Late rent after Hurricane Harvey

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Late rent after Hurricane Harvey

David Hines
Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes

I own properties in the west Houston areas of Katy and Cypress. I've already been notified by one tenant that they may have trouble making the September rent payment due to not working this week at all. None of my properties flooded, but schools are closed and a lot of employers are keeping their employees home all week. What would you recommend I do?

Does anyone in the Carolinas, Florida or New York/ New Jersey area have experience with a similar issue after Matthew or Sandy?

I am inclined to be pretty lenient, the last thing I want to do is initiate an eviction immediately following a natural disaster.

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
9y

When deserving folks let me know they will be late due to not being able to work temporarily I give them a social services list. Community Action, churches, Salvation Army is good for $250 every 12 months, etc. HUD also has emergency one-time programs to help folks keep their housing. My guess is there will be far more avenues of help available because of Harvey.

These services usually need the tenant to receive a 3-day notice to pay or vacate to help.  I let the tenant know I will be giving them one, then purge it from their file when they catch up.  

Kudos to you for offering leniency in this situation @David Hines!

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  • Tom Chen
    Real Estate Investor · Flushing, NY · Member since 2016 · 210 posts · 77 votes
    9y

    I can't speak for anyone else but me, but I would be lenient.

    I didn't have properties during Sandy so I can't actually say for sure what I would do, but I think it's just the right thing to do.

    Maybe a one month leniency?  

    Again, that's just me.  Here in NY, Sandy didn't get cleaned up and people back to work for quite a few weeks.

    3Reply
  • Account Closed
    Las Vegas, NV · Member since 2017 · 32 posts · 18 votes
    9y

    This guy just cant wait to start eviction process.....i can feel it.    This is what s going to happen.  Tenant is one of many who live paycheck to paycheck.  If she doesnt get back to work she she will never be able to catch up.

    I would wait and see what happens.  Observe her employer...and take it from there.

    0Reply
  • David Song
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    9y
    Do not evict, if the tenant has been a good previously. You might lose in court.
    4Reply
  • Debra Grumbach
    Frisco, TX · Member since 2017 · 201 posts · 95 votes
    9y

    It's possible the tenant can apply for federal aid as their income has been affected by the hurricane. I'm sure your mortgage still needs to be paid. Not to sound too callous but any property not damaged is going to be going for a premium very soon. Do what you want but I wouldn't necessarily dismiss the notion of eviction.

    2Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    9y

    When deserving folks let me know they will be late due to not being able to work temporarily I give them a social services list. Community Action, churches, Salvation Army is good for $250 every 12 months, etc. HUD also has emergency one-time programs to help folks keep their housing. My guess is there will be far more avenues of help available because of Harvey.

    These services usually need the tenant to receive a 3-day notice to pay or vacate to help.  I let the tenant know I will be giving them one, then purge it from their file when they catch up.  

    Kudos to you for offering leniency in this situation @David Hines!

    10Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y
    Originally posted by @David Song:

    Do not evict, if the tenant has been a good previously.

    You might lose in court.

     So if a tenant pays early for 60 consecutive months and is late on month 61....the landlord might lose ?  You are absolutely incorrect!! The first 60 months do not apply. 

    Your statement would never apply in any Texas jurisdiction 

    Not that I am advocating an eviction in light of the current situation in H Town

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    being that I am the worlds worst land lord. IE its not uncommon for me to have my tenants miss 1 to 7 months of rent before I even look to see if they paid  :(  and when they call with an upset I always cave.. Ergo I am selling all my units.. like those in the North east that I had and real cold winters I would let them go a few months without paying so they could heat the house  etc etc.

    So if it was me given this event I would probably give them 60 days at least.. I would re write the lease to 24 more months and then spread the 60 days  over those 24 months.. 

    I was wondering how this would all work out there are going to be people out of work for extended amount of time and as we know most renters miss one week of work and they are broke.

    My other big thing I am wondering @Greg H. is how the lenders are going to handle the owners who get wiped out have no insurance and walk away from the property.. knowing how aggressive Texas lenders can be with deficiency judgments on mortgage defaults.. I am wondering if UNCLE is going to do something like they did in the GFC were they restricted lenders from taking defaults from owner occ..

    Then I wonder what happens to the investor who lost 10 homes.. what happens to him and then he or she gets sued.

    this has all sorts of very serious repercussions short of just should I let a tenant slide one week because of the largest natural disaster to ever hit the US>>

    I think it boils down to investors with money and reserves probably will work with folks.. investors who are mortgaged to the hilt this could be something that really hurts them and they will have no choice but to be hard @$$ non caring landlords regardless of cirucumstances.. and then you just have the plane old greedy could give a crap landlords. sorry for your troubles you owe money..

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Steve Vaughan  one thing for certain once people understand how safe it is to own rentals in East Wenatchee there is going to be a huge run.. no forest fires maybe a grass fire and of course some blowing dust and sand.. but other than that one of the safest places to be for any kind of negative weather events. 

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  • Account Closed
    Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @David Hines     I might be a little more careful than @Greg H..  I would not attempt to evict a tenant in the next 30 days.  It is simply not worth it.  A judge could simply say...  "Due to natural disaster and in order to insure due process, I find good cause to delay the hearing for six months in order to give the tenant appropriate time to gather proof of payment."

    That could happen before you ever get to court or the judge could simply instruct the clerk to set them that far out.

    Don't forget in Texas, JPs are often not lawyers and are ELECTED.

    3Reply
  • Bart H.
    Dallas, TX · Member since 2016 · 1k+ posts · 745 votes
    9y

    I might try to help them find work, or give them cash for keys to move if you think they cant keep up.  Because my guess is if you have rentals in good condition, the rent values will spike.

    1Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    @Account Closed

    We as a nation are definately in uncharted waters with this tragedy.  Hundreds of thousands displaced without rental inventory to absorb them and tens of thousands of homeowners without flood insurance.  With oil drilling ticking up, the skilled construction worker type will be choosing whether to work in the oil fields or rebuilding Houston.  No way there is enough labor to meet the demand

    Prayers to the BP members that were displaced as well as the BP investors that were wiped out.  Fortunately, the 2 rentals I own in the Beaumont area are on higher ground.  I do have a flip in Louisiana that sits a little low that could have issues but the lot is probably worth what I paid for it

    0Reply
  • Scott Mclaren
    Investor · Gilbert, AZ · Member since 2015 · 96 posts · 46 votes
    9y

    Have the tenants apply to FEMA for grant money. FEMA has lots of money to hand out to people after these natural disasters. Work with the tenant and if the lease is close to ending you most likely will be able to get a higher rent on renewal and they will get higher FEMA assistance payments. I worked with rentals after Katrina and it was FEMA rent payments for a couple years

    2Reply
  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    Honestly they told you UP Front already they were going to only pay partial rent.. I'd accept let them know you understand, you'll wave late fee for September, ask how much they can pay.. if it's at least 50 to 60% I'd say Ok and  your next payment will be on XXX date. and find out how soon they expect to return to work.. You have their sec dep it's worth working with them on a not more than behind 1/2 months rent to keep them. 

    The are victims of this tragedy and are up front worried about their housing trying to keep a roof over their heads and all they want is to work with you on making a payment.

    You at any time can do a eviction but like others said the whole system down there is going to be overloaded.. calls to assistance social networks are going to be flooded with people seeking assistance and that takes time to get  approved.. Encourage them to apply Yes,, but work with them in this situation,, is a Yes also..

    Your patience and understand is all they are requesting,, not to get out of paying the bill....

    Good luck I'm sure you'll help them out and do the right thing ,, 

    6Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @David Hines I lived thru the 3 hurricanes in 2004 in Orlando, they were all two weeks apart. What hell we loved thru!!!!!!

    If our home had damage, we contacted Insurance and owners were compensated for loss of rent, but not sure you could do the same because they could not work?? You are in a really difficult place. I know the weathers are now receding, so hopefully everything can get back to some sort of normalcy. Be patient. If they are good reliable tenants, they will get caught back up

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  • Alex J.
    Investor · Tarzana CA and Houston, TX · Member since 2015 · 326 posts · 130 votes
    9y

    Im giving my tenants one week grace period 

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    9y
    During Sandy there was rental assistance received by one of my family members but sorry don't know the details. I think it was federal. It was due to job /income loss. I wouldn't do late fee but would make clear rent would be owed and see what you work out there for timeline. Explain you may still need to issue notices so that they qualify for assistance. The town website may list available programs. You still need to meet expenses so if this isn't temporary you unfortunately will need to take action.
    1Reply
  • Tom Chen
    Real Estate Investor · Flushing, NY · Member since 2016 · 210 posts · 77 votes
    9y

    @Account Closed, are your tenants in the flooded areas?  Those that are affected will not even be able to get back into their apartments for at least another 2 or 3 weeks with the overflow of sewage and raw pollution. 

    2Reply
  • Kevin Wood
    Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    9y

    @David Hines We are working with each tenant individually given their situation. We have 44 units under management. In general we are going with a 10 day grace period for right now. We're focusing right now on contracting work and repairing people's homes. We had one house flood and just a bit of roof dmg on some others. So our priorities are as follows:

    1) Make sure everyone is safe
    2) Find out which tenant's are displaced and how we can help
    3) Repo out the damaged house/s and follow proper protocol to prevent mold (see article on my website)
    4) Doing contracting work for other folks 
    5) Collecting rents for month with a 10 day grace period and working one on one with dramatically impacted tenants (sounds like just 1 or 2 for us)

    0Reply
  • Alex J.
    Investor · Tarzana CA and Houston, TX · Member since 2015 · 326 posts · 130 votes
    9y
    Originally posted by @Tom Chen:

    @Account Closed, are your tenants in the flooded areas?  Those that are affected will not even be able to get back into their apartments for at least another 2 or 3 weeks with the overflow of sewage and raw pollution. 

    No major flooding.  Just water in backyard and front yard.   they are ok thank God.

    I did a walk thru of the unit yesterday and took them some bug spray trash bags case of water and sprays to just give a helping hand.  I also reimbursed them for anything they paid out of pocket for cleaning themselves.  They are good tenants and we all just went thru a tragedy so if they need help I am working with them.  One paid the rent on the spot and thanked me the other asked if they can pay it next week and I said yes

    1Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    9y

    I know this is a business, but have a little compassion.... this is a once in a lifetime (hopefully) tragedy.....epic destruction and chaos...people's lives destroyed....everything they own lost. I can only imagine the emotional state of the people that are going through this...... even the people that didn't get flooded are dealing with a lot..... do I still have a job? Is the business I work for going to fold? how do my kids go to school? water and food shortages, public transport etc etc etc....have some compassion and make some temporary concessions on being a strong businessman and landlord.

    I would basically give them a one time "get out of jail free" card for late payment.... make it perfectly 1000% clear that this is a one time deal due to extreme circumstances...don't try and push it or there will be an eviction started.

    If they have been a good tenant and have had the respect to give you the "heads up" that they were going to have an issue paying on time, that counts for something with me....

    I know this is business and when you give an inch, tenants will often continue to push the envelope and take a mile...if they see you are "soft" they will exploit it.....but this is an extraordinary situation that just doesn't fit the rules.......

    3Reply
  • David Zheng
    Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    I think I would have trouble renting to people who live on month to month paychecks in the first place.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    9y

    @David Hines 

    - Rent was due yesterday. Hourly employees usually get paid for previous periods of work. Let's assume today is their pay day. The check probably covers through last Saturday or Sunday. Not guaranteed, but my guess is they are getting a full check. 

    - After hurricane Katrina squatters were a major problem. People lost their homes and got relocated to hotels or rental properties temporarily. Government money paid the bill for several months, then it stopped. People refused to leave. Evictions were difficult because the courts had sympathy. Lesson learned, taking compassion on people can result in them taking advantage of you. 

    - This tenant can probably get emergency money to pay rent. Most of the country has been donating money and the federal government will write a blank check. If you don't get paid, it is not due to lack of money available. 

    - I would ask for more details. What is your pay day? What period of work does that pay you for? When do you go back to work? When do you get paid next? Do you have transportation to get to work? Work out a payment plan to get back on track. If you want to be compassionate, agree to waive any late fees provided they stick with the new payment plan. Put the plan in writing and have them sign it. Work with them, but only under your strict supervision. Don't leave it open to, "we will catch up when we have extra money". Your tenant is living paycheck to paycheck so there is never any catching up.

    If you cannot get them back on track, then follow the eviction process. If the social system doesn't like it, then they can help find rent assistance for them.

    0Reply
  • Wade Rustici
    Investor · Lee's Summit, MO · Member since 2017 · 31 posts · 7 votes
    9y

    I agree with you Steve Vaughan, and also Jay Hinrichs, that is a very good method to move forward in one of these situations, 

    leniency is key, in this business, but there is a live between that and being taken advantage of. give them a time frame to get caught up and give them some social services resources to help the situation, I'm sure you will be glad you did.

    2Reply
  • Wade Rustici
    Investor · Lee's Summit, MO · Member since 2017 · 31 posts · 7 votes
    9y

    Your conscience will be glad you did as well.

    0Reply
  • Olivia Jones
    Gulfport, MS · Member since 2017 · 48 posts · 17 votes
    9y

    I'm not a landlord-yet, but don't do it!  Thankfully your properties did not flood.   People in Texas are in a state of shock!   The renters may not only be having trouble with the rent-they don't know yet if they have a job!!  I waited several weeks after Katrina to find out my employer was closing!   If they have to leave/relocate you will recover quickly.  

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