Councilmember Gonzalez is asking for renters to contribute their COVID-19 stories about dealing with housing providers. I wrote to her to ask that she broaden her appeal and reach out to housing providers for those stories too. 

On that note, I want to contribute my own story as a small landlord. People often think property owners can just tap our “massive” equity to tide us through the tough times and they have little sympathy because we own property. Well, this week my husband and I were turned down for a HELOC on one of our properties despite both of us having secure, essential personnel government jobs, very good credit scores and long term stable tenants. We wanted it in case we needed to draw from it to pay our bills in a crisis like this but were told that we don’t have enough cash on hand to qualify even though the loan to value ratio was very low. 

This is exactly what I was worried about when the city council passed the Winter Eviction Moratorium. I was worried that banks would change their underwriting standards to require larger cash reserves to cover up to 6-8 months of lost rent and utilities due to non-paying tenants and that would in turn hurt small landlords who don’t have a large cushion of cash. We would be denied refinancing, HELOCs, construction loans and property purchases. That’s a major problem for small landlords who thought they had equity to pull from but are now shut out from accessing it. 

This is just after the winter eviction was passed and now the statewide & city COVID-19 eviction moratoriums are hitting. It will become more acute if the council pursues CM Gonzalez’s proposal to extend the eviction moratorium in Seattle to 6 months past the city’s emergency declaration and forces landlords to accept payment plans for another year or more – IF the tenant can even pay. This action will change the entire basis of our investment and mortgage underwriting will in turn become a barrier to new small landlords AND force existing small housing providers out of the market if they cannot access more favorable financing. 

I was worried that banks would change their underwriting standards to require larger cash reserves to cover up to 6-8 months of lost rent and utilities due to non-paying tenants and that would in turn hurt small landlords who don’t have a large cushion of cash.

Seattle Housing Provider

Is it reasonable to expect a small housing provider to have a year or more in the bank to cover a no-rent scenario for 12-18 months, in addition to the cash we need to cover operating costs, repairs, larger long term maintenance, damages, etc.? In a normal economy, we would pursue options to stop that bleeding and get a solid tenant long before that. At minimum, an extended eviction moratorium incentivizes small housing providers to maximize rents to build that cash cushion that banks are expecting now. It says we’re suckers for having kept our rents more affordable all this time. For anyone who wants to point the finger and call us terrible businesspeople – You really have to ask yourself where you think housing providers are supposed to come up with that cash and why anyone would want to be a housing provider under those circumstances. In the end, it always hurts vulnerable residents. 

I want you to hear my story because if two securely employed people with stellar credit like us would get denied a standard loan, what chance does the elderly lady with meager SSI have whose primary income is her rent? What about housing providers who lost their jobs due to COVID and are now on unemployment themselves? 

I’m asking the Seattle City Council to please consider the devastating effect your policies are having on small housing providers, and I especially ask the pragmatic members of the council DO NOT PASS this deeply flawed legislation. There are no amendments you could possibly offer to fix it. Please do not enact an eviction moratorium beyond the actual emergency. There is no good justification to deprive a property owner of the economic value of their property for 12-18 months.

Instead, the city should be providing emergency rental assistance. You can then make sure it is need-based rather than giving tech bros a rent holiday while they code at home. If the city cannot afford it, you can’t expect a small housing provider to afford it either.