Since the start of the pandemic, Village Green—No. 37 on the NMHC Top 50 Managers list for 2020—has operated with empathy for the struggles of its renters as a top priority. This continues even with a nationwide eviction moratorium in effect and a second stimulus package yet to come. It provides a route for residents in good faith to manage their financial hardships and reach a plan that meets the needs of both parties.
Multifamily Executive spoke with Diane Batayeh, CEO of Village Green, about how the company has managed the struggles of its renters, as well as her own insights on the state and future of the multifamily industry, including advice for struggling firms, as the pandemic continues.
MFE: How is Village Green balancing its business operations with empathetic treatment of struggling residents? What sort of measures have you put in place around the struggles renters might be having?
Batayeh: When the pandemic hit and big businesses started to shut down, we established a protocol and a process for financial hardship requests. We trained all of our property-level managers on how to deal with these requests that may or may not come in—at that point we weren’t sure—with empathy and in a collaborative and a very sensitive manner, so that the residents would come to us rather than hunker down and go radio silent because of fear.
Many of the residents are great people who want to pay their rent, who want to have a good credit rating, who are thinking of the future, want to buy a home someday, things of that nature. So we never had a delinquency problem per se pre- COVID. We also built a system, automated, that would be able to track financial hardship cases and then navigate a property manager through that process, because that was not something that they had ever dealt with, for the most part.
We really debated whether or not we were going to publicize this to the resident base; that was a concern. Did we want to invite everyone proactively, or did we want to wait for the requests to come through? We erred on the side of being respectful and not making the assumption that people would have the issue, but instead to wait to see what occurred.
Inevitably we didn’t get as many people as we thought coming through and making the requests. But once they did, it started with a conversation. We met with that person, obviously virtually, to understand what their sensitivities were, what their situation was, and then we walked them through a process. Because obviously we did have to qualify people and make sure that it was a bona fide request.
And so we started to track financial hardship requests connected to COVID and make sure that there weren’t any bad actors—people who were historically and habitually late—taking advantage of the system. We were able to navigate that very effectively, and we did establish payment plans, people lived up to those payment plans, and we really didn’t see any of them extend past two or three months. And this continued on through August.
Once we saw the termination or expiration of the enhanced/extended unemployment benefits, we were holding our breath, thinking we’re going to have a whole new round of requests. Surprisingly, we haven’t seen much of an uptick. So it’s really sort of balanced and maintained what we’ve seen, and it’s been a very engaged community of renters with our people on site working through whatever hardships they have. And fortunately we’ve seen very high collection rates, and really a handful of cases that have continued on, and we’ve just worked with them.
We’re not taking the position that we’re going to start lining up evictions in the queue and waiting for the starting bell to ring. That’s just not our approach. And this has really worked out well, because we are getting people to pay rent, and not seeing anything other than our typical and ordinary habitual late payers more or less taking advantage of the system at this point. So we’ve been fortunate that way, and that’s how we’ve approached it.
MFE: From your observation of the industry as a whole, do you think other companies are seeing similar behaviors? How can and should the industry prevent an eviction crisis, in your opinion?
Batayeh: In answer to the first part of your question, I do sit on a board, I’m very active in the National Multifamily Housing Council, and we have many other leaders that are fully engaged so we’re comparing notes. I understand what’s going on nationally, and where we’re seeing differences are very much geographic. Far coast cities and states, including California and Oregon, are seeing a higher incidence of non-payment and prior delinquencies and problematic collections.
It also depends upon asset class. We’re seeing workforce housing having a higher incidence [of non-payment] than let’s call it more conventional market rate, higher-end assets. Our portfolio happens to be a combination of Class A, Class B, some affordable housing; we do have some workforce housing, but I wouldn’t say that’s predominantly what we have. So I think that’s the reason we’re having a better experience than maybe others.
How do we prevent an onslaught of evictions? I think we have to continue to deal with all of them empathetically. We really want to work with those residents to preserve their credit standing. And again, unless they’re bad actors, which they’ve been probably from the start, they all want to work with you. They want to preserve their credit, they want to pay their bills, and they’re looking for ways to work collaboratively as opposed to being difficult because of the current governance allowing that. So we really aren’t seeing people in general taking advantage of that.
My advice to anyone would be, continue to work with all of your residents in an empathetic fashion, and help them find solutions as opposed to taking just this hard-line approach. And, if they’re working with you, there’s no reason not to do that.
I will tell you, early on, you probably saw all the press around rent strikes and people trying to build a consensus around that. At the very beginning, we did have a couple of those, where we saw renters organizing and sending around a petition. That happened at two properties. We sat down with the organizers, and we educated them on where their rent goes. The rent pays their bills, basically. It keeps the lights on. It pays for the mortgage. Their perception that landlords and owners are essentially benefiting off your backs and it’s all profit was quickly, I would say, quelled when we explained to them where their rent does go. So giving them that education was helpful. And they all paid their rent after that meeting. So that helped, and I think you did see that early on, but that’s been abated since.
MFE: If a property is struggling, what is the best way to balance keeping the property operating and maintaining empathy toward residents? What are the priorities there?
Batayeh: We’ve absolutely experienced that, and it’s driving efficiencies on the expense side, which is where we’ve seen the balance. We understand in some cases revenue has really compressed, either by virtue of higher vacancy, lower rent growth, that sort of thing. And, for the record, we’re seeing a lot of that happen in the urban core of Chicago and Minneapolis, where people are not staying.
So what we’ve done is focus on the efficiencies we can drive at the site level. For example, how service and maintenance is managed. That can be done in an automated fashion. Taking advantage and leveraging natural procurement platforms to be able to buy things less expensively; pushing the virtual experience with prospects, which has really gotten a lot of traction. That minimizes costs in terms of leasing virtually versus physically renting, and that’s obviously a cheaper cost. That’s just a few examples of how we’re driving efficiencies.
MFE: What do you think is the best way things can move forward in the industry, maintaining empathetic work with residents?
Batayeh: I always liken it to what Village Green has always done, and that’s all about building relationships. Owners, residents, employees—as you build that and you rely upon those relationships, that drives profitability, that drives resident retention, that drives employee engagement and retention. We’re focusing on the silver living that we’ve seen come out of all of this, which is more communication, more engagement, albeit virtual. An interesting thing that happened when we pivoted to virtual tours, we saw rentals go up. And as phone calls came in, people were connecting with those prospects, telephonically, and they were building more relationships, understanding more about that prospect. It wasn’t going through an automated system, it was a live person talking to them. So what we learned was, driving relationships right at the front end and then maintaining them and cultivating them led to more profitability, both at the company enterprise level and at the property level for owners.