Why is Rent still due during COVID-19?

328 Replies

Originally posted by @Mary M. :

Yeah, more greedy landlord comments. Lets be sure to look like total asses to the world during this human crises. 

Eta: the govt is going to be the lender/payer of last resort - my guess is that all those that make snarky "comrade" comments will have no problem eating at the emergency fund trough - or, maybe you will be sending your cash the govt is sending back? When you do that, then lets talk :)

You're funny! The gas station charges full price during this human crisis and they aren't greedy. The supermarket charges full price during this human crisis and they aren't greedy. The dry cleaner charges full price during this human crisis and they aren't greedy. My pool guy charges full price during this human crisis and he isn't greedy. The landlord charges full price during this human crisis and ****ing mother****er, greedy son of a ***** deserves to die. 

Sorry, but I'm not getting a discount anywhere on my purchases. Not sure why I should be giving them out. Enjoy your 5 Star Yelp reviews. Maybe your family can eat them when hungry. 

And yes, I will be happy to take payment from the government for anything and everything. Because unlike around half of the people in this country, I pay taxes. I send the government well into six figures every year. So yeah, if they're handing out free cash I'll take some of my money back. 

Originally posted by @Heather Frusco :
Originally posted by @Mary Mitchell:

@Heather Frusco there is a LOT of options out there and IMO tenants should not carry the burden of this pandemic just like hourly workers shouldnt 

Mortgages can be dealt with by calling your mortgage co 


also SBA had emergency funding available

What burden are you referring to? Are you referring to a tenant making their rent payment as scheduled but now being offered options by their landlords, as a courtesy... is that the burden you're referring to? Or are you referring to the burden of making rent all together? - Lastly, what do options available to landlords have ANYTHING to do with whether or not a Tenant makes their rent payment?

 Not sure what you are asking....i will assume you are asking about emergency funding.... there is funding available for tenants, homeowners, business owners...  if a tenant if not able to make rent 100% i will work with them so the burden does not fall all on them. 


@Greg M. you left off utilities, mortgage companies, credit cards, banks.....etc.... and all of those are allowing payments to be delayed or added to the back of the amortization... utilities etc take amount owed and split it up over x months.....




This is informative. But I would counter that credit cards are a slippery slope to tenants who are put suddenly into unemployment. I would also say I know very few tenants who would stay in a unit far exceeding their means such as the single lady in a 4 bedroom you use as example. Otherwise, I agree that tenants should pay if at all possible, but I am giving my tenants the ability to postpone payment for up to 3 months without interest in the event they have been laid off due to the virus. This is only if the tenant can prove they have been laid off. 

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! 

 I truly hope I never become this type of landlord. 

Landlords and tenants interests are not as misaligned as this thread, at times, implies. Rent is still due and people cannot and should not just assume that they can skip payment frivolously. However, a tenant who is genuinely living paycheck to paycheck who works in the decimated service sector could well struggle to make rent, even in April. Seems like it is in the interest of both landlord and tenant to figure out something that works because it makes little sense to increase the number of homeless people while simultaneously increasing the number of empty houses (you don’t expect an easy turn this time, right?). Maybe half rent and the rest tacked on to future months would be an amicable solution in some cases.

If, as a landlord, you are running with no reserves then you may need to explain that to your tenant (and mortgage company). If you have reserves them, chances are, you have more reserves than your tenant and you may just have to exercise good judgement as to where you personally draw the line. Each landlord/tenant dyad is going to be different and, in my view, this is not a black and white “soft touch” vs “ruthless bastard”, but rather a spectrum. You just need to hope you can find a spot on that spectrum that works for your situation.  



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! 

Good points.

I'm in a dilemma with one of my tenants, past due some months and need some suggestions. They're under a stipulation agreement since July 2019, to pay me $3,000/month through April 2020. The original rent is $2,250/month, fell behind 4 months in Jan 2019, so the $3,000 is catch up on the past due rent. The situation is:

1. I have an attorney handling and advised me not to talk to them as I believed all their sob stories. His position is I should shut up and let him be the bad guy. The stipulation says if they fall behind, eviction will take place. However, Governor Cuomo just put a 90 day moratorium  on evictions.

2. Our situation is we collect social security, pensions, have 401k's, and with the recent passing of my mother-in law, a large inheritance. We're also mortgage free. So comparing our relative good fortune to their dire situation, maybe we should lend a helping hand.

3. My wife's been communicating with them in the recent past. The family consists of a 50'ish dad who drives a cab. However, I read of recent stories with cab drivers in a pickle as business is down. A son who had a store manager job who's  now a car salesman. Says in January he's taking a second job to catch up. Two older daughter's in their 20's, working part time jobs paying $30K/year. One work in Macy's that just announce a shutdown. Should be able to easily cover a $2,250/month rent.

4. While they complained of hard times, they have a cab plus several relatively new cars parked in front of the house. When they first fell behind a year ago, they claim a nephew in Pakistan was in a terrible accident lost his legs in an accident and they're helping out, about $10K. Then cab driver dad is recovering from heart surgeries, but can have drivers drive his cab since he has a medallion, but didn't. We discussed this option to him and says he'll look into it. Question is why he didn't think of it. Other is if the sob stories are true.

5. Normally, we hold open houses to rent, and it goes quickly, usually only one open house. Don't know how long it'll take under current circumstances, and don't know whether open houses are a good idea under current circumstances. Property is a SFR and insurance is voided if vacant 60 days or more.

6. Sent email to my attorney but have not heard back as his office is closed and working from home. What should I tell my attorney? The courts are also closed. They'll probably not pay rent till July due to the moratorium. But for us, it's not a financial hardship under the circumstances. Only a $3,000 property tax bill due for the second quarter, should covered by the payment just announced in Congress, or cash from the inheritance. Attorney also try to sell me the idea to let him be PM for a fee and to think about it.

Question is what would you do??? What should my attorney do???

 

Mary the state school taxes can't be paid late. The state will evict and take my houses. I have to collect over $400 per month to cover a $5,000 school tax on each of 10 properties. That's around $50,000. I am retired so this income is all I have. Please explain how your math works for me? Please don't tell me about how the tenants are going to come to my rescue when they get their jobs back I have way more experience than that. My houses are paid off. I have tried to refinance and they say I don't make enough to pay a mortgage. If you're going to tell me about a fairy tale organization that is going to come to my rescue please post their phone number so I can call them. My wife and I will be out of money if the rent doesn't come in.

Originally posted by @Mary M. :

@Greg M. you left off utilities, mortgage companies, credit cards, banks.....etc.... and all of those are allowing payments to be delayed or added to the back of the amortization... utilities etc take amount owed and split it up over x months.....





 

I agree that rent is due in full, and people "should" have reserves, but are you all going to boycott Cheesecake Factory? This just in today:  

Cheesecake Factory has reportedly decided to not pay rent for April at any of the chain’s locations because of business lost to the coronavirus pandemic.

“The severe decrease in restaurant traffic has severely decreased our cash flow and inflicted a tremendous financial blow to our business,” CEO David Overton wrote to landlords in a letter obtained by the Eater website.

I look forward to Heather Frusco denouncing Cheesecake Factory as being run by thieves.




Originally posted by @David King :

Heather gets it, finally someone who gets it! As far as the tenant paying later, that's an absolute joke. The tenants wint pay a penny later. 

depending on asset class totally agree.. any lost rent is lost for good in the service work force housing sector.. white collar maybe not.

 

@Heather Frusco I completely agree with you, Heather. The problem is the tenants themselves.

On the contrary, if people were as responsible as you made them out to be in your post, then real estate investors would not be as successful and less people would rent lol!

Originally posted by @David King :
Mary the state school taxes can't be paid late. The state will evict and take my houses. I have to collect over $400 per month to cover a $5,000 school tax on each of 10 properties. That's around $50,000. I am retired so this income is all I have. Please explain how your math works for me? Please don't tell me about how the tenants are going to come to my rescue when they get their jobs back I have way more experience than that. My houses are paid off. I have tried to refinance and they say I don't make enough to pay a mortgage. If you're going to tell me about a fairy tale organization that is going to come to my rescue please post their phone number so I can call them. My wife and I will be out of money if the rent doesn't come in.

Originally posted by @Mary Mitchell:

@Greg M. you left off utilities, mortgage companies, credit cards, banks.....etc.... and all of those are allowing payments to be delayed or added to the back of the amortization... utilities etc take amount owed and split it up over x months.....

 

Your in great shape more landlords should be like you..  your solution is to just liquidate .. sell one to weather the storm.. or sell them all go to cash.. which should be significant redeploy into assets that pay you monthly. problem solved.. if you have a lot of appreciation and a tax burden you could 1031 into a different asset class ?  But to think your in dire straights when your portfolio is paid for.. not sure about that. I just congratulate you on having it paid for and being in great shape.

 

@David King i too live off my rentals, which are paid in full.... so i get it.... my guess is property taxes will be delayed if this situation continues...  

My point, is that if i have a tenant come to me i will share the pain.... ie if they are short 500 i will eat 250 and then they can pay the balance over time.  

Do you have a better idea?? You cant get water from a rock.... i just think its better for me to eat some of this so my tenants can remain stable and able to pay rent. I make plenty.... i have savings.... 

The bottom of our economic pile should not be the payer of last resort - we all should share that pain equally in relation to our ability to pay 

So a tenant loses their income due to covid which in turn affects a landlord's income--same cause yet the tenant is expected to suck it up and the landlord is free to replace their income. I understand the argument that everyone should be responsible and have cash reserves but this presumes that everyone has the ability to do so. Not all under-privileged people are the same. There can be very legitimate reasons that hard working people live paycheck to paycheck. And many are not in a good position to just up and move their families in the midst of a crisis to a cheaper place. Moving costs money which is at a premium right now. 

Again the argument made by the original poster is legitimate but it doesn't mean that it is kind to people. And yes I do believe that even in the dog eat dog world of business we should be kind to people. This viewpoint is a symptom of the underlying inequality of classes in America--property owners are assumed to be able avoid "feeling the pain" in times like this because, well, they are property owners. And there are many socioeconomic factors that predispose someone at birth to be better positioned to own property. 

Originally posted by @Mary M. :

honestly. lets not be the ******* landlords everyone thinks we are. Howabout the idea that everyone should share in the pain equally??  why is it just the hourly wage earner that needs to float everything??

While we are on shutdown, many people are still working and many more are getting temp jobs.....   My feeling is - if a tenant is having a hardship I will share that hardship with them... and it will depend on  the circumstances what that means.

Be a good human....  share this pain so we ALL can come out ok and so that the public sentiment of LLs does not erode further. 

 Share, share, share, share....then I look at the location: Portland. All makes sense now.

OP, to answer your question. Both landlords and renters alike are financially irresponsible in most cases. The majority of the country lives paycheck to paycheck. Everyone has a newer car, newest iphone, new clothes, vacations all over. Can't afford rent for one month and suddenly everyone wants a bailout. Tenants can't pay and then owners can't pay. Insanity. I'm struggling too but it's unbelievable how quickly people try to walk away.

This thread reminds me of that scene in Mr Deeds...

-What did you want to be when you were a child?

-A veterinarian

-What do you do now, sir?

-I own a chain of slaughterhouses 

Originally posted by @Mary M. :

@David King i too live off my rentals, which are paid in full.... so i get it.... my guess is property taxes will be delayed if this situation continues...  

My point, is that if i have a tenant come to me i will share the pain.... ie if they are short 500 i will eat 250 and then they can pay the balance over time.  

Do you have a better idea?? You cant get water from a rock.... i just think its better for me to eat some of this so my tenants can remain stable and able to pay rent. I make plenty.... i have savings.... 

The bottom of our economic pile should not be the payer of last resort - we all should share that pain equally in relation to our ability to pay

Mary in all my 4 decades of doing real estate i have NEVER seen ad valrum tax's delayed or postponed.. the only way i have seen those is in redevelopment areas where the state or city or county wants to encourage growth.. Like in Portland all the development of condos north of downtown was spurred by a 10 year tax hiatus.. NO tax for first ten years of owning it.. that was called the Pearl district and it worked.

right now.. no one has to pay property tax's  depending on the state it takes anywhere from 1 to 6 years to lose the property for non payment of course you have penalties and in states with tax cert sales those penalties go to private investors who buy the certs.. its a huge business in those states.

And many folks mortgages of course have tax's paid out of your payment.. so if bank is forgiving some payment they are going to pay your tax's.. ( I think ).. for those with no mortgage.. you have time to catch up by law.. just going to cost you penalties is all.. 

 

Thank you for the thought provoking post. The problem I see going on right now other than the pandemic itself is the massive sense of entitlement in this country. I worked my butt off to get scholarships to help with college and worked again to pay them off. Yet, people are crying everywhere about their student loans and how they were duped into getting them and demanding relief. I worked my butt off for years to build a rental portfolio. I did not take my family on vacation, we lived in a very uncomfortable home with our kids, and I can personally remodel a home from top to bottom (except for electrical, plumbing and foundations) because I spent 60+ hours a week getting stuff done. Now what I hear and see is a lot of people complaining and demanding free rent, which is food off of my children's table. 

The worst part is that they are demanding it when they've been laid off for two seconds and there are a lot of resources to help them. No people should not share in the suffering equally. I hated group projects in high school where I did all of the work and the jerks in my group shared the grade I earned. How is this any different? 

We have a moral obligation to care for those in need and I treat my tenants very well, but can I carry their burdens, no. If we just forgive student debts and rent payments while also preventing evictions, we are just enabling so many people to stop contributing to society. Where does the cycle stop? 

That being said I do have two tenants that told me that they're laid off and will do their very best to get rent in on time. I let them know to do the best they can and to keep me posted. I have great tenants and have treated them very well so that many stay with me for years. Hopefully, we can treat each other like human beings and work through this with minimal trauma.

@Heather Frusco What you should do is imagine yourself as a person with good character and go back and rewrite this tutorial, because this is trash. If you lack the compassion or simply do not understand the gravity of the situation, then I suggest you get educated. EVERYONE is affected by this crisis and if you feel so compelled to write this diatribe patting yourself on your back about how ‘prepared’ you are, then clearly you were not prepared. This IS everyone’s burden. Instead of being reactionary, be proactive. Reach out to all your tenants and find out how they are affected. Let them know that you care (if that is possible for you) and that we are in this together. If they have lost a job or some significant income, reduce the rent to something manageable. It will be appreciated and won’t leave you with an empty mailbox and stack of unsatisfied eviction notices. I hope this helps.