Coronavirus and late or no rent payments
Most Popular Reply
Brian BoydPro Member
USA · Member since 2019 · 305 posts · 536 votesArthur,
I was speaking with my wife about this very issue this morning. We have not yet felt the effects of the hit our tenants will feel if they cannot or do not pay their rent. However, we have decided, and this is not for everyone, that we will require them to forfeit their deposits for the month they miss. If they miss again, we will evict.
Like you, we finance our properties and the banks are not going to allow us to miss paying our notes. It's a business transaction. Thus, we treat our tenants the same way: it's a business transaction. They have a place to live in exchange for paying their rent.
This is not a hard line, it is a real world line. We don't get to miss our house payment. We have saved for these possibilities. Once they make their lack of preparedness my problem, I will deal with it like its my problem. That may mean they are without a place to live, which is not my problem.
Others will disagree with me, but others are not paying my bills or paying for my properties. You need to do what is best for you.
Good luck!
694 Replies
- Investor · Saint Johns, FL · Member since 2015 · 141 posts · 100 votes6y
I have tenants who have been great for years. If they are in a tough spot because of these crazy times, I would totally help them. I am in the position that I can, and that is the right thing to do. We have to remain humans and have empathy. I know over-leveraged investors start to panic now and do whatever they can to save themselves. That is a choice they made when they invested and everyone must take responsibility for that. People have short memories, unfortunately.
- Member since 2019 · 25 posts · 18 votes6y
Originally posted by @Rachid B.:
I am fine with helping someone under the current circumstances. But, how would you deal with a tenant who hasn't paid his rent and utility since January and has no plan in doing so for the foreseeable future? This is a perfect opportunity to get a free ride. I have no sympathy with these types.
I have that guy. Before it became common place, just two day ago, I offered him a 'sweetheart' of a deal. Told him I would give him 50% off his rent the next 3 months if he got current with his back Feb and March rent/Utils. I had my PM send over a agreement letter that he would only be liable for $1000/month though June 2020 IF he paid the back items. Otherwise, it would be normal rent. The next day, my PM got a check for $3600 for the back stuff.
His lease is up in June 30th, so I'll end up removing him then (if the moratorium is lifted) but for now, I hope that the rent reduction helps him for 3 months and I got my back rent to help make it though. He's been late 6 of the 8 months he's been in.
- Member since 2018 · 4 posts · 1 vote6y
My thought, I can apply last months rent and make it 11 months. The damage deposit is intended for property damage. That could be used for the second month. I mean if it goes on for several months....but, I need to replenish the damage deposit.
But it seems like a win win for the tenants. No rent payment, some have paid sick days, and a stimulus check. I'm a bit confused.
- Contractor · Canton, GA · Member since 2015 · 111 posts · 81 votes6y
@Tiffany Stevens I’ve got tenants at Uga. Its pretty much a ghost town for students unless they are working or transfer students.
The thing about my renters are they are actually locals who work and live in Athens.
I don’t know how the students will fare if they go back with unpaid leases. I assume the new students coming in August will have first choice provided the economy supports higher education and a depression doesn’t drop in.
- Member since 2018 · 21 posts · 13 votes6y
I already chimed in but a new direction came my way I had no idea...
I called my lender and they offer what is called Forbearance where there's 3 options to keep you going during tough times like when you don't get rent due to corona-crap and market crash at same time.
I'm no expert but seems like a good time to hold your transactions if you can. See how this all plays out. Seems like a great tool for anyone to use.
Here's forbearance:
1. 3 months deferred payment with no additional fees. You have to pay it back on the 4th month. So that's 4 months paid at same time. If you only need a month off, that's fine too.
2. Payments for 6 months. (of the 3 months you didn't pay) And they look to see if you can handle the added payments. If not...
3. Rework the loan to suit your situation.
- 6yStephen KeigheryBusiness MemberRental Property Investor · New Orleans, LA · Member since 2018 · 717 posts · 555 votes
@Arthur P. Get them to file for unemployment ASAP
Home Buyer Louisiana4.855 Reviews - Bolingbrook, IL · Member since 2018 · 29 posts · 9 votes6y
I’m really loving this thread and the ideas that are being shared. Just recently, I received a request from a tenant to lower the rent due to financial hardships caused by the recent outbreak. Being that she’s a fantastic tenant who pays on time every month and is easy to business with, I plan on discounting the rent for the next 3 months to assist her through these uncertain times. The discounted rents will be deducted from her security deposit. I was a little on the fence on tapping into the security deposit but when I weighed the option of possibly losing a great tenant and turn over costs, the decision was a no-brainer.
If this COVID-19 situation gets worse and the general public’s income takes an even greater hit, I plan on contacting the mortgage companies to see if there is anything they can do to help situation. I do have reserves set aside, but before breaking the piggy bank, I plan on exploring every possible option.
- Naperville, IL · Member since 2018 · 330 posts · 357 votes6y
My take on it---there will not be new tenants lining up to replace ones who leave....like in 2009, people are going to move back in with their folks, and demand will fall, and probably prices too. Got my first message about it today...he's a waiter, she teaches cosmetology...both laid off.
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes6y
Honestly I think it's too early to have any idea the impact this is going to have, what will be done by banks on mortgage loans, etc. Though I know everyone is hyped up with all that's going on, it's probably best to wait, let's see what's coming down the pike, and try to find solutions once the dust settles.
It seems going to court, trying to evict tenants, at a time when there is so much upheaval, even court houses, title companies, etc. are closing, would be futile and a waste of money. In the next week we'll know more.
- 6yKenneth HynesPro MemberRental Property Investor · Easton, PA · Member since 2013 · 359 posts · 92 votes
@David H. Thank you for the info on the SBA program . Another optio for Landlords
- 6yJason BottPro MemberInsurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
Originally posted by @Bryan O.:
It seems like everyone is commenting about "use your reserves" or "kick them out". All of my bank documentation for rentals has a section that requires:
"RENT LOSS INSURANCE. Borrower shall maintain insurance against rent loss in addition to the other hazards..."
Which means your policy should have rent loss claim capability. My insurance company calls it "Fair Rent Value". I have not yet had a chance to look into the exact coverage scenarios, but assuming your tenants being forced out of work by the government and then halting evictions is covered then the scenario is already planned for and already insured against (by those using "normal" home loan leverage).Any insurance folks have input here?
Every business in America is asking this question right now.
The short answer for landlords is you do not have coverage.
Coverage language regarding this loss is fairly clear. The insurance policy requires that there be direct physical damage by a covered cause of loss. The Business Income loss to your business was not caused by direct physical damage and a virus is not a covered cause of loss. That being said, after disasters there have been instances where courts and/or government bodies have stepped in and interpreted policy language very broadly, potentially resulting in coverage being applied.We don’t know what is going to happen, but there is no doubt this is a disaster that was unplanned by anyone. We think it is important that a Business Income claim be filed with the insurance company for the business closure due to civil authority. We anticipate that the insurance companies will deny the claim based on their interpretation of the policy language. However, if there are court cases/governmental action somewhere down the line that results in Business Income claims being paid, we want your claim officially registered with the insurance company
- Member since 2018 · 2 posts · 0 votes6y
@Tiffany Stevens please let me know if you hear anything - we ave properties in Winder and long distance investing doesn’t let us have as close contact with the tenets so we are trying our best to keep eyes open on what’s going on
- Property Manager · Atlanta, GA · Member since 2016 · 35 posts · 23 votes6y
Originally posted by @SVetlana Peter:
@Tiffany Stevens please let me know if you hear anything - we ave properties in Winder and long distance investing doesn’t let us have as close contact with the tenets so we are trying our best to keep eyes open on what’s going on
I will let you know what I hear. Its getting tighter and tougher by the day.
- Rental Property Investor · Mountain Top, PA · Member since 2016 · 15 posts · 9 votes6y
@Arthur P.
Will this downturn in economy make section 8 renting more appealing to investors who come across great deals found cheap on the market? Not my first choice, but if things get more hairy out there and great deals are found, why not? Thoughts...
- Property Manager · Atlanta, GA · Member since 2016 · 35 posts · 23 votes6y
Originally posted by @John Patterson:
@Tiffany Stevens I’ve got tenants at Uga. Its pretty much a ghost town for students unless they are working or transfer students.
The thing about my renters are they are actually locals who work and live in Athens.
I don’t know how the students will fare if they go back with unpaid leases. I assume the new students coming in August will have first choice provided the economy supports higher education and a depression doesn’t drop in.
Hopefully those students have decided to go to the online class option like what's being done at all the state colleges in Atlanta. The transition will be a little tough but at least will get them through may of this goes that long.
- Property Manager · Atlanta, GA · Member since 2016 · 35 posts · 23 votes6y
Originally posted by @Joseph B Lively:
Originally posted by @Rachid B.:
I am fine with helping someone under the current circumstances. But, how would you deal with a tenant who hasn't paid his rent and utility since January and has no plan in doing so for the foreseeable future? This is a perfect opportunity to get a free ride. I have no sympathy with these types.
I have that guy. Before it became common place, just two day ago, I offered him a 'sweetheart' of a deal. Told him I would give him 50% off his rent the next 3 months if he got current with his back Feb and March rent/Utils. I had my PM send over a agreement letter that he would only be liable for $1000/month though June 2020 IF he paid the back items. Otherwise, it would be normal rent. The next day, my PM got a check for $3600 for the back stuff.
His lease is up in June 30th, so I'll end up removing him then (if the moratorium is lifted) but for now, I hope that the rent reduction helps him for 3 months and I got my back rent to help make it though. He's been late 6 of the 8 months he's been in.
*insert sarcasm* Surprise!
- Member since 2020 · 1 post · 1 vote6y
I live in California & they have a specific clause stating you can NOT use the deposit for rent.If you go to court they will make you return _the money.
_____
- 6ySteve HyznyPro MemberInvestor · cedar lake, IN · Member since 2017 · 32 posts · 18 votes
With the cost of eviction, loss of rent and repairs to rent to who?
If your tenant is being evicted who is going to rent it?
The problem is the the people stocking up running their credit cards up, then loosing their job, and then loosing their house.
I have had a tenant for 10 years, she lost her job for 6 months, she worked to get help to cover her rent, in the end when she got a job she was 2 months behind, I took the amount and split if over 2 years and added it to her rent as an increase. She has been paying for the last 3 years, I hope I don't have to do this, I have some tenants that are on government paychecks already so I expect them to be able to keep paying. I don't like leveraging my properties to grow faster, because I've seen issues pop up and people that are leveraged loose what they have.
I hope local government would hold off on property taxes, so i can hold off on a little rent until we all recover.
- Investor · Phoenix, AZ · Member since 2015 · 18 posts · 1 vote6y
I do off campus housing with one fourplex in Utah. Classes will be going online as a result of the virus and I got my first student call today saying she was moving early. I came to this message board to see if anyone knows if refunds are expected of landlords in this situation. I can live without April's rent from 11 students but I'm not happy about it. I'm retired and I live on that income and it will affect me. Will their be bailout checks for landlords?
- Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes6y
Originally posted by @Renee Lee:
@Anthony Angotti
Do you have a document to share that states this?
I don't have a document for this. We have an employee that handles property management. This is what I told her, almost word for word and then I copied what I said here onto a doc that we can keep internally as a policy for fair housing purposes.
This isn't something I'm advertising to all tenants. It's on a case by case basis. I don't want tenants that could otherwise pay get the idea that they don't have to pay in full this month. We are only doing it if someone approaches us with documented hardship.
We did send out letters with places where they can get economic assistance though. It included their contact information.
- Flipper/Rehabber · Pensacola · Member since 2019 · 24 posts · 3 votes6yHopefully this will come to fruition...
https://finance.yahoo.com/news... - Oak Park, IL · Member since 2014 · 285 posts · 114 votes6y
Every landlord is concerned but you cannot go for long like this. I have $31000 rents coming in every month with 23 tenants. My expenses are $20000 every month. I have $160000 in cash reserves right now. I am still concerned i.e., 8 months of expenses with zero tenants paying rent. My properties are usually at least B class neighborhoods, some in A. Majority of tenants will keep their jobs except 3-4 of them. Still it is scary.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes6y
I woke up this morning with the thought to forego my profit for April. I don't have an expensive lifestyle, no car payment.
So, I sat down and wrote down all of my mortgage payments and lowered every tenant's rent payment some above my mortgage. Most are getting a $ 300 discount.
I wrote letters to everyone, that I'm distributing today.
I know that a lot of my tenants are effected. I have a creative community and many of them have jobs in the serving or entertainment or film industry. Only a few have reached out so far, but some might just break their lease and move in with parents or whatever.
They've also just set a moratorium on evictions here. So, perfectly responsible people, can be desperate and decide to rather take the eviction hit and hang on as long as they can, because they don't have any income and don't know when this will end.
Many of my units have housemates, so, if the remaining rent is divided by 2 or 3, the upcoming stimulus payments (they talk about 2 checks of $ 1200 each) might help them stay afloat for a few months and pay rent. Maybe we'll be able to flatten the curve and have a vaccine or pills to cure or whatever.
So, if I can get my mortgages paid that way and have no vacancies, I'm willing to give some up front and hope for the best.
- Investor · Comstock Park, MI · Member since 2015 · 54 posts · 14 votes6y
Just got off the phone with my mortgage company and they are able to halt the payments for the next 4 months with no late charges or report to the credit bureau. It will require a balloon payment on the 4th month so I plan on making 1/2 - 3/4 payments. I have enough in reserve for full payments but I'm just being proactive. I'm going to send out letters to my tenants today to let them know they can make what ever payment they are able to afford, but a minimum of 50% is required and the remainder that they don't pay will come out of their security deposit but let them know that they will have to replenish their deposit later down the road.
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