Landlords... Stop being so hard on your tenants

125 Replies

I've been reading through the forums here and I've read a lot of posts about how the tenants should have the money saved up to pay rent in an emergency, and if not they should use a credit card or the money in their retirement account to pay rent.

Yes, they signed a contract to pay a certain dollar amount for a certain period of time but no one saw this disaster coming.

Instead of forcing them into debt or draining their retirement accounts why don't you just let them leave. Let them break the lease and go live with family or friends. Or you can give them a lower dollar amount to pay for the next 90 days.

The truth is that you should have adequate reserves for situations like this as a "professional investor". Try to have some compassion for the average person who makes very little money compared to you and probably lives paycheck to paycheck.

@Jason Allen

We have had a couple tenants vacate and we are now re-renting them. I would rather have someone leave and leave the apartment clean then stay in it for months with no rent and no chance of eviction. Accepting partial payments over the next few months is also going to be a new thing to some landlords that have never been through a pullback. 

All my tenants are MTM and they can leave any time they want-30 days notice. Their deposits will be returned as soon as I have inspected the empty unit. If they lose jobs through coronavirus and can demonstrate that we can work it out. I have plenty of reserves set aside just don't want to spend it unwisely. I think the vast majority of LL here are pretty reasonable when it comes to tenants.

Originally posted by @Bjorn Ahlblad :

All my tenants are MTM and they can leave any time they want-30 days notice. Their deposits will be returned as soon as I have inspected the empty unit. If they lose jobs through coronavirus and can demonstrate that we can work it out. I have plenty of reserves set aside just don't want to spend it unwisely. I think the vast majority of LL here are pretty reasonable when it comes to tenants.

 Sounds like you're in a good situation. Some here are a little more ruthless which isn't necessary.

I think that most landlords will work it out if there is a real need.  However, in some cases there is not a need but a desire to take advantage of the situation and keep as much of the rent as possible.  

In the area I invest in some people are quitting their jobs because they do not want to work--the grocery store, food places doing drive up deliveries, no eat in is allowed in this state, retail stores like Lowes and Walmart.  These stores and restaurants can not get enough employees for the demand and are hiring.

Many of these jobs are very low risk to virus exposure, eg. the pizza cook never sees the customers, puts the pizza into a box and slides it over the counter to a person with gloves and face shield who takes it to someone's car.   Much less risk than their basketball game at the park.

So some people I know are raking in the money, cooking food, making deliveries for the hardware store, and stocking shelves in a store, working 80 hours a week, with the pay rate higher than normal and bonuses.  Others quit their job, have no unemployment because they QUIT, and cry that the government should be giving them more.   

Most landlords do help those that are trying, but those that are not trying, well, no they need to go away.

Landlords also have bills and some of them may have lost their jobs.  Just because they own a home (many have mortgages) doesn't mean they are rolling in money.  Tenants need to pay what they can (ie they can't pay nothing) and work out a payment plan for any shortages with the landlord.

Eviction moratorium is akin to eminent domain. But it is returning the property...just without the government paying rent. All small businesses are being hurt. It just seems different for landlords, some say like stealing, because a good or service will be consumed without payment in advance and no guarantee of payment in arrears. Knowingly. But rent is not forgiven; just no evictions, kicking people out of their homes during a pandemic.

Other small businesses are totally disrupted, and many fear they will struggle to get their client base back as well as their staff. If you don’t think they are worried, read up. They are afraid to borrow disaster funds they may never be able to pay back if their businesses don’t rebound.

This black swan event hit everyone. Landlords’ pain is different from restaurants’ and retail services’. And grocers are doing great business. It’s how the cookie crumbles...and if running a grocery business was as easy and profitable as rental property we’d all be doing that instead.

I think the key is COMMUNICATION. Both in my personal stuff and with my retail Landlords, when people call and say "Hey, I'm not paying for 6 months because of this" it's very easy for us to look at them, laugh, and tell them that they, in fact, will be paying every penny.

On the contrary, if someone calls and says " Hey, this is insane, my sales(income) are X, here is what I have done so far to try to garner more money, here is a bank statement and a check for 45% of my rent this month. Can you accept this?" Then we are going to feel MUCH better about trying to help them.

The unfortunate part is that Tenant's of all kinds (some of which are Landlords TOO) smell free stuff and they start grabbing for it. A lot of times, when you push back on them a little bit, they think it's too much work and just pay the rent. 

While I agree that everyone from Lender to Tenant needs to work together in this crazy time, it should NOT be the easy button to ask the Landlord for a rent reduction. You should be able to demonstrate that you have exhausted other options before coming to the Landlord. 

While I don't necessarily disagree with you, do you think I should start a thread stating "Banks... stop being so hard on your owners"?

Originally posted by @Jason Allen :

I've been reading through the forums here and I've read a lot of posts about how the tenants should have the money saved up to pay rent in an emergency, and if not they should use a credit card or the money in their retirement account to pay rent.

Yes, they signed a contract to pay a certain dollar amount for a certain period of time but no one saw this disaster coming.

Instead of forcing them into debt or draining their retirement accounts why don't you just let them leave. Let them break the lease and go live with family or friends. Or you can give them a lower dollar amount to pay for the next 90 days.

The truth is that you should have adequate reserves for situations like this as a "professional investor". Try to have some compassion for the average person who makes very little money compared to you and probably lives paycheck to paycheck.

 Do you think it's practical to ask Grocery stores to give discounts on food whenever someone is having a tough time? Should Walmart do the same when they're selling t-shirts? Where do you draw the line?

@Jason Allen

There are many posts admonishing landlords for being 'hard' on tenants, suggesting instead that LL need to carry the burden when times are tough. Tenants should not be absolved from taking action to ensure their biological needs are met; they should be doing everything they can to ensure they have food and shelter. If this includes dipping into retirement funds, extending CC debt, or securing government help, that's what needs to happen.  If tenants have done everything they can to make ends meet and reach out for help, we'll be there to share the pain.  I'm not, however, going to shoulder a bigger burden while tenants chose to spend money on non-essentials instead of on rent.

Originally posted by @Patrick M. :

Aren't you the one who Started a thread and told landlords "to enjoy foreclosure"? The thread was ultimately removed. Why are you even on this site?

I suspect "Capt. Airbnb Arbitrage" is holding a bunch of leases and no way to pay them. Way to go slick, you really showed us!

I was mocking the people who ripped on Arbitrage as an investment strategy (...and bad mouthed me personally behind the scenes). To them I have no sympathy. Actually I own multifamily and those are doing fine. The arbitrage deals have had to shift to longer stays but if you followed my advice (which I doubt you did) then you'll realize that I advise to look for more stable Non-Tourist markets where people rent STR's year round for work more so than travel and fun.

This post was to hopefully encourage people who are "landlords" (p.s. not me) to not be so hard on their tenants who are having a hard time, holding people accountable for money they no longer have is a great way to drive them into irreversible debt and financial hardship, of which I have experienced at one point in my life and know how hard it is for the average person to escape that kind of rut.

This disaster could seriously wipe out a lot of people financially and we don't need merciless landlords sucking money out of people. I wrote this because I've seen a few things first hand from investors in my market and it honestly made me sick.

Good luck

Originally posted by @Theresa Harris :

Landlords also have bills and some of them may have lost their jobs.  Just because they own a home (many have mortgages) doesn't mean they are rolling in money.  Tenants need to pay what they can (ie they can't pay nothing) and work out a payment plan for any shortages with the landlord.

 I think that's fair. Try to agree on a number they can pay which is better than nothing. And if they can't pay anything then letting them go is better than driving them into debt.

Would you agree?

Many "investors" are over leveraged which we're about to find out. Over leveraged in more ways than money, they're over leveraged in competence. 

@Jason Allen

Just so we are clear, “we” should have reserves and be able to give free rent, but it’s mean to expect anything close to the same for tenants? Are you being serious? FYI: the government is giving $1,200 per person, $500 per child, unemployment benefits up to their full salary, and perhaps more. But I, Mr. Small Business Owner, should offer free rent or be ok with letting all tenants move out?

Next up, nobody should pay any bills, because life isn’t fair...

Originally posted by @Marian Smith :

Eviction moratorium is akin to eminent domain. But it is returning the property...just without the government paying rent. All small businesses are being hurt. It just seems different for landlords, some say like stealing, because a good or service will be consumed without payment in advance and no guarantee of payment in arrears. Knowingly. But rent is not forgiven; just no evictions, kicking people out of their homes during a pandemic.

Other small businesses are totally disrupted, and many fear they will struggle to get their client base back as well as their staff. If you don’t think they are worried, read up. They are afraid to borrow disaster funds they may never be able to pay back if their businesses don’t rebound.

This black swan event hit everyone. Landlords’ pain is different from restaurants’ and retail services’. And grocers are doing great business. It’s how the cookie crumbles...and if running a grocery business was as easy and profitable as rental property we’d all be doing that instead.

 All I know is that I've seen what a resentful tenant can do to a property owner. If you drive these people to pay month they don't have they "will" take it out on the landlords.

In a way I'm trying to encourage landlords to have more compassion but to also understand the adverse effects of being a ruthless business owner. 

Originally posted by @Jameson Sullivan :

I think the key is COMMUNICATION. Both in my personal stuff and with my retail Landlords, when people call and say "Hey, I'm not paying for 6 months because of this" it's very easy for us to look at them, laugh, and tell them that they, in fact, will be paying every penny.

On the contrary, if someone calls and says " Hey, this is insane, my sales(income) are X, here is what I have done so far to try to garner more money, here is a bank statement and a check for 45% of my rent this month. Can you accept this?" Then we are going to feel MUCH better about trying to help them.

The unfortunate part is that Tenant's of all kinds (some of which are Landlords TOO) smell free stuff and they start grabbing for it. A lot of times, when you push back on them a little bit, they think it's too much work and just pay the rent. 

While I agree that everyone from Lender to Tenant needs to work together in this crazy time, it should NOT be the easy button to ask the Landlord for a rent reduction. You should be able to demonstrate that you have exhausted other options before coming to the Landlord. 

 I like that and I agree, communication is the key here. 

Originally posted by @Jason Allen :
Originally posted by @Theresa Harris:

Landlords also have bills and some of them may have lost their jobs.  Just because they own a home (many have mortgages) doesn't mean they are rolling in money.  Tenants need to pay what they can (ie they can't pay nothing) and work out a payment plan for any shortages with the landlord.

 I think that's fair. Try to agree on a number they can pay which is better than nothing. And if they can't pay anything then letting them go is better than driving them into debt.

Would you agree?

Many "investors" are over leveraged which we're about to find out. Over leveraged in more ways than money, they're over leveraged in competence. 

 That is what I plan to do, but I also know most of my tenants live in an area where the government will pay landlords $500 a month directly if the tenant has problems paying.  the tenants have to apply for this.  I think most of my tenants are good and we work well together-if they need something they have no problems asking.

Originally posted by @James Wise :
Originally posted by @Jason Allen:

I've been reading through the forums here and I've read a lot of posts about how the tenants should have the money saved up to pay rent in an emergency, and if not they should use a credit card or the money in their retirement account to pay rent.

Yes, they signed a contract to pay a certain dollar amount for a certain period of time but no one saw this disaster coming.

Instead of forcing them into debt or draining their retirement accounts why don't you just let them leave. Let them break the lease and go live with family or friends. Or you can give them a lower dollar amount to pay for the next 90 days.

The truth is that you should have adequate reserves for situations like this as a "professional investor". Try to have some compassion for the average person who makes very little money compared to you and probably lives paycheck to paycheck.

 Do you think it's practical to ask Grocery stores to give discounts on food whenever someone is having a tough time? Should Walmart do the same when they're selling t-shirts? Where do you draw the line?

 If it was the deciding factor in whether or not they stayed in business I'm sure they'd consider it.

I'm not saying let them live there for free. I'm saying to 1. agree on a lower payment and or 2. let them break the lease (keep the deposit if you'd like) BUT don't tell them to 1. leverage high interest credit cards, 2. use their retirement fund, 3. use their kids college fund, 4. etc...

Originally posted by @Chris Baxter:

@Jason Allen

 "If this includes dipping into retirement funds, extending CC debt, or securing government help, that's what needs to happen."

 This particular excerpt I find morally disgraceful, however if you want to execute on that you're welcome to But if I were a resentful tenant with nothing left to lose I'd make sure I brought you down with me.

Is that a risk you're willing to take?

@Jason Allen Oh ok! So in your logic it's my fault this happened and I should eat some of their rent or move back in with their parents and out of the lease? Just keep teaching them the lesson that life doesn't come without consequences because they cant save. I'm not saying I wont work with my tenants, because we've had conversations on this issue.

A lack of planning on YOUR part doesnt constitute an emergency on mine.

Originally posted by @Anthony Wick :

@Jason Allen

Just so we are clear, “we” should have reserves and be able to give free rent, but it’s mean to expect anything close to the same for tenants? Are you being serious? FYI: the government is giving $1,200 per person, $500 per child, unemployment benefits up to their full salary, and perhaps more. But I, Mr. Small Business Owner, should offer free rent or be ok with letting all tenants move out?

Next up, nobody should pay any bills, because life isn’t fair...

 You're not grasping what I've said. 

You should give them a the option to make a lower payment if they don't have the immediate means (e.g. loss of income, no emergency fund, which is many people) If that's not possible you should allow them to vacate and break the lease to go live with friends, family, etc.

Keeping them on the rent roll while they can't pay and incur and ever increasing debt of missed rental payments plus fees is immoral and not going to help your business anyways. If they're a problem tenant then by all means discipline them within the full legal force needed to solve the problem but this is not most people.

The bottom line is that these people are your tenants, they are your responsibility in that you provide them with housing, they rely on you, they depend on you and leading the conversation with aggressive tactics that probably manifest out of your own fear is going to blow up in your face.

I'm trying to help you, and the people you house in your properties. If you can't see that fine.