Why is Rent still due during COVID-19?

328 Replies

Originally posted by @Tom Maricle:

I think some of the opinions here might change if this becomes less of a 2 month issue and more of a 1 or 2 year issue.  I think we all are fine with a little charity but at some point it becomes survival.  Like the poster before that has to pay $50k in taxes per year on her houses and can't get financing on them.  When will she have contributed enough to her tenants to please you and gain your approval as an OK human?  Once she loses all of her houses and is put out on the street?  Will that satisfy you?  

For myself I'm working with my tenants and plan to help them through this crisis as best I can, but that's a personal decision.  I don't feel it's my place to toss barbs at someone else's character because they have the crazy ideas that tenants should pay their rent eventually. 

Tom that post about the tax's she owns the homes free and clear she is in no danger.. sell one and ride it out.  right ?

 

Originally posted by @Cory Trevor:

Heather, here's an idea. Pay their rent, use your reserves. And if you run out, take out a credit card. If you can't do that, take out a loan! I heard interest rates are dropping. 

You might not consider your renters lower class, hell they might all be able to float without your "help". But I gaurentee you most of the slime on here is chomping at the bit to evict at whim. You just reinforce their fever dreams by posting this garbage. You people aren't investors, your middle men. The market doesn't need you anymore, and it will abandon and destroy your business at a whim if it serves the fed. 

 Cory, if it comes to that we will but unlikely if we plan accordingly now just as I have mentioned in this post... how a LL's reserves are used are not dictated by the tenant, they are dictated by how the LL wants to deploy them... if at all. Why? because it's their reserves their rules, when we say 'reserves' lets be honest it $ that LL's have saved up forgoing to buy the latest and greatest and even avoiding to splurge on their own kids... so the LL's reserves from sacrifice, their rules on how or if they will use it and if the do use it... consider it a courtesy. A credit card is an option for you... if you don't want to use it... then don't that is your decision but don't say you didn't have any options. As far as your comment of:  'the market doesn't need you anymore, yata, yata, yata' ... you need to come back to reality and look around you... no really, take a pause and a good look around... when is the last time you have seen a rental home offered by the government for you to rent? ... take your time... the simple truth and whether you choose to believe it, is that the government depends 99.9% on the private sector for housing, heck the furthest they will go to providing you with housing is offering to pay your rent and most of the time only partially (section 8). Guess who comes to the rescue for young Americans which can't afford a home or don't want to own a home and would like to stay mobile?... yep, private landlords, the alternative option would homelessness.... so you're welcome... silly LL's taking on all that risk that even the govt. isn't willing to take on and then just asking you to make your payment as agreed.  

Originally posted by @Paul Dauffenbach:

@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.

If they've lost income, at this point that income is going to be made up by the government (PLUS $1200 per adult and $500 per child just because). There's going to be no excuse for not paying rent (maybe an excuse for being late), but many simply won't do it anyway because there are going to be no repercussions, and a system produces what it incentivizes every time. In the same way we had an ocean of elective foreclosures in California during the last downturn, there WILL be a ton of tenants who elect to not pay rent simply because the mechanism of enforcement of the payment of rent has been removed. Just you wait. Let me know how "appreciative" your tenants have been in 4 months.

I've got to say, I've never been more happy in my life to not be a landlord. 

@Heather Frusco It is obviously your prerogative to means test your tenants to determine if they need help. However you initially began this thread to discuss rent/evictions in the context of covid 19 yet you seem to be approaching it from a largely business as usual perspective. The Senate just unanimously passed a relief package to give straight cash payments to a giant swath of Americans. This is a crisis that will probably end up without parallel in our lifetimes and in my opinion we ALL need help. This shouldn't be landlord vs tenants or relief to only the most downtrodden. My only concern with your initial post is it is encouraging landlords on this website to turn towards free market ideals in a time that desperately needs communal effort to help everyone. For some reason in America communal solidarity is avoided at all costs. If a landlord truly needs a monthly rent payment immediately to stay afloat I would hope someone would help them whether it be a wealthy friend, family member or the government. If a landlord is in a position to take a hit to their bottom line for a few months to help someone else, I hope they would do everything they can to help them too.

This whole argument is also assuming that there is a pool of renters waiting to take evictees place, which I am not so sure about, so we it might be a moot point anyway. 

Originally posted by @John Clark :

"you should beware what you wish for. Those are commercial leases and like most commercial leases... when the business makes more they pay more in rent in ADDITION to that the landlord in most commercial leases can take possession of all the businesses assets --"

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Wrong. Most commercial leases are for flat, fixed amounts and the only time you'll see a participation rent is when the business is new and the tenant needs to get established in his cash flow. If the landlord likes the tenant's business, he might agree to a participation rent. You and I both know that Cheesecake Factory and other established businesses aren't doing participation leases.

As for assets, landlords in commercial leases often provide that fixtures become landlord property at the conclusion of the lease. That is common. Other assets? rarely. Usually a judgment levy. Perchance you are thinking of possessory liens?

You called non-paying tenants thieves, @Heather Frusco , and if Cheesecake Factory DELIBERATELY isn't paying rent, then it is, per you, a den of thieves. Are you going to boycott it?


If you say so John. Silly us for giving tenants the option to make ends meet by allowing them to pay with a credit card and absorbing the processing fees.  

Originally posted by @Account Closed  

I don't believe the Restaurant analogy is correctly aligned with what we are facing as landlords.  A tighter analogy would be if there were a law passed stating that someone could ask for food and get it for free, or at a discount of whatever they felt like paying, and the restaurant owner would be forced to give out that food.  Then if they were no longer able to pay their bills and close down they could be berated by someone like you for not being properly prepared for the situation.  



 Totally agree on this. I've been wondering if forcing landlords to provide a service without remuneration is even constitutional. The government is effectively commandeering your assets for what it's classifying as a wartime use. Can that be done without any remuneration? For a lot of landlords, virtually all of their wealth and resource is in their properties. What other business would ever be forced to continue to provide services with no remuneration?

@Heather Frusco   now that you started a very dynamic thread.

lets look at it like most real estate business's

they are for PROFIT and or for LOSS..

When we build new homes we hope to make a profit but sometimes we dont.. market conditions changed on us or whatever its incumbent upon ourselves as investor builders/developers to plan for these types of outcomes that are not ideal. Government changes regs on us all the time.. and there is nothing we can do.. and on top of that no one is offering to bail us out.. WE should have planned for this..  Seems to me the mortgage industry is stepping up to help landlords.. as developers we never would get this help.. it would have to be negotiated with our commercial bank ( which i have done on numerous occasions throughout the decades ).

This is why debt on real estate can be a dual edge sword.. and beleive me there are plenty of landlords that own property free and clear. 

I think coming out of this event landlords are really going to take a harder look at how they set up their for profit or loss business.

Originally posted by @Jeff Cagle :
Originally posted by @Tom Maricle:

@Robert McNeal  

I don't believe the Restaurant analogy is correctly aligned with what we are facing as landlords.  A tighter analogy would be if there were a law passed stating that someone could ask for food and get it for free, or at a discount of whatever they felt like paying, and the restaurant owner would be forced to give out that food.  Then if they were no longer able to pay their bills and close down they could be berated by someone like you for not being properly prepared for the situation.  



 Totally agree on this. I've been wondering if forcing landlords to provide a service without remuneration is even constitutional. The government is effectively commandeering your assets for what it's classifying as a wartime use. Can that be done without any remuneration? For a lot of landlords, virtually all of their wealth and resource is in their properties. What other business would ever be forced to continue to provide services with no remuneration?

Jeff think of Tesla forced to close down their factory and then they jumped into making ventilators I doubt they can pay the bills even if they charge for the ventilarators.. 

 

Originally posted by @Jay Hinrichs :
Originally posted by @Jeff Cagle:
Originally posted by @Tom Maricle:

@Robert McNeal  

I don't believe the Restaurant analogy is correctly aligned with what we are facing as landlords.  A tighter analogy would be if there were a law passed stating that someone could ask for food and get it for free, or at a discount of whatever they felt like paying, and the restaurant owner would be forced to give out that food.  Then if they were no longer able to pay their bills and close down they could be berated by someone like you for not being properly prepared for the situation.  



 Totally agree on this. I've been wondering if forcing landlords to provide a service without remuneration is even constitutional. The government is effectively commandeering your assets for what it's classifying as a wartime use. Can that be done without any remuneration? For a lot of landlords, virtually all of their wealth and resource is in their properties. What other business would ever be forced to continue to provide services with no remuneration?

Jeff think of Tesla forced to close down their factory and then they jumped into making ventilators I doubt they can pay the bills even if they charge for the generators.. 

 

Think of Tesla being forced to stay open and produce cars, just not charge anything for them.

 

Originally posted by @Jeff Cagle :
Originally posted by @Jay Hinrichs:
Originally posted by @Jeff Cagle:
Originally posted by @Tom Maricle:

@Robert McNeal  

I don't believe the Restaurant analogy is correctly aligned with what we are facing as landlords.  A tighter analogy would be if there were a law passed stating that someone could ask for food and get it for free, or at a discount of whatever they felt like paying, and the restaurant owner would be forced to give out that food.  Then if they were no longer able to pay their bills and close down they could be berated by someone like you for not being properly prepared for the situation.  



 Totally agree on this. I've been wondering if forcing landlords to provide a service without remuneration is even constitutional. The government is effectively commandeering your assets for what it's classifying as a wartime use. Can that be done without any remuneration? For a lot of landlords, virtually all of their wealth and resource is in their properties. What other business would ever be forced to continue to provide services with no remuneration?

Jeff think of Tesla forced to close down their factory and then they jumped into making ventilators I doubt they can pay the bills even if they charge for the generators.. 

 

Think of Tesla being forced to stay open and produce cars, just not charge anything for them.

 

I get it..  wild times

 

@Account Closed I don't think anyone is a villain, this sucks for most people in America. As I mentioned in a prior response in a national crisis like this I don't think there are heroes and villains, conversely I would hope for solidarity, that those that are facing financial stability help those with acute financial instability, even it it means assets perform poorly in the short term. I originally weighed in on this thread because it seemed to advocate for valuing the short term performance of real estate assets over people's housing security in the midst of a global pandemic and extreme economic uncertainty. I am also perplexed that property owners seem to be given the benefit of the doubt as far as preparedness goes yet workers in apparently every other sector are not. Make no mistake many full time real estate investors are facing the prospect of losing their income just the same as the bartender down the street, yet no one on this thread is accusing them of irresponsible financial decisions. 

If a landlord is facing immediate financial disaster because of loss of rental income I feel sympathy just as I would for the tenant that can't pay their rent. But I don't agree with business as usual regarding evictions and rent mitigation in these current times. 

"If you say so John. Silly us for giving tenants the option to make ends meet by allowing them to pay with a credit card and absorbing the processing fees. "

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And if they refuse, Heather, you call them thieves. Now stop singing and dancing and evading the question. Are you going to boycott Cheesecake Factory for being a den of thieves? If not, why not? Its CEO made a deliberate decision to not pay rent.


Originally posted by @Jeff Cagle :
Originally posted by @Jay Hinrichs:
Originally posted by @Jeff Cagle:
Originally posted by @Tom Maricle:

@Robert McNeal  

I don't believe the Restaurant analogy is correctly aligned with what we are facing as landlords.  A tighter analogy would be if there were a law passed stating that someone could ask for food and get it for free, or at a discount of whatever they felt like paying, and the restaurant owner would be forced to give out that food.  Then if they were no longer able to pay their bills and close down they could be berated by someone like you for not being properly prepared for the situation.  



 Totally agree on this. I've been wondering if forcing landlords to provide a service without remuneration is even constitutional. The government is effectively commandeering your assets for what it's classifying as a wartime use. Can that be done without any remuneration? For a lot of landlords, virtually all of their wealth and resource is in their properties. What other business would ever be forced to continue to provide services with no remuneration?

Jeff think of Tesla forced to close down their factory and then they jumped into making ventilators I doubt they can pay the bills even if they charge for the generators.. 

 

Think of Tesla being forced to stay open and produce cars, just not charge anything for them.

 

as it relates to real estate I look it also like some of the developments I have worked on spent hundred thousand plus

get in front of the planning commission and they cut down the number of units based on public input or pressure and now the project is not financially feasible and we have to walk away.. WE lost the money nothing we can do.. govmit took our density .. 

 

Originally posted by @Robert McNeal :

@Heather Frusco It is obviously your prerogative to means test your tenants to determine if they need help. However you initially began this thread to discuss rent/evictions in the context of covid 19 yet you seem to be approaching it from a largely business as usual perspective. The Senate just unanimously passed a relief package to give straight cash payments to a giant swath of Americans. This is a crisis that will probably end up without parallel in our lifetimes and in my opinion we ALL need help. This shouldn't be landlord vs tenants or relief to only the most downtrodden. My only concern with your initial post is it is encouraging landlords on this website to turn towards free market ideals in a time that desperately needs communal effort to help everyone. For some reason in America communal solidarity is avoided at all costs. If a landlord truly needs a monthly rent payment immediately to stay afloat I would hope someone would help them whether it be a wealthy friend, family member or the government. If a landlord is in a position to take a hit to their bottom line for a few months to help someone else, I hope they would do everything they can to help them too.

This whole argument is also assuming that there is a pool of renters waiting to take evictees place, which I am not so sure about, so we it might be a moot point anyway. 

Robert, I follow your level headed approach. Let's just for arguments sake say... that a LL is not able to afford to keep a Tenant in the unit because the same LL 'floated' the Tenant for a few month's using up reserves. Maintenance comes due, the furnace just gave out and the Tenant obviously needs heat/cooling... you mention that  "If a landlord truly needs a monthly rent payment immediately to stay afloat I would hope someone would help them whether it be a wealthy friend, family member or the government.' -- Wouldn't the same apply if a tenant needed help making their payment or is that an option only available to LL's?... but, let just for arguments sake keep going with your open-ended recommendation... the LL cant afford it (could have if they didn't use up reserves), the Tenant cant afford it... who exactly should they turn to for assistance, can they both turn to you for it?

Originally posted by @John Clark :

"If you say so John. Silly us for giving tenants the option to make ends meet by allowing them to pay with a credit card and absorbing the processing fees. "

--------------------------------------

And if they refuse, Heather, you call them thieves. Now stop singing and dancing and evading the question. Are you going to boycott Cheesecake Factory for being a den of thieves? If not, why not? Its CEO made a deliberate decision to not pay rent.

John, don't really know what you're talking about... but there is no Cheesecake Factory where I am... way overrated. And again, CC is an option that Tenants fortunate enough have available during an emergency or you can certainly try to seek financial assistance from the govt. or you can seek a personal loan or you can ask family and friends for assistance or you can downsize all together. Hope that helps. 

 

@Heather Frusco I'm not sure I understand the last part. Did you mean the LL and the tenant *can't* afford it? Regardless the federal government is sending cash payments to most Americans so in the absence of a loan or gift from a private acquaintance the government is stepping in for the average American. I cannot predict how long this will last and certainly don't claim to have all the answers but hypothetically if a loved one or friend of mine needed help with rent or to cover their costs of their rental property in this current situation yes I would help them. I have very finite resources so I can't fly around neighborhoods dropping cash on people but from a broader perspective I think that collective solidarity is a better path forward here than business as usual. I understand I probably come across a bit utopian but I truly believe these are unprecedented times and we should avoid the impulse to turn inward. 


"John, don't really know what you're talking about..."

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Sure you do Heather, you said tenants who didn't pay rent are thieves in your original post. I pointed out that Cheesecake Factory has made a deliberate decision to not pay rent. So per you, it's a den of thieves. Are you going to boycott it? Are you going to label it a den of thieves? Stop getting the vapors and answer the questions.

@Jeff Cagle I am also glad you’re not a landlord. We really don’t need any more jerks in this business. I am so surprised and disappointed that this generation of investors has not the character nor the courage to endure this crisis with some dignity. There is nothing but a bunch of complaints about something that hasn’t even happened yet. If all you have is a hammer, all you see is nails. This is a problem sure, but it is also an opportunity to be something better than you were yesterday.

Originally posted by @John Clark :

"John, don't really know what you're talking about..."

-------------------------------------------

Sure you do Heather, you said tenants who didn't pay rent are thieves in your original post. I pointed out that Cheesecake Factory has made a deliberate decision to not pay rent. So per you, it's a den of thieves. Are you going to boycott it? Are you going to label it a den of thieves? Stop getting the vapors and answer the questions.

John, I think you may have your posts confused... never said that... please review your posts. 

 

@Robert McNeal I've read a good bit of the 3 blogs on this and I've seen the "irresponsible" term tossed quite often at landlords who were over-leveraged or just short on reserves.  Look, all that aside I buy most of your argument personally but I don't feel it's my right to toss my judgement on others.  I don't know where most of you are at in this whole cycle and can't begin to understand individual motives.  

Originally posted by @Paul Dauffenbach:

@Jeff Cagle I am also glad you’re not a landlord. We really don’t need any more jerks in this business. I am so surprised and disappointed that this generation of investors has not the character nor the courage to endure this crisis with some dignity. There is nothing but a bunch of complaints about something that hasn’t even happened yet. If all you have is a hammer, all you see is nails. This is a problem sure, but it is also an opportunity to be something better than you were yesterday.

Anyone who thinks that they're simply due someone else's resources is a jerk of the highest order. Hey, remember that time a landlord was having a tough time financially, so all the tenants in the building banded together and paid extra rent to keep them afloat? Yeah, me neither. "Sharing the burden" works in only one direction. I pay an obscene amount in taxes annually, which the government is liberally doling out. There's my contribution. I'm relatively certain that I'm handling a greater share of this burden than you are. You're welcome.

 

Originally posted by @Robert McNeal :

@Heather Frusco I'm not sure I understand the last part. Did you mean the LL and the tenant *can't* afford it? Regardless the federal government is sending cash payments to most Americans so in the absence of a loan or gift from a private acquaintance the government is stepping in for the average American. I cannot predict how long this will last and certainly don't claim to have all the answers but hypothetically if a loved one or friend of mine needed help with rent or to cover their costs of their rental property in this current situation yes I would help them. I have very finite resources so I can't fly around neighborhoods dropping cash on people but from a broader perspective I think that collective solidarity is a better path forward here than business as usual. I understand I probably come across a bit utopian but I truly believe these are unprecedented times and we should avoid the impulse to turn inward. 

Robert, I'm sorry I think you read it before I edited it... no for sure... agreed. Everyone has finite resources, it is just wrong to assume that LL's have endless resources or that their resources are a 'free for all'... we help who we can, when we can... and who we help is completely ours to determine. I think some just believe that LL's should help out no matter as a blanket statement and believe that they have a right to the LL's resources, if any. A business any business which offers their customers (tenants) options to make their payment IS trying to help in as much as they can... heck it may not be as much as some may like... but that's akin to receiving a gift, being ungrateful for it and saying there should be more - failing to realize that no one had to give you a gift in the first place. Same applies here, most LL's are offering payment options, repayment options, waiving fees, etc... but there are still those which want 'more' they would like 'free' - just not possible.   

No confusion, Heather. Here's a cut and past from your original post:  "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"


You called them thieves -- shoplifting is theft. So quit evading and singing and dancing -- Do you agree that the Cheesecake Factory company is a den of thieves? Will you boycott it and encourage others to do so?