Pamela Cruz. Peninsula 360 Press [P360P].
Owners of two- to four-unit buildings earn less than owners of single-family homes or large multi-family buildings, making them more vulnerable to the economic disruption of the COVID-19 pandemic, because they job losses are more prevalent among low-income households.
This was reported by a study conducted by the Urban Institute, which highlights that the median income for a two- to four-unit owner was $67,000 in 2018, compared to approximately $81,000 for owners of single-family units and large multifamily buildings.
The analysis conducted in late 2020 highlights that small rental units have the highest proportion of owners of color; as 13 percent are of African descent and 15 percent are Latino.
While the majority of owners of small rental buildings are white, they represent a significantly smaller proportion than among other building types.
"COVID-19 has disproportionately affected black and Hispanic households, and their greater representation as renters and owners in two- to four-unit buildings may further exacerbate wealth inequality if steps are not taken to protect owners in these buildings from losing their property due to declining rental income," the study specifies.
The 6.2 million rental units in two- to four-unit buildings in the U.S. represent approximately 13 percent of all rental units and are an important natural source of affordable housing for low-income renters and a source of income for their individual investors, most of whom live in the same buildings.
The average rent for these small apartments is around $940, much less than the average for single-family rentals, mid-size apartment buildings and large apartment buildings.
Thirty-four percent of owners of two- to four-unit buildings are over 65 years old, mostly retired and unlikely to have another source of income, the paper revealed.
He noted that in 2018, only 19 percent of two- to four-unit homeowners 65 and older were employed, compared with 82 percent of those 65 and younger.
Thus, greater reliance on rental income puts senior landlords especially at risk from the negative economic effects of COVID-19, as approximately 40 percent of seniors who live in and own two- to four-unit buildings have a mortgage.
"If these older homeowners with a mortgage do not receive rental payments, not only are they likely to lose their only source of income, but some may lose their homes," the study noted.
Because they do not have payrolls like larger investors, these landlords are less likely to access payment protection or small business support programs, so without forbearance options, it will be difficult for these landlords to keep tenants without the risk of late payments.
Tenants in these types of apartments have an average household income of $35,500, the lowest among the four types of rental units, including single-family buildings ($47,400), buildings with 5 to 49 units ($37,800), and buildings with 50 or more units ($36,000).
In that sense, and because the average household size in buildings with 2 to 4 units is larger than in larger buildings, the income per person in small buildings is even lower.
Tenants of African descent and Latinos rent 44 percent of units in two- to four-unit buildings, compared to only 42 percent in mid-rise buildings, 37 percent in single-family rentals, and 35 percent in large apartment buildings.
These two communities had already faced greater difficulties in making housing payments prior to COVID-19, however, since the outbreak, about one-quarter of African American and Latino renters have not paid rent, which is 10 percent higher than white and Asian renters.
It is worth noting that for those tenants who are forced to move out of these relatively affordable properties, they will likely have a greater number of problems finding available low-cost housing options.
