment building upstate. “Tenants need relief—there’s no question about that—but so does my small landlord. How can anyone be expected to run business as usual when people are struggling and the city is on lockdown?” This is especially true when ownership without a professional property manager can mean a job with no weekends or holidays.
For Wong, operating her buildings involves wearing multiple hats. It’s been that way since her parents purchased the prewar apartment building, with her father working odd jobs—from taxi driver to tofu-maker—to make ends meet. He even got into construction so he could learn how to make building repairs. Wong herself took a plumbing class at New York City College of Technology in an effort to cut back on maintenance costs.
“Running a small building is very different because you do a lot yourself,” she says. “We’re the ones unclogging the toilet. We’re the ones shoveling the snow. We’re not in an office with our feet up somewhere.”
Wong plans to pay her bills as long as she can, and if she reaches a point where she can’t, “then choices will need to be made as to what bills not to pay, starting with things not absolutely necessary to operate day to day, like property taxes,” she says.
Owners lacking an ability to pay bills isn’t just bad for landlords and banks. Aside from money that could have gone to building upkeep, like in Ting’s case, some may struggle to pay their mortgages or property taxes. And if building owners cannot pay their next property-tax bill due in July, a deadline the city has refused to postpone, that could mean big trouble for New York City, which has already made $1.3 billion in emergency budget cuts due to billions in lost tax revenue and mounting new costs to combat COVID-19.
“It’s a domino effect,” says Chris Athineos, the executive director of Small Property Owners of New York (SPONY), which represents landlords who own buildings with fewer than 100 units. “If the tenant doesn’t pay the rent and the landlord can’t pay the real-estate taxes, then the city can’t pay [its] obligation to keep the schools running or to pay police and firefighters. It’s all connected.”
That’s why the solution must include equal relief for renters and landlords, Athineos and Martin both argue. One measure could be an emergency rental-assistance program, like the one proposed by State Senator Brian Kavanagh, which would use vouchers to close the gap between the total rent and 30 percent of a household’s adjusted income. Property tax relief in the form of reducing or waiving late fees—which can be up to 18 percent—could also be of help, say landlord groups.
Governor Andrew Cuomo has banned landlords from charging tenants late fees and has instituted an eviction moratorium until August 20, but he has said nothing on how cash-poor tenants should be expected to pay what could end up being months’ worth of back rent once that moratorium expires. He did encourage state-regulated lenders to suspend payments for residential mortgages, but that doesn’t include multifamily properties, and it struck many advocates as unfairly privileging homeowners over renters.
No matter how you slice it, renters and small landlords need government aid, and they should come together to push for it, says Athineos. “Small-property owners and tenants should really be walking hand in hand to their legislators to urge them for relief,” he says. “This shouldn’t be an adversarial relationship; we should be working together.”
Some already are. In Buffalo, New York, shortly after the PAUSE order went into effect in March, leadership at affordable-housing developer PUSH Buffalo raised funds to waive rents in April and May for 99 low-income residential tenants and five commercial renters.
“These are [tenants] working in service employment, and we knew they were going to be the first to not be able to go to work,” says Rahwa Ghirmatzion, the executive director of PUSH Buffalo, at a recent virtual press conference featuring a handful of tenants and landlords from across the country urging lawmakers for greater relief. Downstate, Brooklyn landlord Mario Salerno canceled April rent for a couple hundred tenants in his 18 Greenpoint apartment buildings, urging tenants to focus on making sure “that everyone has food on their table.”
To be sure, not all landlords are so generous. And while some smaller landlords have stepped up to forgive rents, negotiate payment plans, or join forces with tenants to push for relief, others have sought to take advantage of the pandemic. That includes jacking up rents on cash-strapped tenants who are hard-pressed to move right now and misleading or even threatening tenants who can’t pay into moving out amid a public-health crisis.
To some tenant activists, the idea that property owners are facing a financial struggle similar to that of tenants who live paycheck to paycheck is offensive. Tenant advocate Cea Weaver with Housing Justice for All, who is a leading voice in New York’s movement to cancel rent and mortgages, says she finds it hard to be sympathetic to smaller landlords who can still have portfolios that amount to multimillion-dollar assets. She does believe, however, that “actually small” landlords who tend to live in the buildings they own need government relief.
“Mom-and-pop landlords are closer to being renters than they are to being corporate real-estate tycoons,” says Weaver. “I think that we do have shared interests and [tenants and small landlords] should campaign around that.”
It’s an unlikely pairing, tenants and small landlords coming together to advocate for aid, but as an organized constituency they would be hard for officials to ignore, says Martin.
“We are obviously never going to agree on some things, but what I think we can agree on is maintaining safe, affordable housing is crucial to the future of New York. And right now, small, private landlords need support to do that,” says Martin. “It’s like we’re two ships passing in the night but we’re essentially heading in the same direction.”