Schott says landlords are facing ‘tough ,situation’ too
An executive order signed by Gov. Andy Beshear suspending all evictions during the COVID-19 emergency puts landlords in “a tough situation,” rental property owner Trey Schott said, because most properties have mortgages and those payments are still due to the bank. “So when the rent doesn’t come in,” he said, “it severely impacts the landlord’s cash flow, obviously.” Schott said he’s currently not charging his tenants any late fees for up to 60 days (April and May). He noted that Gov. Beshear’s order does not mean tenants do not have to pay rent, so he’s working on payment plans for those who have been laid off. “But I don’t want you to get in too deep of a hole,” he tells them, “because the rent is still there, the clock is still ticking …” In a typical month, under 8 percent of his tenants are late on their rent, Schott said. He said that had climbed to the 40 to 55 percent range as of last week. “That’s troublesome for me,” he acknowledged, “because that affects the rest of my cash flow for paying mortgage payments.” He said some tenants who have received an additional $600 unemployment check are spending that money on other things instead of paying their rent because all court proceedings for landlords to seek evictions are suspended. One of the consequences of the cash flow problems in April has been a decision to shut down improvements to his rental properties, Schott said. “We were going to rehab 10 units during May and June, and we’re not going to rehab those,” he added. From his perspective as a landlord, one of the more troubling aspects of this economic downturn has been how hard it has hit hourly service and factory workers, who make up a large portion of his tenants, Schott said. He noted horse farm workers renting from him have been less affected by the downturn. “Solid,” said Schott of his business, Main Street Realty, before the economic downturn. At his Main Street Ace Hardware Store in Versailles, the buying pattern of customers has been very different, with cleaning products like bleach “flying off the shelf,” while its repair business (plumbing, electrical and tools) sales are “somewhat down,” Schott said. He noted people are stuck at home, so paint sales are up over the last month. Not knowing how long this downturn will last is the “scary unknown,” Schott acknowledged. Fortunately, his family lives on a farm so “social distancing is pretty easy,” he said.