Updated about 5 years ago on . Most recent reply
Tenants not paying should I close it this week
I am looking to close an apartment building that has 20 units this week. At this point the as per the owner 8 units haven’t paid rents for the last 2 months. The rent for the other units is also atleast $200 below market rent but the worry is with unending COVID situation I might not be able to raise rents or do evictions. What happens if the evictions only open in 2021 ? Will we be ever able to recover the rents ?
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When you underwrote the deal; what was the economic occupancy? Did you have any COVID provisions in the PSA about rent collection? The below market rents is great but it will not help you with collections with your current tenants. You have to expect that before evictions restart you will have 1/2 of your building not paying. Are you able to float the building for another year with just half of the tenants paying? Are you getting a great deal on the building? Evictions are not the only way of moving tenants out. If you close, you can start offering tenants cash for keys. Ask the tenants for the amount that they need to move out and leave the unit clean within 7 days. I bet for several thousand dollars you can move most of those tenants out. You will not receive any back rent. It is better to get them out ASAP.