Tenant Impacted by Government Shutdown
Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes
Tenant Impacted by Government Shutdown
Most Popular Reply
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7yI am in a similar situation , with a great tenant , a young man in the coast guard . I told him to write me a check and I will hold it . I will do it again at the end of this month . When he gets paid I will deposit . Plus I have the check .
Sure he should have saved money . But I was 24 years old once . I support the military .
52 Replies
- Investor · New York City, NY · Member since 2017 · 173 posts · 36 votes7y
Hello Jerome,
Tell us, how many units do you have in total?, where in Hawaii is this a small/big city. The reality is, the rent is one of if not his most important bills he has to pay. Its up to you to decide, he can easily put off his other bills, and tell them what he's telling you. Does the tenant pay for electricity water etc... More info please, thanks
- Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes7y
Well your tenant should have had money saved back . Sorry.. I’m glad he’s serving and all but you have a business to run . Is he really that bad with money that he’s totally destitute if he misses just one paycheck . Did he have money for his car alcohol cigarettes Netflix cellphone . Why are you just shrugging your shoulders over this and ready to lose out ? Almost if people on here are reconsidering the future of renting to federal employees after the shutdown .
- Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes7y
Originally posted by @Account Closed:
Hello Jerome,
Tell us, how many units do you have in total?, where in Hawaii is this a small/big city. The reality is, the rent is one of if not his most important bills he has to pay. Its up to you to decide, he can easily put off his other bills, and tell them what he's telling you. Does the tenant pay for electricity water etc... More info please, thanks
This is one of three units on the property. The town is a suburb of Honolulu, so small town beach town feel but big city options (for Hawaii standards). Rent includes utilities.
- Investor · New York City, NY · Member since 2017 · 173 posts · 36 votes7y
Originally posted by @Jerome Keizer:
Originally posted by @Account Closed:
Hello Jerome,
Tell us, how many units do you have in total?, where in Hawaii is this a small/big city. The reality is, the rent is one of if not his most important bills he has to pay. Its up to you to decide, he can easily put off his other bills, and tell them what he's telling you. Does the tenant pay for electricity water etc... More info please, thanks
This is one of three units on the property. The town is a suburb of Honolulu, so small town beach town feel but big city options (for Hawaii standards). Rent includes utilities.
No deal, rent includes utilities, you are under no obligation to give him a break. You do not run a charity, and if he needs help paying rent(which should not be for much longer, shut down will end eventually), let him figure that out. Do you work with a management company, does the home have a mortgage.
Respectfully, honestly explain you have bills to pay as well, tell him you also have a mortgage(even if it doesn't) and the bank doesn't cut you a break.
- Irvine, CA · Member since 2016 · 545 posts · 614 votes7y
@Jerome Keizer there was a similar post that got a lot of rrsponses on both sides of the fence, some saying start the late fees, then eventually the eviction process like you would do with any other tenant, then others posted that since it's already approved that all the Fed's will get back-pay, you'll be wasting your time and money, especially if the shutdown ends in a couple of weeks.
The unknown is will this end in a few weeks or a few months, what do you do if it's a few months, Are you willing to cover the cost at that point?
If it's a great tenant personally I'd wait it out.
I saw a financial news segment discussing that all the big banks, Wells Fargo, Bank of America, USAA, etc... are all holding off on collecting mortgage payments, credit card payments, personal loans, etc... for up to 3 months and not charging any late fees or reporting any negative hits to the credit bureaus if you're a Fed and being affected by the shutdown.
While we're not big banks, they have the same mindset that I do, it's cheaper, less time consuming, and in the interest of the long-term relationship to work with the customer. If it were a job where the tenant wasn't guaranteed the back pay that would be a different story.
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes7y
I am in a similar situation , with a great tenant , a young man in the coast guard . I told him to write me a check and I will hold it . I will do it again at the end of this month . When he gets paid I will deposit . Plus I have the check .
Sure he should have saved money . But I was 24 years old once . I support the military .
- Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes7y
Originally posted by @Ray Johnson:
@Jerome Keizer there was a similar post that got a lot of rrsponses on both sides of the fence, some saying start the late fees, then eventually the eviction process like you would do with any other tenant, then others posted that since it's already approved that all the Fed's will get back-pay, you'll be wasting your time and money, especially if the shutdown ends in a couple of weeks.
The unknown is will this end in a few weeks or a few months, what do you do if it's a few months, Are you willing to cover the cost at that point?
If it's a great tenant personally I'd wait it out.
I saw a financial news segment discussing that all the big banks, Wells Fargo, Bank of America, USAA, etc... are all holding off on collecting mortgage payments, credit card payments, personal loans, etc... for up to 3 months and not charging any late fees or reporting any negative hits to the credit bureaus if you're a Fed and being affected by the shutdown.
While we're not big banks, they have the same mindset that I do, it's cheaper, less time consuming, and in the interest of the long-term relationship to work with the customer. If it were a job where the tenant wasn't guaranteed the back pay that would be a different story.
Thanks for your input and perspective. Do you remember the name of the previous post on this subject? I've been looking for former posts, but everything has been related to section 8 late payments.
- Rental Property Investor · Member since 2018 · 483 posts · 956 votes7y
Originally posted by @Jerome Keizer:
Context:
I have a single tenant in Hawaii who is in the National Guard and has been impacted by the government shutdown. The tenant has been a great tenant, and has paid in full and on time since moving into the unit. The tenant is active duty, so is currently working but not receiving a paycheck, however, back pay is expected once the shutdown is over. The tenant has contacted me to discuss how to handle the next rent payment if the shutdown is not resolved by February 1st. I have funds available to cover the mortgage and expenses for the foreseeable future.
Objective:
With all that said, I want to work with the tenant to come up with an amicable solution with the obviously difficult situation they are experiencing. I want to make sure I protect myself so that I get any lost rent once the back pay is distributed.
Question:
Does anyone have some advice on how to handle this unique situation respectfully and professionally?
Thanks in advance!
Military pay is under the defense department buget. Military pay has not stopped. Is he a unit technician ie a federal employee?
- Irvine, CA · Member since 2016 · 545 posts · 614 votes7y
@Dennis M. I'm definitely not reconsidering renting to Fed's, I have several properties in Washington, DC. and currently have tenants with DOJ, State Department, and DHS, I like the fact that the tenants always pay on time to protect their Clearances and credit score.
I will add that these are Class A, and Class B assets so these aren't rented to the low earning $45k-$55k a year Fed, they're all GS-13 and up in DC doing their HQ time for management so usually 3-5 years. The DHS tenant paid January and I haven't heard anything about not being able to pay February. They are all also dual income households and the spouses/partners aren't Fed's.
- Rental Property Investor · Evansville, IN · Member since 2018 · 32 posts · 27 votes7y
So this may be an oversight but the National Guard falls under Department Of Defense. I am also an Active Guardsman and Department of Defense has a budget and we are being paid. The only Military Branch affected is the Coast Guard who falls under Department of Homeland Security.
I know others have said this is a business, but part of running a business is keeping turnover rates down. Evicting will cost you more than late rent. You should still charge late rent fees but if the tenant is in the Coast Guard I would just explain in writing that due to the government shut down rent will still be late but no eviction will be started until ten days after an agreement is reached. It should take about ten days for pay to be submitted.
Side note for all of the hard core business minded individuals. Coast Guard men and woman are under Contract and cannot just quit and find another job. They can be charged and jailed for this. Should they have money saved? Sure, but 10% of their wages over a year will not cover most rents. And the tide can be turned on you also saying shouldn't you have enough in reserve to cover your vacancy?
Just my two cents!
- Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes7y
Originally posted by @Ray Johnson:
@Dennis M. I'm definitely not reconsidering renting to Fed's, I have several properties in Washington, DC. and currently have tenants with DOJ, State Department, and DHS, I like the fact that the tenants always pay on time to protect their Clearances and credit score.
I will add that these are Class A, and Class B assets so these aren't rented to the low earning $45k-$55k a year Fed, they're all GS-13 and up in DC doing their HQ time for management so usually 3-5 years. The DHS tenant paid January and I haven't heard anything about not being able to pay February. They are all also dual income households and the spouses/partners aren't Fed's.
That’s all fine and nice but having great federal tenants in an A class neighborhood with a white picket fence who can’t afford to pay you rent doesn’t really help lol
- Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes7y
Originally posted by @Shaune L Clark II:
So this may be an oversight but the National Guard falls under Department Of Defense. I am also an Active Guardsman and Department of Defense has a budget and we are being paid. The only Military Branch affected is the Coast Guard who falls under Department of Homeland Security.
I know others have said this is a business, but part of running a business is keeping turnover rates down. Evicting will cost you more than late rent. You should still charge late rent fees but if the tenant is in the Coast Guard I would just explain in writing that due to the government shut down rent will still be late but no eviction will be started until ten days after an agreement is reached. It should take about ten days for pay to be submitted.
Side note for all of the hard core business minded individuals. Coast Guard men and woman are under Contract and cannot just quit and find another job. They can be charged and jailed for this. Should they have money saved? Sure, but 10% of their wages over a year will not cover most rents. And the tide can be turned on you also saying shouldn't you have enough in reserve to cover your vacancy?
Just my two cents!
Thanks for catching my mistake. You are correct, this particular tenant is in the Coast Guard not the National Guard.
- Irvine, CA · Member since 2016 · 545 posts · 614 votes7y
@Shaune L Clark II Well said!
- Morgantown, WV · Member since 2017 · 22 posts · 19 votes7y@Jerome Keizer For what it’s worth I am a big supporter of our military. Personally, knowing that back pay is coming and tenant is of good quality, I’d wait it out. Our military is what makes this country great. The biggest reasons we have the freedoms that we often take for granted.
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes7y
I think holding the checks is the way to go.
I would love to be in eviction court when someone serves a coast guard serviceman. I live in a coastal community, I would expect serious blow back from the town, residents and services. Not to mention the local press and social media.
It is very very easy to be a fire starter.
- Investor · Portland, OR · Member since 2015 · 6 posts · 2 votes7y
@Jerome Keizer usaa is offering 0% loans for federal employees at the moment maybe this info would be helpful.
- Rental Property Investor · Stillwater, OK · Member since 2016 · 6 posts · 0 votes7y
@Jerome Keizer USAA has already pledge to give those effected by the shutdown their normal monthly checks. You could refer the tenants to USAA and they may be able to help.
- Winston-Salem, NC · Member since 2018 · 29 posts · 25 votes7y
Having been in a military family my whole life I can say it's not always so easy to have reserve money, nor do the young ones typically think about such things. Something I heard on one of the podcasts: treat your tenants like royalty. IMO if you have the reserves available to cover it, let it slide and go for the check holding until they get their back pay. You may be taking a risk but for good tenant relations and not to be seen as the dirtbag evicting a federal employee during their time of need it's worth it.
- Real Estate Agent · Falls Church · Member since 2012 · 2k+ posts · 1k+ votes7y
@Jerome Keizer just wanted to put in my 2 cents on the title of the thread. They were not impacted by the shutdown. They were impacted by living paycheck to paycheck.
- Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes7y
Thank you all for your input. I appreciate the honest and frank comments. There's much wisdom to be gained from other's experiences and knowledge.
- Rental Property Investor · Honolulu, HI · Member since 2015 · 143 posts · 61 votes7y
Originally posted by @Shaune L Clark II:
So this may be an oversight but the National Guard falls under Department Of Defense. I am also an Active Guardsman and Department of Defense has a budget and we are being paid. The only Military Branch affected is the Coast Guard who falls under Department of Homeland Security.
I know others have said this is a business, but part of running a business is keeping turnover rates down. Evicting will cost you more than late rent. You should still charge late rent fees but if the tenant is in the Coast Guard I would just explain in writing that due to the government shut down rent will still be late but no eviction will be started until ten days after an agreement is reached. It should take about ten days for pay to be submitted.
Side note for all of the hard core business minded individuals. Coast Guard men and woman are under Contract and cannot just quit and find another job. They can be charged and jailed for this. Should they have money saved? Sure, but 10% of their wages over a year will not cover most rents. And the tide can be turned on you also saying shouldn't you have enough in reserve to cover your vacancy?
Just my two cents!
My man.
- 7yJennifer T.Pro MemberInvestor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
Does the tenant have any other income or someone else living in the house? Like a p/t job or side-gig. Or could they get one. Just saying, I would be a lot more amenable to helping my tenant by waiting it out if they could at least be paying something.
I might be having this discussion next month, though I hope for all our sakes I won't. I have a great S8 tenant, but S8 pays 100% of her rent. I don't even mind waiting a month or two for my money, but what if there is still no end in sight. I'm assuming it will all be resolved before it gets to that point, but I'm not necessarily counting on it.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Jerome Keizer:
Context:
I have a single tenant in Hawaii who is in the National Guard and has been impacted by the government shutdown. The tenant has been a great tenant, and has paid in full and on time since moving into the unit. The tenant is active duty, so is currently working but not receiving a paycheck, however, back pay is expected once the shutdown is over. The tenant has contacted me to discuss how to handle the next rent payment if the shutdown is not resolved by February 1st. I have funds available to cover the mortgage and expenses for the foreseeable future.
Objective:
With all that said, I want to work with the tenant to come up with an amicable solution with the obviously difficult situation they are experiencing. I want to make sure I protect myself so that I get any lost rent once the back pay is distributed.
Question:
Does anyone have some advice on how to handle this unique situation respectfully and professionally?
Thanks in advance!
I'd evict him if he doesn't pay. There is no working with anyone who doesn't pay the rent. They either pay or they don't. The tenant's problems are not your problems unless you allow them to be your problems. My opinion is that he should budget better & you've got a business to run.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Matthew Paul:
I am in a similar situation , with a great tenant , a young man in the coast guard . I told him to write me a check and I will hold it . I will do it again at the end of this month . When he gets paid I will deposit . Plus I have the check .
Sure he should have saved money . But I was 24 years old once . I support the military .
here I am working hard starting our charity aheroshome.org so we can give away a home to a deserving first responder veteran.
and on the other side you have folks. for me I take the stance if your landlord and cannot afford to get rent for a month or two through what is a situation that was or Is unforeseen and your tenant is not causing it.. then your an under capitalized landlord .. so there is the counter point to all these people that say evict the tenant.. I mean come on have heart.
- Member since 2016 · 13k+ posts · 12k+ votes7y
Your best option is to cover your butt. Talk to your tenant and explain to him the facts of life. First ask how much of his rent he can pay, if he has money some/most should be going to you. You are not a pay day loan office. Next explain that it is not personal but you must collect late fees as you would with any tenant and second you must begin the eviction process to protect yourself. Tell him you will start and then put the eviction on hold until he is paid. The day he is paid he is required to pay all back rent owed and will pay full rent owed on the first of the month after that. Anything less and you proceed with the eviction.
The reason this is the best approach is because many of those feds not getting paid will dig themselves in a deep financial hole and will not be able to recover when they are paid back wages. The first person they will choose to stiff is the landlord that has been so understanding. Some, possibly many landlords, are in for a big disappointment. Begin the eviction process only as a pre-emptive approach to protecting your business, be up front with your tenant by making your expectations crystal clear now.
A indivulaes career choice is irrelevant, never show favoritism to any tenant for any reason. Knowing your tenant will be paid does not guarantee you will be paid. Hope is only another word for delayed disappointment.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.