Tenant Impacted by Government Shutdown
Rental Property Investor · Colorado Springs, CO · Member since 2017 · 6 posts · 3 votes
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 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 .
I'm with Thomas.....I'd explain to him that I am going to proceed exactly the same as any other non-paying tenant...doesn't mean I'm going to carry out a full eviction but I will have everything in place if this doesn't work out.
Just because he will get back pay doesn't guarantee you are first in line to get that $$...unless eviction is right at his front door ready to knock.
If this was a blue collar guy who's company was struggling to pay him, how would you handle it?....not my problem. But he's military, so I'll cut him some slack, but not enough to be a pushover.
The thing that strikes me the most....all the Trump supporters that are cheering that we have the best economy EVER.....best EVER...lowest unemployment....highest GDP ....blah blah blah..... but fail to open their eyes to see that a HUGE portion of our country cant afford to miss ONE or TWO paychecks...have ONE small financial setback without being on the verge of economic ruin....cant pay rent...cant eat..... etc etc..... so how is the economy the BEST EVER? Its the best ever for the ones that already have tons of $$.....like Trump and all his
post reported.
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.
James , I have to agree with you 99% , those in the lower ranks of any service , make very little , they get stipends for off base housing . They take these jobs because the pay is steady and the benefits are good . Him not getting paid is not his fault ,he is still working . One political party can end this quickly . I have had 3 great tenants from the Coast Guard . If I were to evict him , I would never get a military tenant again . ( word travels) . Its that last 1% . In my case he is writing checks , I am holding them . Having a bad check is much better than no payment at all
@Dennis M. The National guard members' , average salary is about $45,000 a year (or about ($3750 a month) before taxes . HI is one of the most expensive places to live. Groceries typically 3-4 times the cost of the mainland, about $4 a gallon for gas and rent for a typical 900 sq foot apartment in say Honolulu could cost $2300 a month. That leaves almost no room for savings (even without the "alcohol, cigarettes, Netflix" you assume he partakes in).
https://www.expatistan.com/cost-of-living/honolulu
@Jerome, if he has been a consistent, on-time payer and you can afford to defer the payment a month or so, get the agreement in writing set a maximum flex you'll allow.
Full disclosure: I am also a Fed employee working and not getting paid and I was grateful for the compassion and flexibility my lending institutions showed me.
Well I guess I got my post reported because I mentioned the President name....my apologies
So here is the "acceptable" part of my original post...
I'm with Thomas.....I'd explain to him that I am going to proceed exactly the same as any other non-paying tenant...doesn't mean I'm going to carry out a full eviction but I will have everything in place if this doesn't work out.
Just because he will get back pay doesn't guarantee you are first in line to get that $$...unless eviction is right at his front door ready to knock.
If this was a blue collar guy who's company was struggling to pay him, how would you handle it?....not my problem. But he's military, so I'll cut him some slack, but not enough to be a pushover
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.
James , I have to agree with you 99% , those in the lower ranks of any service , make very little , they get stipends for off base housing . They take these jobs because the pay is steady and the benefits are good . Him not getting paid is not his fault ,he is still working . One political party can end this quickly . I have had 3 great tenants from the Coast Guard . If I were to evict him , I would never get a military tenant again . ( word travels) . Its that last 1% . In my case he is writing checks , I am holding them . Having a bad check is much better than no payment at all
The govt shutdown is no better & no worse of a reason for non payment than any other reason. Sick, lost job, divorce, death in the family etc...None of it has any relevance to me as a landlord.
It's the tenant's problem, not the landlord's. The tenant can make accommodations such as putting the rent on a credit card or taking out a loan. Makes no business sense for a landlord to step in & involve themselves in the tenant's life.
How many tenants who live in homes owned by govt employees are willing to pay triple rent to help the landlord get through these times? None, nor should anyone expect them to.
@James Wise From some of the pic yu have posted in in previous discussions , and from some of your videos I have seen on line on a different venue . I am gathering that you do a lot in lower income / rougher areas ( correct me if i am wrong) . In that position you do have to stand hard on your policy , or it can affect the rest of your business . On the other hand I am dealing in a suburb with a class b property and a tenant with a high 700 credit score , perfect payment record and beautifully maintained property . My risk is minimal ( you start bouncing checks in the military you can lose clearances)
This young man cant get another job , he is still working for the CG . He is applying to USAA for loan .
I was 23 years ago , bought a house , sat in front of the bank manager and explained to him why I was a good risk ( I was on the line qualifying ) . This old man gave me a lecture , an education and a loan . He took a slight risk on me . Sometimes I have to go with my gut , this tenant is worth the risk .
( I went back to the same banker 3 more times for loans and since I was self employed he made sure I got them based on past performance )
For those of you not willing to help a Coast Guardsmen, sure hope your boat never capsizes.
@Matthew Paul I was 24 too and I had plenty saved. Living paycheck to paycheck is a choice. Shouldn’t come at your cost. He can get a loan if needs to.
What? Living pay check to pay check is often not a choice & no he can't get a loan if he needs to. He doesn't have an income coming in? How many banks are cool with overlooking it. You typically turn in 2 months most recent pay stubs. They also know he owes a lot of people money now. I was very close to being in that situation the last one we had. I was low ranking too. What does that come with? Finance ruined my paycheck changing it from Texas to HI. I was get 13 dollar paychecks. 13! I didn't get back paid entitlements because I was told they're under no obligation to outside of my base pay....which was 1900. I ended up being kicked out of my hotel also due to a big military event and they needed room for foreign military. I literally had nowhere to go for an entire day and no money. I closed out my 401k to pull out money. Oh no. My supervisor told me my shoes look dirty and are "unprofessional". Looks like I need to drop another 200 dollars. I have an inspection coming up and need new ribbon racks, rank insignas and gear. There goes 80 minimum. My top ripped during training. 65. My knees on my pants are dirty from mandatory exercises. 49 for one pair. There was always a reason I had to buy gear. Always. I need to move my family and don't have a government travel card. I'm now doing my deployment training. I have to pay for my own food and have no access to even a microwave. Which means groceries are doubled. I'm overpaying for dried snacks to last me and my family has their own shopping to do. I just moved to a new home through TMO. Movers damaged my bed and furniture. Tmo only gave me 400 to reimburse damage. These are just a few scenarios and there are so many. Does happen to everyone? Probably not. Life does happen though. My biased 2 cents are that his paycheck is being withheld from him not through his own fault. Don't waste money on an eviction and go through the whole process. If he is a great tenant, you'll be missing out on top of vacancy on top of someone else coming in and not taking care of your investment.
@James Wise From some of the pic yu have posted in in previous discussions , and from some of your videos I have seen on line on a different venue . I am gathering that you do a lot in lower income / rougher areas ( correct me if i am wrong) . In that position you do have to stand hard on your policy , or it can affect the rest of your business . On the other hand I am dealing in a suburb with a class b property and a tenant with a high 700 credit score , perfect payment record and beautifully maintained property . My risk is minimal ( you start bouncing checks in the military you can lose clearances)
This young man cant get another job , he is still working for the CG . He is applying to USAA for loan .
I was 23 years ago , bought a house , sat in front of the bank manager and explained to him why I was a good risk ( I was on the line qualifying ) . This old man gave me a lecture , an education and a loan . He took a slight risk on me . Sometimes I have to go with my gut , this tenant is worth the risk .
( I went back to the same banker 3 more times for loans and since I was self employed he made sure I got them based on past performance )
You & I are going to have to personally disagree on how we would handle this topic. Which is fine. You've been a landlord for 20+ years, know the risks & have every right to take educated risks like this. You don't need to take advice from me.
However it's important for the other investors out there who come here & read content from experienced investors to learn the biz that what Matthew is doing is an educated risk. Property Management is a lot like Poker. If I am dealt pocket aces & he is dealt pocket 2's it's very possible that once the river comes out he's got the better hand than I do. Anything can go well 1 time, doesn't change the fact that in the grand scheme of things pocket 2's are the inferior hand & one has a higher mathematical probability of loosing that hand than winning it. Same thing here. If you are a new investor that mathematically correct move is to evict 100% of the time. The govt shutdown is no different than any other reason for the tenant not paying rent.
I am not sure why so many who would normally move to evict a tenant are getting on their soap box about this guy. We're having discussions about his personal situation like "he can't get another job b/c he still works for the coast guard." Why the hell are we doing that? That is NOT what we are supposed to be doing as landlords. On top of that I don't even agree with that point. Coast Guard dudes can't drive Uber in their off hours? Him not paying his rent is a choice, plain & simple. I was working 3 jobs when I started my real estate business. Millions of Americans work multiple jobs every day. He's got a finite amount of resources & as a landlord it is our job to ensure that the tenants know we come 1st. If we do not make them aware that we come 1st they will use their limited resources to pay other expenses 1st & we will be left holding the bag.
"Living pay check to pay check is often not a choice"
Wrong. Pay check to paycheck is absolutely a life style choice. If you can not save money after you have received a couple of your first pay checks in life you are living beyond your means. That is a personal choice. Everything else is nothing more than excuses.
@James Wise Agreed .
@James Wise stepping back for a moment from this "specific" instance, any business owner must assess the cost of going forward with an eviction of a coast guard member. In my community it would create enormous bad will. I would expect that the judge would deny my application, ripped me a new one and forever be tainted in any future application. I would expect to be front and center in the local newspaper and probably national ones as well. Social media- absolutely. This would have repercussions which you cannot even quantify. I would fully expect the good will that I have developed with the police, many veterans, would be destroyed. After the papers ran the stories I am sure the Dept of Community Affairs would want to reinspect my properties, as well as the town. And my kids- well we know that attacking the is fair game now.
As a veteran I will not even get into the lunacy of expecting a service member to get off of the cutter he has manned for the last watch patrolling NY harbor and expect him to sit in a car in the hopes of picking up an extra $20 before going back out, sleepless for another tour of duty.
Again. it is very, very, easy to start fires.
@James Wise stepping back for a moment from this "specific" instance, any business owner must assess the cost of going forward with an eviction of a coast guard member. In my community it would create enormous bad will. I would expect that the judge would deny my application, ripped me a new one and forever be tainted in any future application. I would expect to be front and center in the local newspaper and probably national ones as well. Social media- absolutely. This would have repercussions which you cannot even quantify. I would fully expect the good will that I have developed with the police, many veterans, would be destroyed. After the papers ran the stories I am sure the Dept of Community Affairs would want to reinspect my properties, as well as the town. And my kids- well we know that attacking the is fair game now.
As a veteran I will not even get into the lunacy of expecting a service member to get off of the cutter he has manned for the last watch patrolling NY harbor and expect him to sit in a car in the hopes of picking up an extra $20 before going back out, sleepless for another tour of duty.
Again. it is very, very, easy to start fires.
I evict roughly 100 people per year. I am sure a decent number of them have been service members... No disrespect to service members, I thank them for their service & have & still do employ several service members or veterans but their service & the business of property management are not related. The sky is falling story you just described simply isn't realistic. It doesn't go down like that in the real world at all. You cannot operate your business out of fear. Giving away free rent is no different then Outback Steakhouse giving away a free dinner or your local auto dealer giving out a free truck. Nobody expects you to give away your product for free.
You should never operated your business out of fear, especially us, but you must always assess risk.
In my opinion this would result in a tremendous amount of blow back, as I previously eluded to. I imagine that after this unsuccessful attempt at eviction, bad blood, bureaucratic targeting and threats to family you would be left with one thing: A bullet proof tenant which would change the control dynamic.
@James Wise, when I was speaking to this "specific" instance it was talking about this particular tenant. I was not speaking in the context of no shutdown. I would fully expect service members to be evicted when in violation of their lease- as all would, under normal circumstances. Under the current circumstances I would expect proceeding with an eviction on a coastguard member would result in my "sky is falling" version of events.
@James Wise stepping back for a moment from this "specific" instance, any business owner must assess the cost of going forward with an eviction of a coast guard member. In my community it would create enormous bad will. I would expect that the judge would deny my application, ripped me a new one and forever be tainted in any future application. I would expect to be front and center in the local newspaper and probably national ones as well. Social media- absolutely. This would have repercussions which you cannot even quantify. I would fully expect the good will that I have developed with the police, many veterans, would be destroyed. After the papers ran the stories I am sure the Dept of Community Affairs would want to reinspect my properties, as well as the town. And my kids- well we know that attacking the is fair game now.
As a veteran I will not even get into the lunacy of expecting a service member to get off of the cutter he has manned for the last watch patrolling NY harbor and expect him to sit in a car in the hopes of picking up an extra $20 before going back out, sleepless for another tour of duty.
Again. it is very, very, easy to start fires.
I agree with your assessment. The first rule of business is you have to understand your market. The second rule is you have to figure out how to meet your customers' needs profitably. If you fail to do so, you become a motivated seller and your rental will be advertised as "under new management."
In the ideal world, tenants and landlords have ample reserves to handle any disruption. But as author Rita Mae Brown observed back in the 1980s: If the world were a logical place, men would ride side saddle.
You should never operated your business out of fear, especially us, but you must always assess risk.
In my opinion this would result in a tremendous amount of blow back, as I previously eluded to. I imagine that after this unsuccessful attempt at eviction, bad blood, bureaucratic targeting and threats to family you would be left with one thing: A bullet proof tenant which would change the control dynamic.
Speaking from experience having dealt with several hundred evictions your assessment of risk & blow back is wildly overstated & really just flat out incorrect.
@James Wise did you evict a coast guard member during politically charged government shutdown? Do you really think this would not be seized upon by the press and many others? They are champing at the bit for a story like this.
I just watched a kids life get turned upside down because some jackass chaperones didn't do proper risk assessment. He was wearing a hat and had a smile on his face.... no really, I kid you not. His school had to be closed because of bomb threats.
@James Wise did you evict a coast guard member during politically charged government shutdown? Do you really think this would not be seized upon by the press and many others? They are champing at the bit for a story like this.
I just watched a kids life get turned upside down because some jackass chaperones didn't do proper risk assessment. He was wearing a hat and had a smile on his face.... no really, I kid you not. His school had to be closed because of bomb threats.
Yes I really think that this would not be seized by the press. You are waaaaay overthinking this my man. I've had tenants with some sob story or another who were being evicted call the news many times. They don't pick up junk like that. Most recently we had a sick tenant (cancer) try to pull this. No dice. If you ask me that's a story that'd tug more heart strings than some able bodied Coast Guard who can simply put his rent on a credit card & or drive an Uber or deliver some pizzas. You don't think he's gonna stop eating or watching TV during the Govt shutdown do you?
"Living pay check to pay check is often not a choice"
Wrong. Pay check to paycheck is absolutely a life style choice. If you can not save money after you have received a couple of your first pay checks in life you are living beyond your means. That is a personal choice. Everything else is nothing more than excuses.
Wow. Very wrong. However hashing it out on a forum will take the focus off of the main subjects and I do apologize. I'm confident I'm seeing it from both sides. However this particular instance I feel is murky because it's not a man who chose a mustang over a old versa or someone whose martial status changed, lost his job, etc. It's a temporary hold on his paycheck. Only 35 days in. At the end of the day there are a ton of variables but I think it's too soon. However it doesn't matter anymore because everyone might be getting paid so all is good for another 3 weeks.
It is definitely a fine line between helping people and enabling people. And if you are in a small town or have multi family you can run risk of those you help telling others and them expecting it too. Then if you don't help them you get accused of being partial and them saying its because one is one race and they are another.