Taking data from the COVID-19 Rental Housing Initiative, a new information resource for renters and housing providers supported by Yardi, RENTCafe breaks down $1 worth of rent and shows its direct impact on the local economy.
The new initiative—backed by the Institute of Real Estate Management, the National Apartment Association, the National Multifamily Housing Council, and the National Association of Residential Property Managers—provides operators and property owners with the latest information about guidelines and legislation as well as includes resources for renters dealing with issues related to the pandemic.
According to RENTCafe, the largest part of every dollar of rent, 90 cents, goes to keeping rental housing operational, including state and local taxes, employee wages, maintenance and improvements, and mortgage payments. The remainder, 10 cents, goes to property owners and investors.
Mortgage payments take up the largest chunk—38 cents—of the 90 cents. This is critical for small owners, as 59% of them carry a mortgage and many operate on thin margins. Rent is reinvested back into the community in the form of taxes, 14 cents; worker salaries, 10 cents; maintenance, 16 cents; and capital improvements, 12 cents, which support essential services as well as small businesses in other sectors of the economy.
The RENTCafe report zooms in further to show what this means in regards to the recent stimulus assistance enacted.
With the American Rescue Plan providing $21.55 billion in emergency rental assistance, in addition to the $25 billion through the December omnibus package, findings show this funding will help housing providers cover at least a part of the $23 billion in accrued mortgage payments as well as contribute $14 billion to local communities in the form of taxes and wages and $17 billion for building maintenance and capital improvements.
With approximately 10.25 million renters in debt as of January, the back rent has reached an estimated $57.3 million, according to estimates from the Urban Institute and Moody’s. The emergency funds will help keep renters in their homes, keep smaller landlords afloat, and contribute to the local economy.
“The funds are expected to help offset a total rent debt close to $60 billion, triggering a butterfly effect across local communities, particularly visible when you look at where $1 of rent goes,” said the RENTCafe report.
