The police report tells the story of a straight-forward mugging. Marie Guadalupe, 19, and her husband, Christian Pineda, 19, were walking in their apartment complex, the 200-unit Preston Chase Apartments in Marietta, Ga. one night in May when a man wearing a hooded jacket approached them. Pointing a pistol at the couple, the assailant asked Pineda to hand over their money. But when the couple said they had none, the robber became angry and pushed them both to the ground, punched Pineda in the head, and demanded his keys. The suspect then took off in the couple's 2001 Ford Expedition. Though Pineda and a family member gave chase, neither the suspect nor the SUV was ever found.
What is not in the police report, however, is that the couple was likely targeted because they are Hispanic and were assumed to have cash with them. On that particular stretch of Franklin Road in Marietta, the number of robberies continues to rise despite more police resources in the neighborhood, says Officer Mark Bishop. And that has Hispanic residents in the area's apartments frightened—a fear that is not uncommon among Hispanic immigrants, says Janis Bowdler, associate director for the Wealth-Building Policy Project at the National Council of La Raza, a Hispanic advocacy organization based in Washington, D.C. “It is a public safety concern because folks know [Hispanics] get paid on Friday in cash, and they become targets,” she says.
Such personal safety risks exist with legal and illegal immigrants of all backgrounds, but with nearly 45 percent of the U.S. foreign-born population coming from Mexico and South and Central America, these crimes are concentrated in Hispanic groups. This demographic group is also one that the apartment industry has watched closely for more than two decades. The reason? Of the country's nearly 37 million renter households in 2005, 6.1 million, or 16.5 percent, were headed by an immigrant, according to America's Rental Housing: The Key to A Balanced National Policy, a publication by Harvard University's Joint Center for Housing Studies. And that number is poised to grow: 102.6 million immigrants are expected to arrive between now and 2050—by then, Hispanics will represent 29 percent of the country's population, according to the U.S. Census Bureau and the Washington, D.C.-based Pew Hispanic Center, a research organization geared to understanding the U.S. Hispanic population.
From the time they arrive at your property to the time they move out, immigrant renters present a distinct set of challenges for apartment mangers. Whether it's managing the safety issues involved such as increased on-site crime or putting forth effort to ease their assimilation, apartment owners must learn how to cater to this growing demographic. This is the first in a series of stories exploring the myths and realities of three demographic groups that promise to drive multifamily demand over the next decade. MULTIFAMILY EXECUTIVE examined each demographic trend, analyzed the data, and culled anecdotal evidence from apartment executives in the field. Here's what we learned about the immigrant experience at multifamily properties.
Myth 2
Illegal immigrants don't live in your apartments. As the number of immigrant renters increases, many owners are all too aware of the risk that some of those renters may be in the country illegally. That's where resident screening comes in, right? Not necessarily. While owners may ask for social security numbers, work references, even credit histories, there's no surefire way to know if you have any of the estimated 11.5 million to 12 million illegal immigrants in the United States living in your units.Conventional wisdom would dictate that illegal renters are mainly piling into older complexes because they tend to be more affordable and have a less stringent approval process. “While immigration is an important factor for apartment demand in the next century, I think it's focused in [Class] B and C rental product,” says Jim Butz, divisional president and managing partner of JPI East, a division of Dallas-based JPI, which manages more than 45,000 units nationwide. “In the luxury product, it has been less of a benefit.”
But not everyone agrees. “I am confident that most big companies have some presence of undocumented immigrants living on their properties,” Vela says. “A lot of big companies have avoided the issue of immigration … by systematically excluding the immigrant renter pool for lack of knowing how to deal with them.”
Most apartment owners believe that if there are illegal immigrants in their units, they aren't on the lease. The theory: One person rents an apartment and then brings along three or four friends or family members who don't have papers. Vela thinks some illegal immigrants are sneaking past screening procedures as well. “It's not only those who are living with somebody on the property,” he says. “There are a lot of false documents out there.”
Despite this, the Pew Hispanic Center estimates that less than a quarter (23 percent) of illegal immigrants have any form of photo ID issued by a U.S. government agency. Various media outlets report that illegal immigrants use stolen social security numbers to get jobs and homes, but the Federal Trade Commission doesn't know how widespread this practice is.
“We all know that even if a prospective resident presents genuine identification, it may not belong to him or her,” says Elizabeth (Betsy) Feigin Befus, vice president for employment policy and special counsel at the Washington, D.C.-based National Multi Housing Council, the industry's national trade association.
The problem is that asking too many questions can run the risk of liability. Apartment owners that require documentation to verify legal status have to make sure they ask every potential resident to provide the same papers. “If apartment owners have a different standard for Hispanic people versus whites or blacks, or if they were asking for something from people with only a particular background, that would violate fair housing laws,” says Bryan Greene, deputy assistant secretary for enforcement and programs at the U.S. Housing and Urban Development's Office of Fair Housing and Equal Opportunity.
Unfortunately, these issues are complicated when legal immigrants don't have the proper papers. “It's not uncommon for people to get stuck as one permit expires before they secure a second permit,” Bowdler says. “Folks assume that there is a straight line that says that the immigrant is documented or undocumented. That's not necessarily the case.” These complications can leave apartment owners in a bind. How much time can one invest in qualifying employment, wonders an apartment owner in Miami who requested anonymity for fear of legal liability. “How deep do I want to chase this guy's references from John Smith? John is like, ‘Yeah, Jose works with me, but you can't see a stub because he was paid in cash,” he says.
Myth 3
Requiring documents won't affect operations, values.
Unfortunately, deciding to what extent you will pursue documentation may no longer be optional. Local governments in smaller cities such as Hazelton, Penn., and Farmers Branch, Texas, have crafted legislation that is aimed at keeping illegal immigrants out of their towns by fining the people who rent to them. But federal judges shot down these attempts to curb illegal immigration. In Escondido, Calif., for example, proponents of an anti-immigration law eventually backed down—and California subsequently passed a law making it illegal for towns to ask for citizenship verification.
Indeed, states are active as well. State legislatures considered 85 bills in the first quarter of this year that would create stricter guidelines with regard to proof of residential status in obtaining an ID, according to the National Conference of State Legislatures. All in all, in 2007, 1,562 bills related to illegal immigration were introduced nationwide, and 240 were enacted, three times the number that passed in 2006, according to the organization.
“Those types of ordinances have largely been put on hold pending lawsuits and federal action in Congress,” NMHC's Befus says. “The state and local ordinances have particularly targeted apartment owners and, if implemented and enforced, would be quite burdensome and totally inappropriate.”
What's more, there's no requirement under federal law for apartment owners to check that much information, says David Crump, director of legal research for the Washington, D.C.-based National Association of Home Builders.
As a result, each time one of these towns passes a law, outrage from the apartment industry usually follows. It's no wonder when you consider the fees and penalties associated with the laws had they gone into effect. Hazelton attempted to fine landlords $1,000 per day for each day a landlord rented to an illegal alien. In Farmers Branch, the fine was $500 a day. “Local governments enact policies where local businesses have to be the police,” says Campo of Camden. “It's unfair for the business. They are not really prepared to deal with it.”
Training property managers to conduct these checks or hiring a third-party verification firm would be an additional cost for apartment owners. Plus, most site-level staffs—a mix of high school graduates and students fresh out of college who know little about real estate or legal liability issues—can't conduct proper background checks. “There's no way we can expect a property manager to be qualified to play border agent,” says Akins of the Bascom Group.
The added effort of doing background checks isn't the only reason apartment owners want to avoid towns that require verification. Vela says that in Cobb County, Ga., where the county put forth legislation in 2007 to limit day laborers and overcrowding in apartments, occupancy rates fell from 80 percent or 90 percent to the 60 percentiles. “I don't know about long-term property values, but I can tell you from a daily and NOI [net operating income] perspective, it hits your bottom line,” he says.
And once such legislation turns up—whether enacted or not—even legal immigrants flee the area. “It sends a message to the immigrant community. They get the message, and they leave,” Bowdler says.
These falling fundamentals mean that apartment executives such as Starpoint's Budman are wary about buying in cities with activist governments. “With people buying more on cash flow than appreciation, I think that occupancy has a direct effect on value,” Budman says.
Akins doesn't own units in Farmers Branch, where they have attempted to supply citizens with a special card (landlords would be able to rent only to people with this card), but he does have properties in nearby Addison, Texas, which is more open to immigration. “If I am looking at an apartment, I'm not going to the city to register,” Akins says. “I will just go to Addison.”
Even beyond cash flow, liability, and the possibility of extra overhead, Vela, who is Hispanic, believes there is an ethical responsibility for apartment owners to avoid these cities. “My company won't go into a governmental situation that is against any group of people,” Vela says. “We're not going to spend our money in your community if you don't support all people. I know we're not alone on that.”
Myth 4
Immigrants have a negative impact on property safety.
Ultimately, when immigrants find their way onto a property, they often face distinct safety challenges. Newspapers are chock full of stories such as that of Pineda and his wife. For instance, in early May, the Miami Herald reported the story of Arcenio Garcia. A man knocked on Garcia's apartment door, showed him a police badge, and asked him and his roommates to hand over their money. If they didn't, the “officer” threatened to call immigration.
This happens frequently, and Hispanic residents are all too aware of the risks. “There are gang members assaulting and robbing people,” says Gustavo Restrepo, 39, who lives in the Las Colinas Apartments in Marietta, Ga. Through a translator, Restrepo tells how his family, which came to the United States from Colombia four years ago, is afraid in their neighborhood. “[The gangs] know Latinos get paid cash; that's when they target them.”
While traditional banking would help assuage these patterns, many Hispanic immigrants avoid cashing checks and establishing bank accounts. “In their country, they don't trust their banks,” says Angela Smith, southern regional manager for The Comunidades Group. “When they come here, it's the same scenario.”
The Pew Hispanic Center reports that 8 million Latino immigrants in the country lack access to bank accounts. Often, they're walking to places such as Western Union with hundreds of dollars in their pockets to send back home. According to a survey by the Inter-American Development Bank, 50 percent of the 16.7 million foreign-born Latinos living in the United States last year sent $45.9 billion back home, the same dollar amount as two years ago. And this makes them a target.
“In addition to walking with $500 in cash on Friday after getting paid, they won't call the police if you [steal] their money,” says the anonymous apartment owner in Miami. “They fear the police will send them home. So, you have two powerful incentives to commit a crime.”
This fear is deep-rooted in the Hispanic population, experts say. “Many come from countries where the police and military are corrupt and brutal,” says Rabbi Bruce E. Kahn, executive director of the Equal Rights Center, a Washington, D.C.-based nonprofit that combats discriminatory practices. “When they see officials or people in uniform, they experience terror.”
Indeed, the fear of reporting such incidents means there is little data to support the anecdotal claims of high crime that plague the Hispanic immigrant community. Many times, residents are just as unlikely to report these problems to their management companies, which are often seen as another authority figure. That's a problem, considering that economic pressures often force immigrants into older units that may have structural issues property managers should be aware of.
According to the U.S. Census Bureau's 2005 American Housing Survey, 341,000 housing units inhabited by Hispanics have severe physical problems, while another 732,000 units have moderate physical problems. Of the Hispanic-occupied units with severe issues, 184,000 have two or more floors; 334,000 units with moderate problems are in multi-unit properties.
If the residents would open the door to the property manager, some of these issues could be eliminated. But they may fear authorities or the possibility of being evicted, especially in overcrowding situations (many municipalities have legislation against overcrowding). “When they complain, we've seen problems with landlords threatening to call immigration,” says Anabell Martinez, a housing paralegal with the Central American Resource Center in Washington, D.C. “Even if they have their documents, they're often too scared to complain.”
But when the immigrant has a reputable apartment owner, this fear can cause serious problems. “We have Hispanic residents who don't speak English or are uncomfortable coming into the office,” says Eric Bolton, CEO of Mid-America Apartment Communities, a Memphis, Tenn.-based REIT that owns 41,120 units. “They may have a problem like a leak, and they're reluctant to point it out to us. We only find out about it subsequent to it becoming a major issue.”
There are also some dangers inherent in overcrowding situations. “Overcrowding of a living space can promote germ and bacterial growth,” Akins says. “It also tends to wear on the plumbing of a unit because of overuse, which can result in leaks and mold growth. The one thing I am concerned about is safety and sanitation with so many people in those units.”
Myth 5
Property managers play no role in assimilation.
Indeed, Hispanics can go out of their way to avoid landlords. But in some cases, their avoidance may be justified. Consider what happened to an immigrant living in an apartment complex on Jefferson Street in Washington, D.C. She was taking a shower when a rat fell on her, says Kahn of the Equal Rights Center, who suspects the property manager was trying to drive out Hispanic residents by allowing the property to deteriorate. Rodents are actually common in immigrant housing, per the American Housing Survey, which said that 257,000 units with Hispanics had rats in the past three months; 753,000 units had mice in the same time frame.
Sadly, this isn't an isolated incident. Hispanic residents have been threatened by landlords who accuse them of being in the country illegally. “We see the examples of letters going out to residents saying that they're going to bring in immigration authorities,” Bowdler says. “They say, ‘If you're here illegally, we're going to find you.'”
In other instances, property managers simply overlook their Hispanic residents. “They welcomed me [to] lease the apartment, but when I moved in, they forgot about me,” says Luis Carlos about his rental experiences as an illegal immigrant living in Marietta, Ga., via a translator.
Vela believes that the vast majority of property managers don't know how to interact with their Hispanic residents. But why? Is it racism? Ignorance? Or, as Kahn's example shows, a desire to chase out immigrants to make room for residents who will pay more? “There's a lack of understanding of the culture by the vast majority of apartment owners and operators,” Vela asserts. “They don't recognize the value of investing in our community.”
Akins is not one of those owners. He has had success reaching out to immigrant renters in Texas. “It starts with bridging the language gap,” he says. “We make sure the staff speaks Spanish, so they can communicate with the residents. We want an on-site staff that cares about people and is interested in the well-being of residents.”
And providers in every segment of the multifamily industry have begun offering bilingual products and services to serve this demographic. It's even possible for a property manager to steer immigrants away from their reliance on cash. “You've got to educate people,” Vela says. “I bring in local banks and nonprofits. We teach financial literacy. We can teach you how to wire the money home to your family.”
There are also a lot of banks out there eager to help out with this. “For a lot of local community banks in the Southeast, their whole purpose is to remove this shadow world. They will allow the Latino immigrant—documented or undocumented—to open an account there.”
These programs, together with apartment owners, can drastically impact the lives of Hispanic renters, especially those unfamiliar with American culture. “Landlords can go a long way in helping people feel welcome here,” Bowdler says.
BY THE NUMBERS For apartment owners and managers, the Hispanic immigrant population is a demographic group with the power to shape and influence their future operations. Here's a statistical snapshot of this community.
U.S. Hispanic Population: 41 million
SOURCE: U.S. CENSUS BUREAU
U.S. Hispanic Population by 2050: 29%
SOURCE: U.S. CENSUS BUREAU; PEW HISPANIC CENTER
U.S. Renter Households Headed by an Immigrant: 6.1 million
SOURCE: HARVARD UNIVERSITY'S JOINT CENTER FOR HOUSING STUDIES
Hispanic-Occupied Housing Units With Physical Problems: 1.1 million
SOURCE: U.S. CENSUS BUREAU
Hispanics Without Bank Accounts: 8 million
SOURCE: PEW HISPANIC CENTER
Hispanic Consumer Spending Power by 2010: $1 trillion
SOURCE: UNIVERSITY OF GEORGIA'S SELIG CENTER FOR ECONOMIC GROWTH AT THE UNIVERSITY OF GEORGIA.
Hispanic Immigrants Who Send Money Home: 73%
SOURCE: INTER-AMERICAN DEVELOPMENT BANK'S MULTILATERAL INVESTMENT FUND