Coronavirus and late or no rent payments
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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
- Rental Property Investor · Mc Kinney, TX · Member since 2013 · 50 posts · 50 votes6y
Originally posted by @Jessica Edmond:
Hopefully this will come to fruition...
https://finance.yahoo.com/news...“The Trump administration is considering a plan to allow homeowners whose income was cut by the coronavirus to delay mortgage payments. Still to be decided is a mechanism for borrowers to catch up.”
Doesn’t sound like it would be useful to landlords who have tenants affected. The landlords are the ones paying the mortgages. And foregoing mortgage payments while interest continues to accrue also isn’t a solution because it’s still punishing landlords.
- Member since 2020 · 1 post · 0 votes6y
@Tyrone Jackson I agree. Besides, as a practical matter how who would rent your now-vacant unit? Better to work with your tenants as much as possible.
- Flipper/Rehabber · Pensacola · Member since 2019 · 24 posts · 3 votes6y
@Paul Doherty, I take that as meaning, us as homeowners income is being cut
because we are not getting rents from the renters". Rents is considered
income per tax laws. So the stimulus should directly relate to homeowners with rental income that are not able to pay their rent, thus us not paying our mortgages.
@Michaela G. Great plan you implemented. I love it. Creative,effective and thoughtful of your tenants.
What exactly is the rule in "no eviction" states/jurisdictions regarding rent payments? Does this mean that rent is optional for everybody in the next 90 days or are payments simply deferred past the 90 days period (i.e. if rent is $1000, do they owe $3000 in 90 days or are the next 3 payments considered lost income)? I haven't seen anything clarifying this, but I'm just wondering why even the employed renters would still pay rent?
- Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes6y
I think this conversation is beyond a financial one, and is now a moral one. I started a thread about that if anyone is interested. Landlords can help the situation if they choose to. I am sure this thread of 16 pages has had much talk of this already (didn't get through it - sorry).
We are retired from an industry with no pension. We planned all of our working life for this & got into the rental business for our retirement income. We've worked very hard & used up a considerable amount of our personal savings to purchase & renovate several older houses into fantastic properties for our tenants. I would live in any one of them! That said, we count on rent to live, pay our personal expenses, taxes, insurance, maintain the properties, etc. We are lucky to have no mortgage payments but that means we can't go to anyone to request relief. We're not "fat cats" that can absorb a huge loss of income over an extended period of time, but are willing to work with our tenants as much as we can. Luckily with our 13 doors, we only have one that we are anticipating having some real issues & she is an older, long term tenant with health problems + self emplyed in a "people" business. We also have a couple that we fear will take advantage even though they are still getting a pay check. For those, if they do take advantage of this, will we be able to just not renew their lease when up? It's not an eviction.....
- Investor · Springfield, MA · Member since 2010 · 277 posts · 84 votes6y
My understanding is it is deferred. Just like banks are doing for mortgage payments.
Originally posted by @Jason L.:What exactly is the rule in "no eviction" states/jurisdictions regarding rent payments? Does this mean that rent is optional for everybody in the next 90 days or are payments simply deferred past the 90 days period (i.e. if rent is $1000, do they owe $3000 in 90 days or are the next 3 payments considered lost income)? I haven't seen anything clarifying this, but I'm just wondering why even the employed renters would still pay rent?
- Flipper/Rehabber · Arlington, TX · Member since 2014 · 78 posts · 58 votes6y
I'm w you Tyrone!
I haven’t broadcast this to my tenants but I’ll work with them. I’ll certainly waive late fees and if need be, I can reduce the rent by 30% for up to 3 months. (but no longer) I’d rather keep them and lose a month’s (total) rent than have to go through the larger costs of vacancy, make ready and re-letting expenses.
So far only one set has been laid off but they have some savings so they are expecting to get by.
- Member since 2018 · 70 posts · 89 votes6y
Merrit, I understand that we need to be morally responsible in these times and I don't think there's any of us blaming our our good tenants for the situation. I think the blame is aimed at the more short-sited government edicts that don't address those taking the financial hit.
Luckily I have enough reserves to last a while but if this becomes a zero rent scenario then in my situation I'll be paying around $2,500 per month in just expenses (maintenance, taxes, management and insurance). Shouldn't there be some assistance for those of us housing those in need for free? Or, do you believe it is just that we bear 100% of the burden for morality's sake? Would your opinion be a different one if this moratorium lasts 6 months, or 12 months etc.? At what point will we have paid our due to society? Should morality bear our standard when we are unemployed and deciding on whether to hold on to our investment or just let it go so we can feed our family?
Again, I'm not upset about the tenants having issues. They are victims just like us. I'm just asking about when our life-line will get here.
- Rental Property Investor · Johnstown, CO · Member since 2015 · 119 posts · 78 votes6y
@Jason L. My understanding is that rent is still due. It's not "optional" What it means (I think) is that if someone does not pay they can be evicted, but not until <90 days in your example>Best thing I can say is be proactive and reach out to your tenants ASAP and work with them as best as you can. Will people take advantage of this, you bet. People take advantage of things all the time - this is nothing new. The ones that do will get a free ride for a few months but they're cutting their throats when the time comes that you kick them out and they need a new place. It sucks, but it is what it is right now.
Lastly, in your 90 day example, I don't see anyone being evicted until at least 180 days because I fully expect a massive amount of evictions to overload the courts when the 90-day period is up. This is why I recommend working with your tenants as much as you can. It'll be a win-win for both of you in the long run. - Flipper/Rehabber · Arlington, TX · Member since 2014 · 78 posts · 58 votes6y
Originally posted by @Jerry R Harris:
I, currently, have two duplexes under contract.(All occupied) Should I hold off on closing? Just looking for a second opinion....
It depends on where you are Jerry. I do see a recession coming and likely some price drops but Duplexes are hard to come by in DFW. If you're in a booming area like Dallas, I'd probably move forward.
- Flipper/Rehabber · Arlington, TX · Member since 2014 · 78 posts · 58 votes6y
Originally posted by @John Kennedy:
We have 13 units in Indy and here's a letter I'm about to send to my tenants...
Excellent letter John
I just sent this to our tenants & have had good response so far - (borrowed parts from all over the internet)
Hi y'all -
We are focused on what is best for our country, our community and the long term health of our tenants. That said, we still have expenses and financial obligations related to each property. Since Ginger and I are self employed as your landlords, we are not receiving financial help as the large companies are. With all the uncertainty at this time, we ask that if you continue receiving a pay check that you continue to pay rent. Please reach out to us if your circumstances change so we can devise a plan & we will all get through this together. Please stay safe, healthy and at home as much as possible.
- Member since 2020 · 65 posts · 9 votes6y
Please go to your local rental association websites for more information on specific options in your state based on your laws and potential free to very low cost rent amendment documentation (The Oregon association gave it for free early this week - so I now feel like my membership has more than paid for-it-self). Oregon already has a very simple document that gives you lots of options to work through with tenants. I imagine that most other state have already done this or that they very soon will. While I live in California - - joining the Oregon based rental association and receiving their low cost legal documents, monthly newsletters, and contact resources was the very best financial decision I made last year!!!!!!! DO-NOT-WAIT if you have not done this. They are generally very cheap to join and will give you experienced options specific to your state that will help keep you out-of-trouble.
- Investor · Springfield, MA · Member since 2010 · 277 posts · 84 votes6y
I agree. I would much rather keep my tenants and over a short term reprieve. I am just concerned if I need to do it with all my tenants. Currently we have over 500 units and giving a 30% cut across the board would hurt. I am think what we might do is at least for the first month offer them to sign a form allowing us to apply their last month's rent to their balance so they have some breathing room and I have the cash flow. And if this continues go from there.
Originally posted by @Jennifer Ryan:I'm w you Tyrone!
I haven’t broadcast this to my tenants but I’ll work with them. I’ll certainly waive late fees and if need be, I can reduce the rent by 30% for up to 3 months. (but no longer) I’d rather keep them and lose a month’s (total) rent than have to go through the larger costs of vacancy, make ready and re-letting expenses.
So far only one set has been laid off but they have some savings so they are expecting to get by.
- Investor · Springfield, MA · Member since 2010 · 277 posts · 84 votes6y
Can you share a link to the document? Curious to see how it reads. Thanks
Originally posted by @Sonja Sevcik:Please go to your local rental association websites for more information on specific options in your state based on your laws and potential free to very low cost rent amendment documentation (The Oregon association gave it for free early this week - so I now feel like my membership has more than paid for-it-self). Oregon already has a very simple document that gives you lots of options to work through with tenants. I imagine that most other state have already done this or that they very soon will. While I live in California - - joining the Oregon based rental association and receiving their low cost legal documents, monthly newsletters, and contact resources was the very best financial decision I made last year!!!!!!! DO-NOT-WAIT if you have not done this. They are generally very cheap to join and will give you experienced options specific to your state that will help keep you out-of-trouble.
- Norwich, CT · Member since 2014 · 5 posts · 3 votes6y
I am the last person to really speak about being a landlord based on the fact that I am not one (here comes the but), But I would think that any person the has leveraged property for rent would have put CASH aside for vacancy or some other form of emergency. Seems to me that a lot of the threads that I am reading, things like, "thats not my problem they cant pay rent" and "its a business and not a charity" is misdirected frustration because they, the business owner, is either over leveraged or didnt plan properly to handle this type of situation. Not saying that anyone would have expected something like this but you would think that most landlords would be able to manage a two month vacancy or equivalent with renters not paying rent. By all means this money is still owed and due to the landlord but you would think it is something they can work out with the tenant. For personal savings they say three to six months of expenses saved in cash, and I have that, so I wouldnt expect much difference with a business.
- Flipper/Rehabber · Arlington, TX · Member since 2014 · 78 posts · 58 votes6y
Originally posted by @Brittany Vigneault:
I am wondering if taking out 20k from my HELOC would be a good idea right now since I have no cash reserves. I am
Hi Brittany,
If you don't have any reserves, you were in a risky spot before this COVID 19 mess. I know you've got a good job but Markets are cyclical and there is always a downturn; a fatal error investors forget about when Markets are great.
I saw many a prolific investor go under and lose all their properties in the 2008-2010 downturn because they didn't have any reserves to cover their debt service after the rents decreased or flat out dried up. I always try to leave a chunk in the bank; like it doesn't exist or, at least know where it's coming from if I were to get in a bind.
I'd get the HELOC until you have enough reserves to cover 3-6 months of your debt service for your business. It'll cost you a little in closing costs but & hopefully you won't have to use it but it'll be a relief knowing it's there. (BTW, just so you know, you can't get a HELOC overnight. It's just like a normal loan w underwriting, and a closing, etc.)
Wish you well,
Jennifer Ryan
- Flipper/Rehabber · Arlington, TX · Member since 2014 · 78 posts · 58 votes6yOriginally posted by @Matthew T.:
I agree. I would much rather keep my tenants and over a short term reprieve. I am just concerned if I need to do it with all my tenants. Currently we have over 500 units and giving a 30% cut across the board would hurt. I am think what we might do is at least for the first month offer them to sign a form allowing us to apply their last month's rent to their balance so they have some breathing room and I have the cash flow. And if this continues go from there
Originally posted by @Jennifer Ryan:I'm w you Tyrone!
I haven’t broadcast this to my tenants but I’ll work with them. I’ll certainly waive late fees and if need be, I can reduce the rent by 30% for up to 3 months. (but no longer) I’d rather keep them and lose a month’s (total) rent than have to go through the larger costs of vacancy, make ready and re-letting expenses.
So far only one set has been laid off but they have some savings so they are expecting to get by
500 doors is a different story. Wow. Hang in there buddy!
- Las Vegas, NV · Member since 2011 · 42 posts · 17 votes6y
I am at around 100 doors, am not proactively offering tenants anything if they don't reach out. Everyone is panicking right now, which I believe is a good thing because it makes people take this seriously and isolate as required so that we can overcome this faster.
Every time I pay a bill right now I second guess if I should wait, if I have a larger bill owed to a company that offered me to defer payment I would take the offer immediately even though financially I can afford to pay the bill. I think a lot of tenants would take the offer even if they didn't need to. The government plan to provide cash infusions to all Americans will go a long way to helping us out too I believe, though the next few months will be crazy before things begin to settle down a bit.
We have to remember also that this is just the initial panic portion, the world is working together not just for a vaccine but for medications that will help slow down the rate of infection and severity of the symptoms if people develop any at all.
I have signed 7-8 leases in the past two weeks at full market rent, have had 2 people ask to defer a portion of past due amounts, and am more than willing to work with people that need temporary help as everyone should be. So far so good, most of what I read online says that the B/C rental housing should be better off than most other segments of real estate investments.
- Investor · Austin, TX · Member since 2013 · 32 posts · 16 votes6y
For some of the non-landlord friendly states like California, the governor is taking a stan on no evictions or rents increases. We are researching more alternatives but payment plans might have to be an option for us.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Ginger H.:
We are retired from an industry with no pension. We planned all of our working life for this & got into the rental business for our retirement income. We've worked very hard & used up a considerable amount of our personal savings to purchase & renovate several older houses into fantastic properties for our tenants. I would live in any one of them! That said, we count on rent to live, pay our personal expenses, taxes, insurance, maintain the properties, etc. We are lucky to have no mortgage payments but that means we can't go to anyone to request relief. We're not "fat cats" that can absorb a huge loss of income over an extended period of time, but are willing to work with our tenants as much as we can. Luckily with our 13 doors, we only have one that we are anticipating having some real issues & she is an older, long term tenant with health problems + self emplyed in a "people" business. We also have a couple that we fear will take advantage even though they are still getting a pay check. For those, if they do take advantage of this, will we be able to just not renew their lease when up? It's not an eviction.....
good news is you have no debt and can sell an asset or two that would carry you through the trough.. there is simply risk when you rely on money from any third party .. this will pass..
- Member since 2018 · 70 posts · 89 votes6y
What would make sense for me for the Feds to do would be to push some money into HUD to temporarily increase the HUD certificates that can go out and decrease the time to qualify for one. So, for example, the once solvent tenant who is now unemployed with minimal prospects can get a HUD certificate that would pay the Landlords a portion of rent (not a huge money-making portion but an amount that would help them meet their expenses).
For example something like this:
Tenant loses job and after 30 days of unemployment they can get this special new certificate that will pay X amount (determined by city and # of rooms). So the landlord who was once getting $1100 for his 3 br house might now get 650 but it will protect both the tenant and the landlord in case this doesn't get resolved within the next 6 months.
I don't think this should be a period where tenants are in jeopardy and I believe that landlords should at least be made whole enough to stay solvent enough to keep the property and not be in a position of total insolvency after this is all over.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Stephen Keighery:
@Arthur P. Get them to file for unemployment ASAP
I dont think unemployment benefits will handle all the bills for most folks..
- 6yJoel DavidPro MemberMember since 2018 · 1 post · 5 votesI saw something in a meme I believe essentially saying that in the next few weeks the true character and ethics of people and businesses will be revealed. I think that is 100% true. We've seen a lot of companies and individuals "step up to the plate" being willing to help out where possible. We don't have hundreds of units so maybe we are different but we will not be looking to boot people out. We are blessed enough to have good tenants and they don't grow on trees as you all know. We will be willing to reduce the rents during this time to those that truly need it due to job loss or sickness. Hopefully those laid off will be able to get unemployment and for those that don't and end up needing to move in with family well then I guess we will cross that bridge at that time. Hopefully the grace we show will be remembered and rewarded down the road. I am also watching for those tenants that might be looking to BS on this and just know that they can't be evicted - the character and ethics of tenants will be revealed as well and if there are any of those they will be dealt with accordingly too :) Anyhow just my 2 cents. Stay healthy all!
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