Should rent be canceled because of the coronavirus?

General Landlording & Rental Properties

Should rent be canceled because of the coronavirus?

John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

Good article.

Talks about Pros and Cons and discussed the Landlord side of this too.

Should rent be canceled because of the coronavirus?

https://news.yahoo.com/should-rent-be-canceled-because-of-the-coronavirus-204910688.html

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Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

6y

I'm only reading and responding because it's you, John.

If you forgive Tenants of their responsibilities because they are out of work, then you have to forgive the restaurant owner, the hospital that had to furlough all their staff, the farmer that can't sell his apples, etc.

There's no end to this.

What we really need are some leaders with cajones that understand how to conduct a basic cost:benefit analysis based on actual data, not unproven models and fear. Our government shut down the economy without a justifiable reason and the vast majority of us will suffer the consequences while the vast majority of them will become wealthy.

Start preparing because this is not the worst of it.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
I'm only reading and responding because it's you, John.
If you forgive Tenants of their responsibilities because they are out of work, then you have to forgive the restaurant owner, the hospital that had to furlough all their staff, the farmer that can't sell his apples, etc.

There's no end to this.

What we really need are some leaders with cajones that understand how to conduct a basic cost:benefit analysis based on actual data, not unproven models and fear. Our government shut down the economy without a justifiable reason and the vast majority of us will suffer the consequences while the vast majority of them will become wealthy.
Start preparing because this is not the worst of it.
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
6y
Is there even a need to cancel rent? With all the money the government is handing out in the form of stimulus money, state unemployment benefits, additional federal unemployment benefits through the CARES Act, etc many people are making more NOT working than they were before this whole thing started.
In my state for example, if a couple were both out of work, they could receive up to $2,100 per WEEK just in state/federal unemployment benefits. Probably why I keep seeing stories like this one about employees not wanting to return to work and actually getting angry when their employers offer them their jobs back:
https://www.forbes.com/sites/jackkelly/2020/04/28/furloughed-workers-dont-want-to-return-to-their-jobs-as-theyre-earning-more-money-with-unemployment/amp/
Some of these people are making more “passive income” than their landlords. ;)
9 Reply
Tchaka Owen
Real Estate Agent · Merritt Island, FL · Member since 2017 · 974 posts · 1k+ votes
6y
@John Underwood - another thing to consider is that it does not have to be all or nothing. Ie, times are tough for many, but that doesn't mean all obligations get canceled. More often than not, a helping hand is what people need. If rent is $1000 and the tenant is in a really tough bind and you believe deferring won't help, then maybe write a provision dropping to $600 for 2 months. Like @Nathan Gesner insinuated, if we go down the chain forgiving everyone's obligations, it gets messy. Be caring and work with each other, that's a better recipe for mutual benefit.
2 Reply
Ujwal Velagapudi
Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes
6y
I agree with @Nathan Gesner, as a landlord we are just in the middle of the supply chain. We shouldn't be the ones to take the hit. It doesn't start with us and it definitely shouldn't end with us. If the guys on top (lenders, insurance companies, utilities, etc.) alleviate some weight off of us, then it makes sense to chip in as a collective unit to help out our tenants. Otherwise it's on a case by case basis of the risk/reward with your specific tenant and what you're willing to offer them. Requiring evictions, regardless if they were covid related or not, to be postponed during a lockdown are ethical and fair which the landlord is already taking on the brunt of with a non-paying tenant while providing them full accommodation.
2 Reply
Ben Zimmerman
Rental Property Investor · Raleigh, NC · Member since 2016 · 393 posts · 995 votes
6y
Should food be free during the corona virus? What about your medical expenses, should those be free? What is so magical about rent that landlords should simply bend over and accept no payments from their tenants?
If someone was laid off, they are getting at minimum 600/week in addition to whatever your states regular unemployment benefits are. They also got at least 1200 in cash.
If it weren't for the media and constant articles about rent strikes and crappy companies like Cheesecake Factory declaring they aren't paying rent even during the very first month. Are we really to believe that a billion dollar company cant afford April rent? The restrictions on evictions doesn't help either. They know that they can simply get free rent for however long this lasts so why should they pay? Why not just keep that 1200 and unemployment and just not pay the bills and move out once the evictions start up again. How many landlords are actually going to waste money on lawyers and take their former tenants to court afterwards and try to obtain a judgement? -Not many.
I have all rent payment info sent to the credit reporting bureaus and have notified my tenants that I am willing to work out payment plans, but that rent is still ultimately due and will negatively impact their credit if things can't be eventually resolved. So far I've had 100% on time payments during this crisis in my B class units.
8 Reply
Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y
Not a consideration at all, in fact all our rents are either on-time or early as are our mixed use NNN commercials. We have some tenants making a lot more/month on 'stimulus/unemployment' than when they were working. Time will tell, BUT we can weather it.

The one family member who told us for DECADES we have no idea how to invest in real estate & what we're doing is ALL wrong, just sent me the article below, gloating that we are about to face tough times & financial ruin. During the 2008 housing crisis, this same guy emailed me weekly telling us to sell all our properties. In 'passive' (income) defiance we were buying, buying, buying & with CASH.

Having just turned 65 he admitted he can't retire until his mid 70's, after many years of a high end consulting income, a recent large mortgage & because (according to his wife) his own very poor financial investments.
Every Landlord Needs To See This Shocking Chart Before May 1st
by Tyler DurdenSat, 04/25/2020

Last week we identified a potential rent strike brewing among the working poor in New York City. Many of these folks are planning to skip out on May 01's rent payment to their landlords.......

... the virus pandemic, triggering mass quarantines and economic depression, has exposed America's second housing crisis. We recently noted that as many as 30% of Americans with home loans – about 15 million households – could stop paying if lockdowns continued through summer.
2 Reply
Nick Rutkowski
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
6y
@John Underwood
The free market capitalist in me says “no, everyone should keep paying rent and the government had no right to shut down businesses.” The socialist in me says “...”
0 Reply
Wesley W.
Rental Property Investor · The Vampire State · Member since 2013 · 2k+ posts · 2k+ votes
6y
I am not even listening to any argument lawmakers have until the conversation involves forgiving the TAXES I have to pay as a landlord. It's ironic how they pass legislation to make companies and individuals take the financial hit, but they are not willing to "share the pain."

Here in NY, my property taxes are about the same as my mortgages each month. Forgiving the mortgage (at the lender's expense, mind you) only alleviates a portion of my monthly operating expenses.

Funny stuff.

Like @Nathan Gesner said - where does it end? Not every bad thing that befalls you needs to be someone else's fault or responsibility.
3 Reply
John UnderwoodPro Member
OP
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
Originally posted by @Nathan Gesner:
I'm only reading and responding because it's you, John.
If you forgive Tenants of their responsibilities because they are out of work, then you have to forgive the restaurant owner, the hospital that had to furlough all their staff, the farmer that can't sell his apples, etc.

There's no end to this.

What we really need are some leaders with cajones that understand how to conduct a basic cost:benefit analysis based on actual data, not unproven models and fear. Our government shut down the economy without a justifiable reason and the vast majority of us will suffer the consequences while the vast majority of them will become wealthy.
Start preparing because this is not the worst of it.
I absolutely agree with you.
At the end of the day I'd like to get the rent from all my rentals. If the government is going to say it's OK not to pay rent then I'd like the government to make those payments vs me not getting paid at all.

1 Reply
Alex Kreeger
Member since 2019 · 63 posts · 60 votes
6y
@Nathan G. In your opinion, what are you pointing to as the worst of it? I appreciate your opinion in all of the other posts I’ve read and would like to hear it on this Major issue, if you could. Thanks
1 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Originally posted by @Alex Kreeger:
@Nathan G. In your opinion, what are you pointing to as the worst of it? I appreciate your opinion in all of the other posts I’ve read and would like to hear it on this Major issue, if you could. Thanks

The short version? I think we'll see a strong bounce this year as things open up. People, businesses, and government will have extra money in their pocket and they'll spend it like drunken sailors to give our economy a false boost. The real depression will hit next year after businesses start to shut down permanently across the country and the bill comes due.

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3 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
I don't think rent should be forgiven. Most govt are offering money to those who lost their jobs (and many who didn't have jobs are getting extra money). The amounts they are getting more than cover their rent and living expenses. I get some smaller businesses, but large companies (like cheesecake factory) are taking advantage of free money and not paying rent.
By all means work with some individuals who can pay most of their rent and a plan to pay outstanding rent, but I'd ask for proof that they lost their jobs.
0 Reply
Joel Atzenhoffer
Property Manager · Columbus, OH · Member since 2020 · 28 posts · 12 votes
6y
@John Underwood, thanks for sharing the article, it has some great information.
0 Reply
Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
6y
Headlines such as: "Should rent (and mortgage payments) be canceled because of the coronavirus?", seems like a news story in the public interest. Approximately 50% of the people rent and 50% of the people own.

Headlines such as: "Should rent ( ) be canceled because of the coronavirus?", seems like a story in the interest of one particular political party's most current attempts to get voters to vote for them.

Media amplification of the potency of so called "Renters Advocates" calling for rent strikes is probably either Fake News hoping that gullible people will try doing this, or greatly overblown.

When the so-called "Renter Advocate's" lease comes up for renewal what do you think the result will be.

I understand the working poor, and losing their housing situation is a rough road for these people. I doubt that many will become as militant rent-wise as those who have their pockets a lot more lined with money want them to be.

And as to "Renters Advocates", Owners are the best "Renters Advocates" there are:

-- Owners prescreen people to make it more likely they can afford to continue to live indoors.

-- Owners provide clean, safe, comfortable housing situations to people who can not afford to buy their own home.

-- Owners maintain the property so those who cannot afford to do it have a roof over their head that does not leak (an un-doable repair expense for "The Working Poor"), and replace furnaces so they don't freeze to death in the winter, and replace hot water heaters so they can wash.
The working poor cannot afford to buy furnace, let alone the price of installation.

There is not a renter/owner problem in the USA, other than what is being artificially gined up.

The system works well for both sides.

Just my 2 cents.

0 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
I do not see the landlord's side in this at all.

They do 2 minutes of tenants fighting back against mistaken property manager form letters- saying there is a moratorium in affect, and then they say "well millions of tenants don't know there is a moratorium... WHAT? And then they have a Princeton professor stating "If evictions are allowed to continue..." Huh?

Look at the WSJ link I put up- That is more accurate, tenants in the process of eviction given a reprieve. Other tenants ducking a concerned landlords offer to help...

This is garbage, and I listened to the whole thing because it came from @John Underwood
1 Reply
John UnderwoodPro Member
OP
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
Originally posted by @Patrick M.:
I do not see the landlord's side in this at all.

They do 2 minutes of tenants fighting back against mistaken property manager form letters- saying there is a moratorium in affect, and then they say "well millions of tenants don't know there is a moratorium... WHAT? And then they have a Princeton professor stating "If evictions are allowed to continue..." Huh?

Look at the WSJ link I put up- That is more accurate, tenants in the process of eviction given a reprieve. Other tenants ducking a concerned landlords offer to help...

This is garbage, and I listened to the whole thing because it came from @John Underwood

Sorry I didn't write the article. I just thought it was interesting what this article was saying. Who knows what the government might do to us?
I hope tenants don't band together and do something foolish that would come back to haunt them.
I have a great set of tenants for the most part and all are paying the rent. I try and treat them right so that they want to do the right thing.
2 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
@John Underwood not saying it is your position- I just don't see much in the way of fair representation. Landlords are often mention as "well landlords have expenses too." They need to put a human face on landlords and if they are going to have multiple tenants stories they should do the same for landlords.
I just saw it as a one sided piece.
1 Reply
Michael H.
Investor · Kennesaw, GA · Member since 2018 · 98 posts · 127 votes
6y
Seems like shutting down the economy to avoid potentially hundreds of thousands if no millions of deaths is a pretty valid reason. But who cares about them as long as you get paid? amirite?

Originally posted by @Nathan Gesner:
I'm only reading and responding because it's you, John.
If you forgive Tenants of their responsibilities because they are out of work, then you have to forgive the restaurant owner, the hospital that had to furlough all their staff, the farmer that can't sell his apples, etc.

There's no end to this.

What we really need are some leaders with cajones that understand how to conduct a basic cost:benefit analysis based on actual data, not unproven models and fear. Our government shut down the economy without a justifiable reason and the vast majority of us will suffer the consequences while the vast majority of them will become wealthy.
Start preparing because this is not the worst of it.

0 Reply
Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
6y
Should wages be canceled because of the Coronavirus?
Businesses will have a difficult time the first few months the economy is reopened. They are suffering and when they reopen they will need to pay rent, utilities, healthcare for employees, vendors, etc. Should we help them by canceling worker wages while at the same time placing a moratorium on worker resignations?
Businesses can have signs: Can't Pay Wages. Won't Pay Wages!
1 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Michael H. Life is a bit different when you have a horse in the race. Also, to the extent that you are still oversees, many, many tenants are teleworking, receiving steroid unemployment and otherwise working.
Since the true scope of this crisis has come into focus, I have not seen a landlord who has not been willing to work with tenants who are adversely affected. But again, if you are watching from the sidelines it isn't so bad, is it?
0 Reply
Frank Chin
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
I am in a situation where I see both sides of the story.

Yes, there are millions unemployed, no money in the bank, and wait a whole day on food lines. Then there are those financially unaffected, in fact, doing better in the short run. We are in this category, but we have a struggling tenant who's under stipulation, was four months behind in rent of $2,250/month last June, and agreed to pay $3,000/month to catch up under stipulation in July, haven't paid the stip since December, now 5 months behind under the stip. We were ready to evict, waiting till March, when the 90 day eviction moratorium by Governor Cuomo went into effect. Our hunch is the tenants won't do anything till July.

Here's where we see the current situation. The tenant household has a dad, a taxi driver, an employed son, and two part time (30 hours/week) employed daughters. The son claims he's getting a 2nd job to help the family out. Based on the Federal stimulus, they should all get a $1,200 stimulus payment, plus unemployment, and from what I read, another $600/week. So far, I haven't heard a beep from them.

According to everything I heard, all of this Federal largess is to help struggling people pay rent and buy food.

So should I excuse the rent? The rental is mortgage free and we cash flow $1,500/month after taxes and expense. But due to the "stay at home" lockdown here in NY, our expenses are down over $1,000 month, and if we include our employed daughter who spend every dollar she earned on her full time job while living rent free with us, she now has a surplus of $1,000 month, so we're in fact ahead as a family.

What should we do?? My wife is nervous about renting and doing showings during the pandemic. We normally do open houses. It makes sense if we have them there. Our attorney was taking a tough guy approach which apparently is not working, but offered to be our PM for a fee. Told him we might consider that. We don't really need the money right now and in fact feel sorry for them.

We're sort of in a moral dilemma. To top in off, we're finally settling an estate this week, about $200K plus for us.

If you were in my shoes, what would you do??

0 Reply
Jackie Cramer
Rental Property Investor · North Jersey Shore · Member since 2020 · 102 posts · 49 votes
6y
I would run my business. When they share in your losses they can share in your profits.
Oh yeah. They failed to live up to their obligations already.

0 Reply
Paul Shannon
Rental Property Investor · Fishers, IN · Member since 2016 · 335 posts · 470 votes
6y
Unless socialism is to prevail, which would destroy our economy as we know it, the answer is no. To print money to bail out every business, including rental investors, will ultimately destroy capitalism. You sign up for an obligation, whether debt to a bank or rent to a landlord, the debt is owed.
The reason the USA is the USA and the dollar is the standard or currency is because our debt obligations are sacrosanct. You sign....you pay.
0 Reply
Patrick M.
Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes
6y
Rent Strike
After 40 years of living in Elmhurst, Queens, Jairo Nunez says he will be missing rent for the first time in May.

"I’m not going to pay May or June. Our aim is to get something resolved from the governor. We want the governor to do something for the tenants, not just the rich people, the businesses," Nunez said. "I do have the money, but I want to be with the tenants who are not going to be able to pay rent tomorrow.”
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