When COVID-19 made national headlines in mid-March, many real estate investors speculated that the worst was yet to come. The expectation was for rent collections to worsen month-over-month, with the biggest impact occurring in the early summer months of June and July.
Last month, we gave an update on the May rent collection numbers, which you can read How Covid 19 has impacted rent collection.
In short, rent collections by the end of the week of May 6th were down less than 2% compared to 2019, and rent collection increased from April to May. This data indicated that the worst was behind us.
Do June rent collections indicate the same?
According to a new national survey of multifamily residents by J Turner Research, 90.3% of respondents said they expected to pay their June rent by the end of the month.
Of the 90.3%, 84.3% said they expect to pay their June rent by the 10th, which is a 5% increase from the same time in May. The remaining 6% said they expect to pay by the end of the month.
Of the 84.3%, 74.6% said they expected to pay rent on time (compared to 70% in May) and 9.6% said they expect to pay by the 10th.
Only 9.6% of respondents said they did not expect to make their rent payment for June (compared to 14% in May).
Overall, compared to April, more residents expect to pay rent on time, by the 10th, and by the end of the month.
Keep in mind that this is only a survey and not actual rent collection data. However, J Turner’s May rent collection predictions were extremely accurate. They predicted rent collection early in the month of May to be 80.8%. The actual rent collected by May 6th was 80.2%.
Joseph Batdorf, the president of J Turner Research (the firm that conducted the survey) is quoted as saying, “If our numbers are as on target as last month, rent receipts will be stronger than May, which bodes well for the industry.”
Another key finding was how respondents prioritized their expenses. Rent payments were the number one priority, over car payments, utilities, and even groceries. This is something I’ve talked about before – the last thing people stop paying is their rent. So the findings of this survey reinforce that concept.
To stay up-to-date on the actual month-to-date rent collections, I recommend bookmarking the NMHC Rent Payment Tracker.
The April-to-May-to-June rent collection trends are great news for apartment investors. However, according to NMHC President, “the hardships caused by the outbreak are not ending anytime soon.” Therefore, it is important to stay up-to-date on new rental assistance legislation, and local eviction laws, and continue to stay in contact with your residents in order to understand their ability to pay rent on time.
For more reading on how the coronavirus is impacting real estate,
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.