As the coronavirus crisis stresses almost every facet of American life, we’re featuring the stories of people who are struggling to stay afloat, finding unexpected financial opportunities or simply changing the way they’re thinking about money, the economy and our country’s social safety net. To do that, we need your help — we want to hear how the coronavirus crisis is affecting you economically. Please share your experience with us.
The way Ricardo Concepcion sees it, April 1 should have been one of the happiest days of his life.
About six weeks earlier, he and his wife had closed on a multifamily home in New Jersey. It was an “American dream” sort of milestone for the 40-year-old, who had once been homeless but would now own a home for the very first time. The $450,000 price tag was a bit daunting, but Concepcion — a real estate agent — planned to rent out the part of the house he wasn’t living in to make his mortgage more affordable. Some tenants already lived on the second floor, though he hoped to rent the second and third floors as a single unit.
But on the first of April, the day Concepcion tried to move in, he found a problem at the front door of the house he and his wife had just bought: A man and his adult daughter said they lived on the first floor.
“It’s Day 1, my wife and two young daughters are about to come over, and I’m on the phone with the police, who have to come and hash out a squatter’s rights situation.” Concepcion said he broke down during the ordeal and asked his brother to come by to help calm him down. When the dust settled, though, the police essentially told Concepcion to hand over a key to the man and woman. Because of the pandemic, the state suspended evictions and foreclosures back in March.
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Concepcion doesn’t want the man and his daughter on the street — if anyone is sensitive to that possibility, he says, it’s him. But he’s worried about falling behind on his brand-new mortgage — one he intended to pay for mostly by leasing out the second and third floors at a market rate. “I actually had someone lined up to rent the place, but then I had to give the unit up to this guy,” he said.
Concepcion’s situation points to a somewhat prickly issue amid the coronavirus outbreak: Landlords are often seen as multimillionaires who can weather financial storms because they own so much property. But the reality is that about half the rental properties in the U.S. belong to landlords who own no more than 10 properties, and many of those 8 million individual landlords rely on the nominal rent they collect.
Over time, Concepcion has developed a good relationship with the man and his daughter. They were initially subletting a master bedroom and walk-in closet from previous renters for $600 a month,1 but now for the time being, they are living on the entire third floor — with two bedrooms, two baths and a finished kitchen — for that amount. Concepcion doesn’t blame them for the situation, and he appreciates that they pay what they can. (Concepcion said the man has done handiwork at the home since he can’t afford the full rent.)
“I share my wireless with him,” Concepcion said. “We’re at a good place now.”
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Still, because of Concepcion’s financial reality, he’s almost certain to serve his “tenant” with a 60-day vacate order once New Jersey state courts reopen. Concepcion had already taken that approach with the second-floor tenants, but for a different reason: The home is legally listed as a two-family home, meaning he can be fined if he rents out the second and third floors separately. (The second-floor renters — who have also seen their employment affected by COVID-19 — aren’t in a position to afford the full apartment.)2
So, in a nutshell, Concepcion now owns a home with two tenants, both of whom he’s been forced to rent to for less than the going rate, which will put more financial pressure on him and his wife once their three-month period of mortgage forbearance expires.3 (The monthly mortgage on the home is a little less than $3,500. Concepcion says he would be getting $650 more per month if he had tenants paying market rate.)
Concepcion received a $1,200 stimulus payment but isn’t eligible for unemployment. In different circumstances, he would be a bit better insulated from a shortfall here or there. He got his real estate license late last year, and for extra money, he has driven part-time for Uber and rented a second car out to someone who also drives for the ride-sharing company. But all those sources of income have fallen away: He’s held only one property showing over the past few months, and Uber ridership is down considerably, with fewer people needing transportation and drivers feeling unsafe being exposed to countless passengers in their cars. Because of that dwindling market, the person renting Concepcion’s car can’t fully afford the weekly fee.
Rather than reclaim the car, Concepcion simply agreed to lower the man’s payments. “The better of the two evils is for me to just come out of pocket a few hundred bucks a month instead of paying an entire note on the vehicle and the entire commercial insurance for it,” he said.
The last month and a half has been a whirlwind for Concepcion. More than anything, he’s stunned by the irony of his situation. For much of his life, he had been forced to move frequently for reasons beyond his control. His parents were incarcerated during parts of his childhood, so he and his brother bounced from place to place. “When my mom would get out of jail, we would stay with her,” Concepcion said. “But we would get evicted every other year. That was kind of the pattern of our life. We were hood famous, because we lived on so many blocks.”
While he and his wife thought they were taking full control of their situation by buying a house, they’ve had almost no say in who is living in their new home so far. And, because of the financial strain, they haven’t been able to fully embrace the happiness they thought home ownership would bring them.
Still, Concepcion has faith that things will work out. Though he has repeatedly second-guessed himself on the timing of all this, he thinks about how, if he and his wife had waited to purchase the home, the virus and its impact on the markets would have drained much of the 401(k) money that they used for their down payment.
“Had I not done this when I did, I probably wouldn’t have qualified for the house,” Concepcion said. “I honestly think things are going to be good for us once everything clears up. The pandemic is the only reason we aren’t feeling that life-changing feeling yet.”