Why is Rent still due during COVID-19?

No, compared to the vast majority of sane Americans. You know, the kind that don't want to pay $3500 rent for a 1000 square foot flat and have to dodge homeless people, feces and raw sewage to get to their front door.

Gary

1 Reply

Brandon ChidesterPro Member

Member since 2018 · 12 posts · 19 votes

6y

Interesting points! I have a differing outlook I'd like to share.

In 2019 I worked for investor and collected $21,000 in back rent for his business. I will share the information that made this possible.

Tenant Vs. Landlord Mindset Having the approach of “well you should have been saving, have reserves, made better choices, you have to pay your bills” etc.... is too late in the game. We are not suddenly going to change the mindset of a tenant. There is a reason (stemming from life choices) why some individuals are meant to be landlords and others are meant to be tenants.

Fighting Fire with Fire Attempting to justify & lecture why paying rent is the right thing to do and not paying is the wrong decision is just going to frustrate your tenant further. Some tenants may think of you as a greedy politician, and if you start lecturing now, they certainty wont pay.

Here is your best shot at collecting! Anyone familiar with Chris Voss? Never Split the Difference is his book on negotiation. What will get you the furthest with your tenants and collecting payment is:

1. Let them be heard, let them give their story, and sympathize with them. Be genuine! You may find yourself saying "Wow, that has got to be frustrating" "Sounds like it's been a tough month, huh?"

2. Get them to say "that's right" if your tenant feels understood, they wont argue your side. They just want to feel understood for the bad position they are in.

3. They will only listen to you Once they feel heard, now they will listen to your side of the story.

Conclusion Have communication with your tenant that is falling behind on rent. Call them and let them you know it's a frustrating time and you want to understand their situation a bit better. Get them to say "that's right". Explain the position you'll be put in if you cant collect any rent. Find middle ground!

Be well, good luck to all!

Brandon Chidester

Gallagher Portfolio Insurance

8 Reply

Digna Del Orbe

New to Real Estate · Sacramento, CA · Member since 2018 · 16 posts · 21 votes

6y

Hello All,

I’d like to put this in the tenant’s perspective. I rent and that rent check is ready to go for April no matter what. I’m a health care worker but mid-March, we were sent home and may not return for another couple of weeks. Ugh.. I’m keeping a high chin and know that we’re going to come through this without adding to my landlord’s worries. But the rent will be paid

I’m sure some of your tenants have thoroughly considered, “hum that money I do have, I will instead save it for food and hoard more toilet paper”. This is a scarcity mentality. Perhaps this is a time when you can help bring education into the picture. Sometimes we assume people know about savings and emergency funds, etc.; I mean it does sound quite basic, right? Think about that time when you read “Rich Dad Poor Dad” and your mind did a 360 pivot and lo and behold a new perspective. Your tenants could probably use some pivot in their use of money. You may not see it as your job but here you are worrying about money yourself. What can you do to bring a little enlightenment to your tenants?

Communication with your tenant and encouraging your tenant to stay in touch is of utmost importance. Here’s a little story about my negotiation as a tenant: There was a time when I lived in Jersey, and went through surgery, chemo and radiation. I wrote a proposal to my landlord stating the situation and gave my BOLD proposal which was: asking to her to reduce my rent by $200 (from $1300 to $1100) for six months, then in 6 months I will pay her $1500/month until caught up. This angel landlord approved it; I was elated and I fully complied with that agreement and paid her despite working part time and four children to feed. Previous to this scenario, I had made other proposals that were all win-win. Let’s not go into agreement with scarcity. How can you and your tenants get in touch to create a win-win scenario despite Covid19?

5 Reply

Scott F.

Property Manager · TX · Member since 2017 · 15 posts · 4 votes

6y

@Heather Frusco

According to the New York Times...

Is there any relief for renters in the bill?

Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.

0 Reply

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

6y

Originally posted by @Samuel Pentowski:

@Andrey Y. Education in the US is terrible and inconsistent. This is what leads us to have around 16% of our population believing that Earth is flat.

No disagreement on the first part. I looked up the second part. It's 2% of the total population that firmly believes the earth is flat and it drops as people get older. 84% always believed round. 14% had changing beliefs, unsure, or no opinion.

I have to believe that a large percentage of those 2% people (especially younger ones) are screwing with the census taker. Ask a stupid question, get a stupid answer. Of course the earth is flat. If it were round we'd all fall off it. Try standing on a basketball, you can't. You fall off it. Try standing on a pancake and you can. Clearly the earth is flat like a pancake. Stupid question = stupid answer.

1 Reply

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

6y

Originally posted by @Sarah Lewis:

Good will is priceless! I have excellent relationships with all of my tenants now (7 doors) and I expect to maintain those relationships in the future. Let's see how everyone does by April 5th.

Hey honey, what's for dinner tonight?

@Sarah Lewis: Good Will!

What type of Veal?

@Sarah Lewis: Not veal, GOOD WILL!

3 Reply

Steven Lowe

Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes

6y

Originally posted by @Scott F.:

@Heather Frusco

According to the New York Times...

Is there any relief for renters in the bill?

Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.

What if you own a property that is fully paid off?

1 Reply

Steven Lowe

Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes

6y

Originally posted by @Brandon Chidester:

Interesting points! I have a differing outlook I'd like to share.

In 2019 I worked for investor and collected $21,000 in back rent for his business. I will share the information that made this possible.

Tenant Vs. Landlord Mindset Having the approach of “well you should have been saving, have reserves, made better choices, you have to pay your bills” etc.... is too late in the game. We are not suddenly going to change the mindset of a tenant. There is a reason (stemming from life choices) why some individuals are meant to be landlords and others are meant to be tenants.

Fighting Fire with Fire Attempting to justify & lecture why paying rent is the right thing to do and not paying is the wrong decision is just going to frustrate your tenant further. Some tenants may think of you as a greedy politician, and if you start lecturing now, they certainty wont pay.

Here is your best shot at collecting! Anyone familiar with Chris Voss? Never Split the Difference is his book on negotiation. What will get you the furthest with your tenants and collecting payment is:

1. Let them be heard, let them give their story, and sympathize with them. Be genuine! You may find yourself saying "Wow, that has got to be frustrating" "Sounds like it's been a tough month, huh?"

2. Get them to say "that's right" if your tenant feels understood, they wont argue your side. They just want to feel understood for the bad position they are in.

3. They will only listen to you Once they feel heard, now they will listen to your side of the story.

Conclusion Have communication with your tenant that is falling behind on rent. Call them and let them you know it's a frustrating time and you want to understand their situation a bit better. Get them to say "that's right". Explain the position you'll be put in if you cant collect any rent. Find middle ground!

Be well, good luck to all!

Brandon Chidester

Gallagher Portfolio Insurance

Great info! And "Never Split The Difference" is required reading for me!

0 Reply

Heather Frusco

OP

Investor · Union, NJ · Member since 2020 · 81 posts · 312 votes

6y

Originally posted by @Scott F.:

@Heather Frusco

According to the New York Times...

Is there any relief for renters in the bill?

Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.

Scott agreed the relief available to renter's in the form of moratorium on evictions in the bill... is going to wind up hurting renter's much more that it's going to help them. Don't get me wrong in the immediacy of this issue it'll help some but, it's certainly going to hurt A LOT of renters once this is over. - Every time the government gets involved in the free market usually it's the very same people they are trying to help which wind up loosing and hurting but only realize it once it's too late - look at rent control... how has that worked out - not too good.

3 Reply

Wesley W.

Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes

6y

Originally posted by @Steven Lowe:

Originally posted by @Scott F.:

@Heather Frusco

According to the New York Times...

Is there any relief for renters in the bill?

Yes. The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.

What if you own a property that is fully paid off?

Then you have to be punished for being so well capitalized, sir. This bailout is for those that "lived in the moment" these last several years.

3 Reply

Rob Massopust

Real Estate Broker · Santa Ana CA [South Coast Metro] · Member since 2016 · 459 posts · 202 votes

6y

Originally posted by @Heather Frusco:

I have had the opportunity to find and work with some of the best property managers (after many years) for our current properties. Over the years we have gone from me just treating them like just a service I hired to us working together toward a common goal and reaching a place of trust. So a few of our managers have reached out to us regarding their interactions with our tenants regarding the COVID-19 situation. So here goes:

Rent is still due. Why?

1 - Tenants should also have saved 'reserves' in place - so if they are already missing their rent payment come April just a few weeks into this, they are selectively deciding not to pay for their shelter in hopes of rent forgiveness - which is no different than shoplifting or any other use of a service with the knowing intention not to pay - no one to blame but one person.

2 - There are options available to Tenants: They can always put it on a credit card, which really already has a payment plan set up for them with their terms... a tenant can quite literally just pay the minimum until they get back on their fee, not suggesting anyone just may the minimum on a CC but that is an option, just like it is an option to put food, utilities and anything else on a credit card, shelter is no different.

3 - There are loans available to Tenant: Applying for temporary loans to make ends meet are available and even more so now - and before anyone says you won't qualify - there's only one person to blame for that and yes... a CC is a type of loan when used - so if you have a CC... you can access to borrowed funds with a re-payment system.

4 - Why does a tenant have to live in the current rental? - As if there aren't options...So if a single lady is renting a 4 bedroom waterfront rental for $3,000/mo. and then says she cant afford rent but continues to remain in place i.e. selectively choosing not to move out and just stay - wouldn't her moving out to 4 bedroom non-waterfront for $1,600/mo. make more sense? or better yet... downsize, that is... if the tenant did really want to make it right. - so again selectively choosing to pass on the debt to someone else without taking 'sacrifice' for you situation under your own wing... is a choice.

5 - One of our managers was trying to work out a deal with a tenant for deferred rent and contacted the employer to verify the situation before approving the deferred rent plan... The employer:

'Yes unfortunately we had to lay him off due to this pandemic, but it just important you take that into consideration because everyone needs shelter, you should certainly let him stay'

---- Couldn't agree more everyone does need shelter just like everyone does need food and water, the baffling question is... if the this employer is worried about the employees than why not just continue to pay them a salary during this entire thing?.... oh yeah... because they want to pass the buck... essentially saying 'No, I cant afford to continue paying them because we have no customers but you should offer to continue paying for the mortgage on their rental even though your customer (tenant) is not paying you' - hypocrisy at its best.

Albeit most that request assistance as it stands RIGHT NOW... only a few weeks into this situation... are unwilling to take on the responsibility for themselves onto their shoulders and find it just easier to put it onto someone else... which is why we have instructed our PM's to 1) verify the tenant's unemployment with connection to COVID-19, 2) allow them to take advantage of the options above, deffer rent for only those that truly absolutely need it, and file for eviction for all the rest to be in place when courts start the process... because as mentioned above options remain in helping tenants make ends meet but not paying for a product you are currently consuming is never going to be an option, if it is... next time you go to the grocery store for food... a first level necessity... try to walkout with a cart full of it without paying and see if they'll absorb the cost - the audacity of the manager even trying to stop you!

MIKE TYSON – “EVERYONE HAS A PLAN UNTIL THEY GET PUNCHED IN THE MOUTH”.

Its easy to "spreadsheet" this out from your limited perspective. Not everyone is as smart and well off as you. Give them some slack. Wait till we are in the throws of this full swing, will be worse than 2008 x 10 unless we really get a handle on things and it does not look like that.

When Mike Tyson was asked by a reporter whether he was worried about Evander Holyfield and his fight plan he answered; “Everyone has a plan until they get punched in the mouth.”

What Tyson said is similar to the old saying “no plan survives first contact with the enemy”. But does this mean that there is no need to plan? Absolutely not.

Holyfield was no doubt smarter and more strategic than Tyson (hard not to be), but was Tyson right? Tyson was a brawler, awesome at powerfully fighting his way out of a corner and landing devastating blows. Could Holyfield have planned to have half of his ear bitten off? How did he respond to Tyson’s unpredictable nature.

Holyfield won. Despite the massive 15/2 odds against him. He won. However had he blindly followed his plan when things had changed he may not have. The question is how you adapt your plan when you get punched in the mouth. There are two key things here

Most of the plan should survive despite everyone being focused on the bit that is broken. So, keep the old plan in mind when working out the new plan. You may have a puffed up eye and half an ear but your arms and legs are still working so don’t stop moving, defending and throwing punches.
The new plan needs to deal with right now reality. There’s no point thinking about training and strategy while you’re being punched in the face. Your ear hurts and your eyes are swelling so you need to think and make a decisive decision. In this case the fighter can either to go for a knockout now or stay away for a while, his choice will have knock on effects for the rest of the fight but the fighter needs to make a decision or get punched in the face again.

To bring this back to the workplace. If you’ve created a detailed work plan for your team that fully utilizes your people and equipment and key people call in sick or a machine breaks down. What do you do?

Most of the plan should survive, priority jobs should still happen and most of the team should be able to carry on doing what they were planned to be doing. So, adapt the current plan to cope with the change, don’t throw it all out and start again.
The new plan needs to deal with right now reality. In most cases planners won’t be around to help so your supervisor needs to be able to solve the problem himself, this means they must both understand the plan (the why behind the what) and believe that they have the authority to change it. Someone didn’t come in, I can borrow someone or do a different job from tomorrow’s plan. Machine is broken, can I do contingency work, fix it or borrow another machine. The last thing you want is for people to stand around doing nothing.

Both Tyson and Holyfield were right, plans shouldn’t survive the first punch in the mouth but you need one in the first place to be able to adapt it for changes in reality…

“Victorious warriors win first and then go to war, while defeated warriors go to war first then seek to win” Sun Tzu, the Art of War.

So, be like Holyfield, put a plan together in sufficient detail to “win first” but ensure you can adapt this plan so that one “punch in the mouth” does not result in defeat. Holyfield won with a TKO in the 11th round after Tyson tried to bite his other ear.

Some things you just can’t plan for!

0 Reply

Heather Frusco

OP

Investor · Union, NJ · Member since 2020 · 81 posts · 312 votes

6y

Originally posted by @Rob Massopust: