Collections in workforce multifamily have become harder since the pandemic - not because tenants cannot find housing elsewhere, but because the policy environment created conditions that made not paying rent a rational choice for some. Massachusetts state assistance programs made back rent available without a hardship requirement. That dynamic, combined with real affordability pressure from inflation and job losses in the service and manufacturing sectors, has produced more legal cases for operators like Arrowpoint Properties than at any point before 2020. And yet the Merrimack Valley portfolio runs at 98% occupancy. Both things are true at the same time.
Key Takeaways
- The pandemic created a collections dynamic that has not fully unwound. Various subsidies were put in place during COVID and they stuck. Arrowpoint is still navigating the after-effects.
- State assistance programs removed the hardship requirement. Massachusetts made back rent available to tenants without requiring them to demonstrate genuine inability to pay. That changed the incentive structure around rent collection in ways that persist today.
- Real affordability pressure exists alongside the policy dynamic. Inflation, energy costs, and job losses in the service and manufacturing sectors have made it genuinely harder for some workforce tenants to meet rent. The two causes - policy and economics - are distinct but run together.
- Legal cases have increased. Arrowpoint had not experienced meaningful collections-driven legal volume before the pandemic. That has changed. Navigating through it is now a regular part of operations.
- The Merrimack Valley portfolio holds at 98% occupancy anyway. Demand in the Valley is structural. Vacancy in the core markets is low, new supply is not coming, and tenants who leave are replaced. The collections friction does not translate into an occupancy problem.
- The outlook is bullish. With little new supply in the pipeline and demand expected to increase over the next two to three years, the underlying market position is strong.
Dave Lamattina has been operating workforce multifamily in the Merrimack Valley through multiple cycles. He was active through the financial crisis, through the COVID period, and through the post-pandemic environment that followed.
The collections dynamic described here is one he is managing in real time across a portfolio of approximately 850 units. The 98% occupancy figure is the current operating result on the Merrimack Valley smaller-building portfolio - part of Arrowpoint's broader Class B/C operations.
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What the Pandemic Changed - and What Stuck
Before 2020, collections were not a significant operational challenge for Arrowpoint. Tenants paid. Legal cases were rare. The model worked the way it was supposed to.
The pandemic disrupted that. Eviction moratoriums suspended the normal enforcement mechanism that landlords rely on to maintain collections discipline. State and federal assistance programs put money into the hands of tenants to cover rent - which, in principle, was the right response to a genuine economic emergency. But the programs were structured loosely. Massachusetts made assistance available without requiring tenants to demonstrate actual hardship. Back rent could be covered by the state whether or not the tenant lacked the ability to pay it themselves.
The consequence was predictable once you see it: for some tenants, not paying rent became a rational economic decision. The state would eventually cover it. The enforcement mechanism was suspended. The cost of non-payment dropped to near zero for a period.
The moratoriums ended. The emergency framing faded. But the habits and expectations that formed during that period did not fully reset. Arrowpoint is still managing the after-effects. Legal cases are up. The process of navigating non-payment - notices, filings, court dates, timelines - consumes more operational bandwidth than it did before 2020.
The Real Affordability Problem Underneath
Alongside the policy dynamic sits a genuine economic one. Inflation pushed up the cost of everything that workforce tenants spend money on - energy, food, transportation. Wages in the service and manufacturing sectors did not keep pace. The result is that household budgets in the Merrimack Valley tenant base have become tighter, and some of that tightness has translated into difficulty making rent.
Job losses have compounded this. Arrowpoint has seen an increase in employment disruption among its tenant base over the past year or so, concentrated in service industry, manufacturing, and similar workforce positions - the kinds of jobs that make up the employment base in Lawrence, Methuen, and Haverhill. These are not white-collar layoffs with severance and extended runways. A warehouse job gone is rent in jeopardy within a month or two.
Some of the turnover Arrowpoint sees is not collections-driven at all. Some tenants – not many – leave because they buy homes. That has been a factor in the Valley market as well, and it is worth distinguishing from the harder collections situations. A tenant who leaves to purchase a home is a vacancy to fill, not a legal matter to resolve. The two look similar in an occupancy report but are very different operationally.
The fact is that both things are real - the policy-created dynamic where some tenants did not pay because the system made it easy not to, and the economic reality where some tenants genuinely could not. Arrowpoint is navigating both.
Why Occupancy Holds at 98% Anyway
The collections environment is more difficult. Legal cases are up. And the Merrimack Valley portfolio sits at 98% occupied with collections that Dave describes as really good overall. Those facts are not in conflict - they reflect different factors about the market.
Occupancy reflects demand. And demand in the Merrimack Valley is structural. The core markets - Lawrence, Methuen, Haverhill - have very low vacancy rates. New supply is not coming: the land is limited, regulatory approvals take years and sometimes do not come at all, and construction costs at current levels make workforce-rent projects economically impossible to build without subsidy. The pipeline is essentially empty.
That supply constraint means tenants who leave, for whatever reason, get replaced. The pool of people looking for workforce housing in the Valley consistently exceeds the available units. An operator who manages the property well - maintains curb appeal, responds to maintenance, prices renewals sensibly - does not struggle to fill vacancies in this market. The demand is there.
Collections reflect a different question: of the tenants who are in place, how many are paying on time and in full? That number has become harder to maintain. But it has not produced a vacancy problem, because the underlying demand absorbs any unit that does come available.
The two metrics measure different things, and both matter. Occupancy tells you whether people want to live in your building. Collections tell you whether those people are paying for it. Right now in the Merrimack Valley, the answer to the first question is clearly yes. The second is where the work is.
The Outlook: Demand Increasing Into a Constrained Market
Dave is unambiguously bullish on the Merrimack Valley going forward. The supply constraint is not resolving - if anything, it is deepening. Cost to build, regulatory friction, and limited land combine to make new workforce housing supply structurally unlikely at any scale. At the same time, the population and employment drivers that bring people to the region - the Boston metro employment base, healthcare, education, manufacturing - remain intact.
The expectation is that demand increases over the next two to three years as the recent supply additions from 2023 and 2024 get absorbed and nothing material replaces them. For a landlord already operating at 98% in that market, that trajectory is favorable.
Massachusetts carries real policy risk - rent control has been proposed and has gone to a ballot vote, and the state's regulatory posture toward landlords is not friendly. Dave acknowledges that some investors avoid blue states entirely. His response is that the demand fundamentals in the Valley outweigh the policy headwinds, and that 22 years of operating here across multiple cycles is the evidence. Massachusetts is not New York City. The market has worked through difficult policy environments before.
For context on the supply constraint that underpins the Valley's demand story, see The $212,000 Problem. For the broader investment thesis, see the Merrimack Valley Investment Thesis.
Frequently Asked Questions
How has Arrowpoint's collections process changed since the pandemic?
Legal cases have increased. Before 2020, collections-driven legal action was rare in the Arrowpoint portfolio. It is now a regular operational matter. The process involves notices, court filings, and court dates that consume time and money that was not budgeted in the pre-pandemic operating model. Arrowpoint navigates it as part of standard operations now, but it represents a real increase in friction that has not gone away as the pandemic receded.
Does the collections difficulty affect distributions to investors?
Collections are described as being good overall on the Merrimack Valley portfolio despite the increased legal volume. The 98% occupancy means that even when individual units require legal resolution, the portfolio as a whole continues to perform well. Arrowpoint has never missed distributions on its Merrimack Valley deals, and the friction has not risen to the level of a cash flow problem at the portfolio level - consistent with a 26-deal record of no capital loss.
Are workforce tenants in the Merrimack Valley uniquely vulnerable to economic disruption?
Workforce tenants in service, manufacturing, and related industries do not have the income stability or savings buffers that higher-earning renters carry. A job loss creates a rent problem within weeks, not months. That vulnerability is not new - it is inherent to the tenant profile in workforce housing markets. What changed post-pandemic is that the policy environment created an additional pathway to non-payment that did not previously exist. Both the structural vulnerability and the policy-created incentive are now operating at the same time.
Why is new supply so constrained in the Merrimack Valley?
Three factors combine. Land is limited - the Valley does not have the open acreage that sunbelt markets offer. Regulatory approval is slow and uncertain - a project can take years to work through permitting and still not get through. And construction costs at current levels make it economically impossible to build workforce housing and charge workforce rents without subsidy. The result is that virtually no new supply is coming into the markets where Arrowpoint operates, which is the single most important factor supporting the 98% occupancy figure - the supply gap detailed in The $212,000 Problem.
For an overview of how Arrowpoint underwrites deals in the current environment, see Class B/C Multifamily Operations. For information on investing alongside Arrowpoint in the Merrimack Valley, see How to Invest in Real Estate Syndications.
David Lamattina
President & CEO
About Dave Lamattina
Dave Lamattina is the founder and CEO of Arrowpoint Properties, a vertically integrated multifamily owner-operator based in Lawrence, Massachusetts. He has been acquiring and operating multifamily assets in the Merrimack Valley for over 22 years, with 1,100+ units acquired and exited and a current portfolio of approximately 850 units valued at around $230 million. Arrowpoint has completed 26 syndications with an average net IRR of 32% and a 2.50x equity multiple.
