Two decades ago and with $400 in her pocket, Giselle Cevini moved from her native Argentina to Dallas and finally to Los Angeles. There, she took jobs as a house cleaner, babysitter and fast food worker while studying to become a medical sonographer and dreaming of one day buying a home.
By 2009, she had saved up enough to close on a $150,000 two-bedroom condo in Whittier, California, which she turned into a rental property after buying a second home.
The condo became a needed financial support when Cevini and her husband explored the costly process of surrogacy as they pursued another dream: having a child.
“Some people put the money in a 401K — I put the money in this property,” she said. “I always thought it was going to be my retirement.”
Instead, the 900-square-foot home has become a major liability. Cevini’s tenants owe more than $30,000 in rent stretching back to just before the pandemic took hold, she said. By the time she contacted a lawyer to start the eviction process, county, state and federal moratoriums slammed that door. Her tenants — who did not respond to multiple requests for comment — have not paid since, she said.
The sweeping protections and rent relief programs enacted during the Covid outbreak have helped prevent a wave of evictions and misery for tenants. But they have also contributed to a less visible crisis: economically insecure small landlords struggling to earn a living and avoid mortgage default after losing months of income.
“I don’t think legislators understand this side of the coin,” said Irma Vargas of RST & Associates, an L.A. property management firm that works with mom-and-pop owners. “They all think landlords are these fat cats that can withstand, and they can’t … We are already seeing property owners who will never be property owners again.”
Government aid programs have provided only partial help. In the city of Los Angeles, home to some 2.3 million renters, about 113,000 landlords and tenants had applied for government emergency aid as of July, housing data shows.
Those landlords said they were owed $530 million in back rent but have received only about $28 million. And in L.A. County, more than 31,000 households had applied for $350 million in rent relief as of July 21. Of those, 6,000 had received $85 million in assistance, an average of around $14,000.
But even those figures likely represent only a fraction of the need. Many tenants — and landlords — are still unaware of the assistance programs or how to apply, said Vincent Reina, associate professor of city planning at the University of Pennsylvania. And while most renters have been trying to pay what they owe, some owners and property managers said they have also been dealing with tenants who owe thousands of dollars and simply packed up and left.
“I think landlords are willing to work with their tenants, because we all went through hard times over the last 18 months,” says Rick Albert, a Lamerica Real Estate broker in L.A. who runs a Facebook group for nearly 300 small property owners. But he said the pandemic has also removed tenant accountability, forcing him to nearly double the deposit on the accessory dwelling unit he rents out in the San Fernando Valley.
“It became, for lack of a better term, like the Wild West,” he said.
And in the longer term, the events of the past 18 months may only make L.A.’s unaffordable residential market more out of reach to small owners, Vargas said.
“Is this what we want?” she said. “People to become tenants only?”
Everything on the line
In February 2020, just as L.A. was notching its earliest coronavirus cases, it overtook San Francisco as the country’s least affordable housing market.
Angelenos who earned the area’s median income could afford to buy just 11 percent of available homes. The white-hot residential market — which has seen sales and prices soar during the pandemic — has pushed more people into renting. Those tenants are also among the country’s most cost-burdened: A 2019 survey by the University of Southern California found that half of 800 L.A. County renter households spent at least 50 percent of their income on rent.
That also meant small landlords were vulnerable. “For some owners, particularly small owners, this is not a new [problem],” Reina said. “It’s just amplified.”
In March, Reina co-published a survey of 1,300 L.A. landlords whose tenants had applied to the city’s emergency rental subsidy program. Small owners — defined in the survey as those with five or fewer units — reported the most intense need.
About 550 landlords surveyed said that by July 2020, at least 40 percent of tenants across their rental portfolios were behind on payments. Nearly a third of the owners also said that under those conditions, their businesses could continue operating for a maximum of three months.
The federal government, California and L.A. have passed measures providing assistance to small landlords during the pandemic. In May 2020, the city used $100 million from Washington to pay landlords directly for back rent owed. Officials have also sought to change the narrative that portrays landlords as villains.
“This notion that every landlord is greedy or a corporate landlord is nonsense,” Gov. Gavin Newsom said in July in Bell Gardens, an L.A. County city with a median household income of around $42,000. There, he detailed California’s $5.2 billion low-income tenant relief fund, the country’s largest.
“A majority of landlords in this community are small landlords that pay their own mortgages, and they put everything on the line,” Newsom said.
In June, County Supervisor Holly Mitchell had emphasized the housing “tightrope” shared by renters and mom-and-pop owners, who she said “tend to be the landlords with the strongest relationship to their tenants and provide fair rent increases to sustain their property.” But she also voted with the Board of Supervisors to extend the county’s eviction moratorium for another three months.
Fury and frustration
Several small L.A. County landlords said they have looked on aghast as legislators passed tenant-centered protections, particularly a provision that allows renters to declare, without verification, their inability to pay.
Most of the owners contacted for this story refused to speak on the record or even directly, fearing the fallout. Instead, several communicated through property managers.
They have also fought back. Last summer, dozens of small L.A. property owners — and some who traveled from the Bay Area — gathered for a series of protests. Carrying American flags and signs — one declaring rent control “bad for tenants,” another branding State Assembly member Ed Chau a “homeless creator” — they marched outside legislators’ homes, blocking traffic and attracting a police presence.
“If you’re taking the position that this is an emergency … then the governor is supposed to step in and cover those expenses,” said Cheryl Turner, president of the Apartment Association of Greater Los Angeles, who attended the protests. She added, “It’s not supposed to be borne on the backs of one particular group.”
The association also sued the city to halt the eviction ban. That effort failed.
L.A.’s ban lasts through Sept. 30, while the CDC’s new moratorium runs through Oct. 3, providing no immediate relief to landlords. Of the roughly 3,200 units that property manager RST oversees, tenants in about 220 units — 7 percent — are not paying rent, Vargas said.
While that number has shrunk since the early days of the pandemic, the nonpayers owe $20,000 to $30,000 on average, a significant amount for a small landlord.
Vargas said she gets calls every day from desperate owners. Recently, one of her clients, who is single and works at a bank, made the grueling decision to list her Central L.A. fourplex. She had bought the property partly to provide housing for her mother, who lived in one of the units, but soon fell behind on her mortgage when one tenant stopped paying last year and another moved out.
Another owner, an elderly widow, is even more desperate. Vargas said tenants owe the woman — who lives off of her property income and has a dependent adult daughter — more than $120,000 in back rent.
“She’s calling me like, ‘What can I do! What can I do!’” Vargas said.
For Cevini, who blames her tenants in Whittier and government indifference for her months of despair, an August eviction hearing looms.
“I’m really into a big depression,” she said. “I feel like they are not only stealing my property — they are destroying my dreams, my life.”