I was a little worried a month and a half ago when this all started going down. I thought, “Oh, man. What if rent doesn’t come in?!”
Then we were at like 96% rent collected for April—about where we would normally be.
My personal investments were 100%. My mobile home park fund? We’re at almost 100.
Because of this, I feel a lot more confident now than I did a month and a half ago. But even then, we had a pretty solid plan in place.
This Is Why I Don’t Fear Not Getting Rent
Just because “tenants don’t have to pay rent because you can’t enforce that right now”—because the government’s basically saying you can’t evict—eventually they still owe that money.
And so, even dumb tenants are going to realize that they’re going to owe that money eventually, and they’re never going to able to come up with it.
Why would they suddenly have five times that much five months from now? That is not going to happen.
So they all realize that yes, they can play that game if they wanted to, but they’re not going to.
Now, some people just literally could not afford it. Like if they really lost their job, they couldn’t afford it.
Well, thankfully, the government stepped in (or maybe not thankfully, depending on how you look at it). They threw $2.5 trillion at people to help with that. That’s going to help a lot for the short-term.
This Is When I Would Start to Worry
Now, if this goes on for the next year and people are out of work for a year, we’ve got some serious problems and discussions to have.
But if that happens, we’re looking at a complete meltdown of the entire American financial system. And something will happen whether or not every single solitary person goes bankrupt in the country, or they do a reset, or they change the laws or whatever. Something will happen.
I’m not worried about that because they can’t let the entire world meltdown. They’re not going to. At some point, laws will change or people will figure things out.
So anyway, we’ve had a solid plan in place. And if people really couldn’t pay, we would put them on a payment plan—like a 12-month or 10-month payment plan.
You didn’t pay your $500 rent? OK. We’re going to spread it out over the next 10 months, and you pay $50 extra each month. Then at the end of the year, we’re all good. Not a big deal.
And so again, I don’t invest in real estate for a week or for a month. I invest in real estate for the next 10 years. So 10, 20 years down the road, when I look back and go, “I remember that weird time where we had rent that was delayed by a year, and we had to spread it out for 10 percent of our client tenants. Yeah, that was weird.”
But it hasn’t really been that crazy for me as a landlord (yet!).
What has your experience been so far?
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.