Enough Money, Credit No Good
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Enough Money, Credit No Good

Renters struggle with average rent, but landlords lose at market rate.

This is the second article in a series examining the crisis of affordable housing in Fairfax County and Mount Vernon District.

Jackie Betts came to Good Shepherd Housing because she was desperate. In 2002 she had left her hometown of Paterson, NJ and the apartment she had lived in for 35 years because her son and daughter-in-law asked her to care for their children while they were at work. Her son was in the Army, and she moved with his family when he was transferred from a post in Hawaii to Fort Belvoir three years ago. But when he was transferred back to Hawaii this spring, Betts decided she would stay in the area. Her daughter, a special education teacher and counselor, was moving to Fairfax with her 3 year old son, and the two decided they would live together so Betts could look after her grandson.

In 2004, the family had tried living off-post in Mount Vernon, but after one year of expensive rent on Woodward Avenue, they had returned to the post’s comfortable military housing. After her son’s transfer, Betts would have to find a new home.

“[We thought] maybe we could find a house, an affordable house,” Betts recalled. “But that was just a dream idea.”

That spring, Betts’ daughter, who has a bachelor’s degree, was earning a little less than $20,000 a year from her job at an alternative school. Betts has an associate’s degree, but cannot work full-time because of a medical condition.

“We’d been all up and down Richmond Highway,” Betts explained. For months, they scanned the classifieds and explored apartment complexes. They stopped the car whenever they spotted a prospect.

“She got so good,” Betts said of her daughter, “she could be riding 40, 50 miles per hour and see that For Rent sign.”

They were hoping for a two-bedroom apartment. But the minimum price they could find was $1,400 a month. The $1,100 rent on most one-bedroom apartments in the area was little better.

But Betts and her daughter never even got the opportunity to try and make these daunting numbers work. The area’s high rent could only become an issue if their rental application was accepted, and Betts’ and her daughter had a poor credit history.

“Time after time we were getting denied because of bad credit,” Betts explained.

With each evening they returned home from another fruitless day spent searching for an apartment, Betts, her daughter and her grandson were one day closer to waking up homeless. They were propelled forward by the hope of spotting the elusive For Rent sign that would mark a place they could afford. But a sense of futility rose with the knowledge that even if they beat the odds and found the perfect apartment a credit check would scuttle their all their hope. This was when Betts showed up at Good Shepherd.

“I was a wreck when I came in here,” she said. “I can’t remember ever having felt that way. It’s almost a sense of hopelessness. You get desperate.”

GOOD SHEPHERD HOUSING specializes in helping families with enough income but bad credit. “It’s a population that doesn’t instantly come to mind. But it is a population in need,” said Good Shepherd’s Executive Director, Shannon Steene.

All of the 70 tenants that it helps house “have the resources to pay for their own housing,” Steene said. “Nobody gives them the opportunity.”

Good Shepherd deals in opportunity. It does not pay rent. To qualify for a two-bedroom apartment, its’ most common housing option, a client must earn at least $27,600 per year to pay the market rate. Good Shepherd’s programs provide the credit guarantees that allow a family to move into a home and offer ongoing social support structures that help keep families stable.

“The majority of people we help have a poor credit history,” Steene said. “Credit is one of those things that’s so easy to foul up and so difficult to correct.”

But when Betts came to Good Shepherd, she learned her family’s income was too low to qualify for its housing assistance. She was able to join its women’s support group however.

Good Shepherd employee Kari Warren said the group was created because people that have to worry about shelter find it nearly impossible to engage effectively with less fundamental aspects of the needs hierarchy.

“It just starts collapsing on people and they can’t focus on the big picture,” Warren explained.

Betts and her daughter finally found a home in April, four days before they had to leave their old home. When they first found the $820 a month apartment at Mallard Court on Blankenship Road, they altered their strategy. “We might as well just let them know up front we’re not going to pass a credit check,” Betts recalled telling their daughter.

Their application was accepted.

Betts sleeps in the den of the one bedroom apartment. Betts’ daughter sleeps with her son in the bedroom.

“It’s cozy enough,” Betts said.

Her daughter was given a raise after they moved in, and now the family’s budget can stretch each month to cover utilities and food, but they have not been able to start saving.

“Yet,” said Betts.

“IT’S TIGHT,” said Steene of the finances for families earning less than $30,000 a year in Fairfax. “But they’re hard working … and they capitalize on the opportunity.”

The $1,100 to $1,500 rents that Betts encountered along Route 1 are standard market rates in Fairfax. For the county’s average rent of $1,157 to be 1/3 of a person’s income (the standard calculation for how much should be paid for housing), a family must earn $41,652 a year. This is unrealistic for many families in Mount Vernon District. According to the 2000 Census, 1/3 of Mount Vernon’s 35,000 households earn less than $40,000 a year.

Good Shepherd Housing was founded in 1983. It currently owns 16 condominiums on Route 1 and leases the rest to house 70 tenants.

Out of the $1.3 million Good Shepherd paid for its housing program last year, $800,000 came from the tenants themselves in the form of rent. The remaining $500,000 came from donations and a contract with Fairfax County.

The housing economics in Mount Vernon have created a situation in which it costs half a million dollars to keep 70 people in apartments they are paying for every month.

Phil Rosenthal understands this. As the chairman of Fairfax’s Community Action Advisory Board, which reports to the Board of Supervisors about the situation for low income people in the county, Rosenthal knows how hard it is to make the numbers work when you are earning a low wage. But he did not agree to an interview to discuss the plight of the poor. He wanted to talk about the economics of being a landlord.

The market rates for rental properties in Fairfax are unaffordable for many of its residents. But these rates are actually unaffordable for many landlords as well.

Rosenthal currently owns ten rental properties, two of which are leased by Good Shepherd, the rest he rents out for-profit. He suggested that rising land values, and the mortgages and real estate taxes that accompany them, mean that a landlord renting out a one bedroom apartment at the market rate is usually losing several hundred dollars on the property each month.

To demonstrate, he cited a scenario in which an aspiring landlord buys a small, one bedroom condominium on Edsall Road for $200,000. He pays ten percent in cash and takes on a 30 year mortgage for $180,000 at 6 æ percent interest. The mortgage payment will be about $1,000 a month. The condo complex charges a $200 monthly fee. Property taxes add an additional $200 per month.

The hypothetical one bedroom apartment costs $1,400 a month, at least two hundred dollars above the market rate.

“If you and I chose to buy that [apartment] it would be a matter of, ‘How much each month do you and I want to throw into that to rent it?’” Rosenthal said. “There’s no way we can buy that house[and] even begin to cover our payment.”

Is it possible that the economics of renting an apartment in Fairfax will ever produce a situation in which there is a range of apartments affordable to all the county’s residents?

The answer, said Rosenthal, is an “almost unequivocal no.”

“It’s almost impossible to put your money down and rent [a house] at market value for what you’re putting into it.”

“It’s just an insurmountable problem,” he said. “The numbers just don’t add up.”