Times are changing and what landlords need to know about rent and eviction moratoriums regarding the coronavirus is too.
This is a very fast, ever-changing situation. This is affecting people worldwide—not only with local jobs but also with international jobs that may trickle down. The rippling effect will be astronomical.
If this continues at the rate that it’s going, you want to make sure that you are checking with your state and local government to see what is going on in your specific area. Just because the government says they are doing something does not mean that locally it will be the same.
The Impact of Coronavirus on Landlords and Tenants
What you’ve got to understand is that this is something that will affect not only jobs, it’s also going to affect the stock market and people’s ability to pay their rent. And because of that, you’ve got to make sure that you have some policies and procedures in place for a situation like this should it ever happen again.
Cash Reserves and Lines of Credit
There will be people who are affected by this financially, and it could be catastrophic. If you do not have the right cash reserves set up, I recommend that you start making sure that you have the ability to shore up some cash, and you are looking at ways to get your credit up. If you are able to get credit lines, this is the time to start doing that.
I know for a fact that there are more people who have created wealth during these economic times in the past than ever before. You want to make sure that you’re educated, and you know what you’re doing. Because then when the opportunity arises, you want to be able to take action and have the necessary funds to:
- Purchase property
- Sell property
- Change strategies (maybe from flipping or wholesaling to buy and hold)
What the Government Is Doing
Understand that the moratoriums that are going on right now are something that is ever-changing. The government is trying to stop all evictions, as well as all foreclosures.
In my opinion, that is fair for both sides because what is happening is unprecedented. Nobody knows what the end result is going to be.
What You Can Do
The only thing you can control is your own financial situation/position. That is why it is imperative to make sure you carefully consider and map out your strategy.
Now, one thing I will tell you, the last thing you want to do base any decisions on fear and emotion. Nothing good ever comes from kneejerk reactions because of things that you’re hearing on the news. You can only control what you know, and you can only control the situation that is right in front of you.
However many properties that you have, how can you make sure that you keep the cash flow coming in?
Or what’s your exit strategy? You’ve got to make sure that you create multiple exit strategies right now, so that if you do have to get out of a deal, you can.
Now, getting out of the deal could mean that you’re going to buy and hold it. It could mean that you’re going to flip it. It could mean that you’re not going to even buy the deal or not close on a deal. And again, it just depends on the situation that’s going on.
If you own property or were planning to buy in a town that you think will experience a lot of layoffs because of the coronavirus, this is something to consider. People may not be able to pay their rent.
The Bottom Line
So, again, it’s just something you want to think about. Think logically, not emotionally.
What you thought was a really good deal a week ago is totally different than what it is today. And it’s going to keep changing.
You’ve got to make sure that you create a solid baseline to ensure that when you are looking at a deal, you have the reserves in there. You could be sitting on a three- to four-month period of someone not being able to pay the rent—and you not being able to evict them.
You may want to start talking with family members. I would suggest you start talking with credit card companies. I would suggest you start talking with friends. Anyone who could possibly loan you money, should you need it.
Just because you have the ability to get the money doesn’t mean you need the money. It just means that you have the ability to get it. And that’s what’s important right now—should everything go bad, you are able to protect yourself.
How are you re-strategizing during these unprecedented times?
Share in a comment below.