Twilight of the Mom-and-Pop Landlord

Landlord Rian de Laat, left, and tenant Ollie Aldama (Time)

Time has been covering the eviction crisis from multiple angles, including the plight of small landlords. [bold added]

More than 70% of properties with four or fewer rental units aren’t owned by fat cats at all, according to the National Association of Realtors, but rather people like [Rian] de Laat: mom-and-pop landlords who often live nearby; manage the property themselves; and rely on the rental income to pay their own mortgages, health care bills and monthly expenses.

Almost half the nearly 49 million rental units in the U.S. are owned by individuals, who tend to offer more affordable housing in their communities than the billion-dollar conglomerates that build high-rises with marble counters and rooftop pools.

These small landlords are shouldering a huge burden during the pandemic. For many, it’s increasingly untenable. De Laat, who has since found a good new job working in gene therapy for a pharmaceutical company, is on better financial footing now. She remains “morally opposed to putting people out if they can’t pay, especially under these circumstances,” she says, but notes that “every bit” of the extra income she’s making goes toward paying for [tenant Ollie] Aldama’s housing. “It’s not sustainable,” she says. “But I also don’t see a means for them ever to be able to work on paying stuff back.”

This condo is vacant until evictions become legal again.

We've been writing about the looming eviction tidal wave since June. The repeated extensions of the eviction moratorium have caused mom-and-pop landlords to get deeper into the hole because they have been prevented from getting a new tenant who will cover more of their expenses.

When the bank, the local government (delinquent taxes), or the homeowners' association (unpaid dues) eventually seizes the property, the fruits of the eviction policy will be the ruination of some small landlords just so that tenants can live a few months longer in a place they can't afford.

The increased business and legal risk in real estate rental will cause a reduction in the supply of housing. No, it's not the opinion of your humble blogger, it's what's going on in the market.

Alex Brendon, who owns an investment property in the Seattle area, is among a growing group of small landlords considering getting out of the rental game altogether. After losing his own job in July and struggling to support two toddlers, Brendon was unable to evict his tenant, even though that tenant had stopped paying rent three months before COVID-19 began spreading rapidly in the U.S. After 10 months–and more than $18,000 in unpaid rent–Brendon took back ownership of his unit by moving into it himself.

Like small retailers, small landlords have been devastated by a government that has removed their legal protections. When after a few years people wonder why they have to rent an apartment or buy groceries from a big corporation, progressives will say it's a result of capitalist "greed", but we know who changed the rules to force small businesspeople or landlords out of the marketplace.