tenants vs landlord vs mortgage companies

13 Replies

I'm new to Bigger Pockets and I only own one property so im sure I won't get a lot of attention but even one reply would be appreciated. I'f we have tenants who either lost their jobs or just flat out refuse to pay rent during these times should us landlords continue to pay our mortgage on time? what assistance should we be seeking to keep from digging ourselves in a deeper financial hole?

Thanks for reading, Zack 

@Zack Williams if you can, it is a good idea to continue to pay your mortgage, only go into forbearance if you have to. Because the bank has a lot more recourse against you for nonpayment (in the form of foreclosure) than you do against your tenant (eviction and maybe a judgement, all of which costs about what you might get back)

Your mortgage is contract between you and the loan holder .You dont pay , you lose the house and trash your credit . The fact the tenant isnt paying is between you and the tenant . Its called investing , there is risk . But as a smart landlord you have 6 months of reserves to cover situations like this , so you are fine .

@Zack Williams

Always pay your mortgage. The forbearance is going to destroy some investors and homeowners in two ways. First it's all due in 90 days. In three months you have all payments due. If my mortgage is $1000 in three months it's 3000 plus the next month. I'm not sure this helps anyone. The other part is if you take the forbearance it will be noted on your credit report. Even though it will not impact your score the lenders will see it and I've heard will not lend in the future for 2-4 years. My guess is this will be on a lender by lender basis.

At least reach out to your mortgage provider and talk to them. It doesn’t cost anything to ask. Find out when the forbearance will be due (and if it can be pushed to the end of the mortgage).

Then make a decision. It’s always better to pay if you can, but I don’t see any reason to not use the tools provided to you.

Thank you all for the great information, it's really helpful to see what others are doing in times like these. I'll make sure I pay my monthly mortgage to avoid any further damage to my credit history. 

would it be a good idea to ask my tenant to provide proof of loss of income? or how would anyone go about try to come up with a plan before putting someone on the street.

Thanks for the help everyone. 

Always pay your mortgage. As others said, if you are having problems paying because the tenant isn't paying their rent, talk to the bank. I would also talk to the tenant and see what their plan is. They still owe you the rent money, but may be late paying it under these circumstances. You can also talk to your tenants and give them a offer to let them out of their lease.

Originally posted by @Zack Williams :

I'm new to Bigger Pockets and I only own one property so im sure I won't get a lot of attention but even one reply would be appreciated. I'f we have tenants who either lost their jobs or just flat out refuse to pay rent during these times should us landlords continue to pay our mortgage on time? what assistance should we be seeking to keep from digging ourselves in a deeper financial hole? 

Thanks for reading, Zack 

Hey Zack, if your situation is dire, turn to local credit unions or friends / family that may be willing to give you a loan before you don't pay your mortgage. Not paying the mortgage has ugly consequences as mentioned by those above me. I'd rather have to pay a friend back than deal with my mortgage company. The best case is that your mortgage company tacks on the payments to the back end of the loan, the worst case is that they only defer it 90 days out, or don't do anything at all. 

 

Does it matter if your tenant can prove that they lost income? I'd buckle up and, at the very least, work with your tenant on a reasonable plan to get them caught up. Use this time to research tenant screening and make sure you are protecting yourself and your investment next time by finding a stellar tenant. 

@Zack Williams I agree. Don't do a forbearance unless it is an extreme last result. However, you could ask for a "deferment" where the payments are tacked onto the backend of the loan. BE VERY CAREFUL, make sure you and the lender are talking the same thing or you could find yourself with a forbearance stamp or a loan modification. This is NOT a loan modification either. Literally, you are moving the amortization schedule.

Also, be VERY careful to not ask for anything until you really need it.  I've seen two investors who just inquired about loan forbearance and now their lending is shutdown. 

End of the day, all investors should have enough cash on hand to float their portfolio for a few months.  You can also modify your lease and get your tenant to pay 1/2 now and tack on the rest later.  Even if you had 1/2 of your income coming in you could probably pay most expenses.  Get creative.  

Thank you so much for all the help and input on this topic. I've came away with a lot of knowledge than I came in with and I plan on making sure I stay on top of my mortgage payments. In the long run it will hurt me more than my tenants if I decide not to pay because as an investor my credit holds weight with lenders and that needs to be protected at all cost. I'll get more creative in trying to get my tenant up to date on their payments to prevent this from happening again. 

thank you all and I wish you all the best.  

@Whitney Hutten

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@Aaron K.

hey guys , im back again lol. sorry. will a forbearance have the same effect on a auto or student loan if I wanted to seek a home loan from a lender? im guessing it will have the same effect as any other forbearance, and you should always pay if you can. im a right? lol 

All forbearances work the same and will show on your credit report, but not hurt your score. My guess is that Congress passes something to disallow the forbearance notation during COVID. 

If practical, consider refinancing now. You may get a lower interest rate and there is always that one month period without needing to make a payment on new loans.