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
- 6yBrian BoydPro MemberUSA · Member since 2019 · 305 posts · 536 votes
@Jay Hinrichs all good points and salient as investors go through this current situation. My wife works in the pharmaceutical industry on the research side and is keeping abreast of the testing. It’s their belief (Big Pharma) that once a test can get to market that rapidly identifies the virus and quarantine can be instituted, the curve will flatten faster.
But I digress, April and May are going to be tough. I have already had a client call about the SBA loan/grant and that may be an option for the investors on this forum since housing is an essential need. Here is the link if anyone wants to consider this option:
Www.disasterloan.sba.gov
- Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes6y
@Heather Frusco
Agree entirely.
I'm all about someone who documents hardship, and was on time all the time, being given an option of deferred payments and then tracking their situation.But if they don't locate assistance or a new source of income by May then I can't keep floating them.
By then they should have at least: reached out to unemployment, reached out to other assistance programs, enrolled in subsidized housing, tried to locate alternative employment that will pay more than their unemployment, etc. Additionally the tenants should have been providing consistent updates on what efforts they are taking to resolve the situation.
If they can't help themselves then I can't subsidize them. If you have 1 or 2 rentals then maybe it makes sense to be charitable. There's a way to make sure that you are being fair/understanding, but also being firm on the fact that people still do owe rent. But the larger the number of rentals you have the less flexible you can be, because as you said, the reserves are also for major Capex items. - Rental Property Investor · Mc Kinney, TX · Member since 2013 · 50 posts · 50 votes6y
Originally posted by @Alan Grobmeier:
@Paul Doherty, ALL of my rental are financed with conventional loans, not Fanny or Freddie. It looks like I’m screwed if this thing goes longer than I have cash/income. :-(
I read that any loans packaged and insured in a way as to be compatible with Fannie/Freddie guideline (which includes conventional, not just FHA) would qualify. Do you have info that says they aren't?
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Brian Boyd:
@Jay Hinrichs all good points and salient as investors go through this current situation. My wife works in the pharmaceutical industry on the research side and is keeping abreast of the testing. It’s their belief (Big Pharma) that once a test can get to market that rapidly identifies the virus and quarantine can be instituted, the curve will flatten faster.
But I digress, April and May are going to be tough. I have already had a client call about the SBA loan/grant and that may be an option for the investors on this forum since housing is an essential need. Here is the link if anyone wants to consider this option:
Www.disasterloan.sba.gov
My other go to website I frequent if Cirrus owner and Pilots.. there are some pretty heavy duty discussions going on there.
As many of us Cirrus owners are Docs and or in the medical field in some way. some of it really scary frankly and some of it showing some hope with these vaccines they are working on.. One of the Doc's made a great point about Us in America.
its not the first time the older generation has had to live through this.. in 1952 there were 60,000 cases of Polio with 3,000 deaths and you know how people with Polio were left some in pretty tough shape.. Well in Palo Alto the Linus Pauling institute came up with a vaccine within about 18 months that has made Polio only a 3rd world issue.. I know a little more about it than some as i used to live 2 blocks from the institute when i lived in Palo Alto.. but it was a good analogy.
Believe me as others get on this site and have for years hoping preying for a crash so they can profit from it.. A crash is not what we need we need a stable real estate mortgage market stable prices stable healthy tenants etc etc.. All of us are just going to have to do our part to get through this and there is going to be some tough realities. My wife and family we are Blessed and we know it.. We are thankful everyday.. Not that everything i have going on is perfect or profitable.. As we all take risk in real estate.. Hell I have 30 lots that i am just finishing up in Oregon and will be building 500 to 700k spec homes.. so my matzah ball is hanging out there :) I just dont have any rentals anymore i left the space 5 years ago on a favorable buyout scenario.
I suspect like the stock market there are going to be buying opportunities in real estate and there is nothing wrong with partaking in them if your in a position to do so.. but hoping for it.. Na dont like that thought process personally.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Heather Frusco:
The one I thing I hear from half of the smaller time landlords on here is that they would 'forgive the rent payment due to the pandemic' and then the same LL's will highlight that investors should have 3-6 month's of reserves in place for this... I'm sorry but these same 'investors' / landlords are likely not going to be here for much longer with that thought pattern (will likely find their foreclosed properties on the market soon). Tenants and really anyone else should ALSO have 3-6 months in reserves for times such as these. So if you have a responsible tenant/citizen which has 3-6 months in reserves in place there really is no missed rent payment.
What some of these 'investors' are failing to see it that it is not your position to cover someones living situation on your dime as in investor - that it is the state's responsibility, if that is something they would like to do. Have you seen any states instead offer to pay for a tenant's rent payment? ---- of course not and you won't because they would rather 'lean' on a landlord to 'adsorb' that cost. Look I'm not faulting you for covering someones rent during times like these in one of you rentals but if that's the case... I have a cousin that would love to rent one of your 'rent-free' units if you like to take him up on it.
We are certainly not callus to the situation but, any tenant's which we have that miss their rent payment on month 1 of this pandemic situation have dropped the ball they SHOULD also have 3-6 months of reserves but don't and as grown adults it is not a landlords or investor's responsibility to support another adult - heck the states don't even want to support these adults which is again why you don't see governments pay for tenant's rents - they just push it onto the landlord... how's that for an eye opener. Again not callus to the situation just realistic...if our tenant's miss payments during this whole situation, we will work with them to schedule a payment plan moving forward.... we will still file for eviction during this time and get it lined up for when the courts start processing again... and if by the time courts start processing evictions again an agreement hasn't been reached we will certainly carry out evictions as needed.
We currently have 3-6 months in reserves for all of our rentals but guess what?.... that is exactly what the are - reserves - which are meant to carry our properties over during long term evictions such as these... not meant to support adults which failed to prepare properly. For those looking to 'carry' your tenant's debts... a word of caution and important to ask yourself 'who will carry your debts once you have blown through your reserve and you are then facing a leaky roof, a leaky water heater, taxes, insurance, mortgage and utilities'?this might be true with A class and some B class tenants IE they have 3 to 6 months of reserves . but work force C and D there is NO way they have 3 to 6 months reserves no way. and i suspect a vast majority of all renters do not have that kind of reserves if they did they would be buying houses not renting them. as that would be enough for an FHA loan. Or a VA no down or a Farm credit loan.
so its just a reality.. Will be interesting to see how this all works out.. I think most will pay rent if they have the money.. and if the govmit bails them out we hope they dont just pocket the money and move in with relatives. I can see anyone who gets evicted in these times will use the covid as an excuse..
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Anthony Angotti:
@Heather Frusco
Agree entirely.
I'm all about someone who documents hardship, and was on time all the time, being given an option of deferred payments and then tracking their situation.But if they don't locate assistance or a new source of income by May then I can't keep floating them.
By then they should have at least: reached out to unemployment, reached out to other assistance programs, enrolled in subsidized housing, tried to locate alternative employment that will pay more than their unemployment, etc. Additionally the tenants should have been providing consistent updates on what efforts they are taking to resolve the situation.
If they can't help themselves then I can't subsidize them. If you have 1 or 2 rentals then maybe it makes sense to be charitable. There's a way to make sure that you are being fair/understanding, but also being firm on the fact that people still do owe rent. But the larger the number of rentals you have the less flexible you can be, because as you said, the reserves are also for major Capex items.If its really that bad who is going to replace them.. is there a waiting list of qualified gainfully employeed credit worthy tenants to replace them.. thats going to be the next shoe to drop. you boot these folks but who replaces them ?
- Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes6y
Originally posted by @Jay Hinrichs:
Originally posted by @Anthony Angotti:
@Heather Frusco
Agree entirely.
I'm all about someone who documents hardship, and was on time all the time, being given an option of deferred payments and then tracking their situation.But if they don't locate assistance or a new source of income by May then I can't keep floating them.
By then they should have at least: reached out to unemployment, reached out to other assistance programs, enrolled in subsidized housing, tried to locate alternative employment that will pay more than their unemployment, etc. Additionally the tenants should have been providing consistent updates on what efforts they are taking to resolve the situation.
If they can't help themselves then I can't subsidize them. If you have 1 or 2 rentals then maybe it makes sense to be charitable. There's a way to make sure that you are being fair/understanding, but also being firm on the fact that people still do owe rent. But the larger the number of rentals you have the less flexible you can be, because as you said, the reserves are also for major Capex items.If its really that bad who is going to replace them.. is there a waiting list of qualified gainfully employeed credit worthy tenants to replace them.. thats going to be the next shoe to drop. you boot these folks but who replaces them
I agree with you. Which is why we will evaluate monthly. We have never done subsidized housing in the past for anything other than existing tenants, but we told everyone that if they plan on long term job loss to apply and get subsidized housing and we will do whatever repairs necessary to keep them in place.
I'm only going to end up giving the boot to people who make literally no effort to find a way to pay. They should be able to sort something out or provide evidence that they are making an effort over a month and a half.
If in fact they do need to leave we will fill with section 8 or market tenants whichever comes up first. It's very difficult to find a nice section 8 apartment in a quality school district in my area. So I suspect we will have lots of demand for that if we allow it.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Anthony Angotti:
Originally posted by @Jay Hinrichs:
Originally posted by @Anthony Angotti:
@Heather Frusco
Agree entirely.
I'm all about someone who documents hardship, and was on time all the time, being given an option of deferred payments and then tracking their situation.But if they don't locate assistance or a new source of income by May then I can't keep floating them.
By then they should have at least: reached out to unemployment, reached out to other assistance programs, enrolled in subsidized housing, tried to locate alternative employment that will pay more than their unemployment, etc. Additionally the tenants should have been providing consistent updates on what efforts they are taking to resolve the situation.
If they can't help themselves then I can't subsidize them. If you have 1 or 2 rentals then maybe it makes sense to be charitable. There's a way to make sure that you are being fair/understanding, but also being firm on the fact that people still do owe rent. But the larger the number of rentals you have the less flexible you can be, because as you said, the reserves are also for major Capex items.If its really that bad who is going to replace them.. is there a waiting list of qualified gainfully employeed credit worthy tenants to replace them.. thats going to be the next shoe to drop. you boot these folks but who replaces them
I agree with you. Which is why we will evaluate monthly. We have never done subsidized housing in the past for anything other than existing tenants, but we told everyone that if they plan on long term job loss to apply and get subsidized housing and we will do whatever repairs necessary to keep them in place.
I'm only going to end up giving the boot to people who make literally no effort to find a way to pay. They should be able to sort something out or provide evidence that they are making an effort over a month and a half.
If in fact they do need to leave we will fill with section 8 or market tenants whichever comes up first. It's very difficult to find a nice section 8 apartment in a quality school district in my area. So I suspect we will have lots of demand for that if we allow it.
Yup as long as there are vouchers for them.. and or you could raid other landlords who don't do as nice a job as you.. we see that in the deep south all the time.. voucher holders moving yearly from one fresh rehab to the other.
- Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes6y
Originally posted by @Mark Whittlesey:
Originally posted by @Alyssa Dyer:
Originally posted by @Arthur P.:
@Brian Boyd I am actively looking for out of state investment but having a hard time finding good information and everywhere I look seems overpriced. I’m in FL now and trying to learn the area. NY investments I’ve had for years now and provide a great return but I’m thing I have to change my expectations or wait a year or two. I think this is the beginning of the next recession.
Oklahoma might be worth a look. 60-80k purchase price, 8% cap rates and Forbes called us recession proof in the last downturn. Might be worth some exploration!
The problem with Oklahoma are the property taxes and the hazard insurance. Both are CRAZY high. But if the deal makes sense even with those 2 costs factored in.... then yea.
Taxes are actually pretty low in Oklahoma! We're typically seeing 1% of the purchase price annually for property taxes. Maybe you're thinking of the taxes in Texas? Our insurance is higher than you may see in other markets. We're generally right around 1% of the purchase price annually for insurance as well, but if you drop below 80k it creeps up closer to 1.5% annually. We're generally getting 8% cap rates with those things factored in.
They have postponed evictions in St. Louis for about 3 weeks. I have been in close communication with tenants to hear their situations. It will vary from place to place but be prepared to delay certain actions. I am just trying to be patient and stay on top of everything. It has been an adjustment to stay home 24/7.
I already had this problem because tenant husband couldn't work (construction), not covid. For almost 3 yrs they were "good" tenants, altho now I know they only pretended to like me. But I dont care about that. He asked me why i was "nasty" when I got really angry at him so i told him to stop with the name calling & he says "what?".
I gave them a 36% discount off their rent for 3 months till the lease expired, and they agreed to forfeit the sec. deposit. Turned out they were really angry about that. I guess they thought I would love to have them steal from me.
I'm just barely breaking even, but endless hassle.
The husband is acting like a spoiled 6 yr old, i told him to GROW UP! He is so paranoid he changed the locks without telling me, and I had to really push to get a key for the new ones he installed. I told him they belonged to ME because they were attached to the house. He decided to take them out & reinstall the old ones. Dont know if that will ever happen ... at least i have a key for the new ones. Will need a locksmith to release the riding gate padlock etc.For a while it seemed they were never gonna get a rental but i had to brag about them when the next landlord called. That lying was really painful. Now I know what it means when landlords give A+++ references to tenants--they just can't wait to get rid of them.
They had the nerve to try to tell me what to put in my ref. letter. The wife looks at me like im something stuck to her shoe.
I kind of wish I had evicted them, ruining their financial records, but its now too late, they swear they will stay in a hotel March 31 if they cant get into the new place. I'm going to verify if they do.
Maybe I should start the eviction process, since my county might just put a hold on any evictions.
Don't know what condition the property will be in. It was pristine, like no one lived there, a couple months ago. Tenant swears they will deliver it in fine shape. That requirement is also in their lease and in the agreement where they forfeit the security.
They agreed to be OUT by 4 PM March 31 and I am gonna do a very detailed walk thru with my tech manager. If anything needs fixing I will do it and then take them to court. He's working now and makes really good $$. He showed me his paystubs 3 yrs ago he was making about $6000 a week!!!!!!!!
- Rental Property Investor · Los Angeles, CA · Member since 2018 · 21 posts · 3 votes6y
@Brian Boyd
Maybe you can make them pay by credit card and they can apply for 0 APR card to do so?
They can pay you through PayPal?
- Investor · Union, NJ · Member since 2020 · 81 posts · 312 votes6y
@Jay Hinrichs oh I know it... heck the majority go from pay-check to pay-check. But it's must something to point out to those on here that mention 'investors should have reserves in place for situations like these' and the proceed to make their point as to why they'll be deploying their reserves to 'help'. The counter argument is, 'Tenant's should also have 3-6 month's in reserves in place'... those that don't just like those investors that don't should not be expecting help from those did prepare appropriately.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Heather Frusco:
@Jay Hinrichs oh I know it... heck the majority go from pay-check to pay-check. But it's must something to point out to those on here that mention 'investors should have reserves in place for situations like these' and the proceed to make their point as to why they'll be deploying their reserves to 'help'. The counter argument is, 'Tenant's should also have 3-6 month's in reserves in place'... those that don't just like those investors that don't should not be expecting help from those did prepare appropriately.
its a fundamental money problem with the US credit is too easy.. its kind of like when we work with first time home buyers.. they get pre qualified.. so they get a pre qual for say a 400k prop.. then they go shopping you think they will buy a 250k Nope they want to look at 395 to 410k. same I think with renters lets say its the 3X rule and they make 3k a month so 1k is the rent they just go look for 1k rentals instead of maybe settling at 750.. of course 750 might put them in a worse neighborhood or school system so I can see that. But it is what it is.. if they don't have the money they don't have the money what are landlords going to do
- Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes6y
"If onlys and justs were candies and nuts, then everyday would be Erntedankfest."
Dwight Schrute (Landlord btw)
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes6y
Originally posted by @Heather Frusco:
@Jay Hinrichs oh I know it... heck the majority go from pay-check to pay-check. But it's must something to point out to those on here that mention 'investors should have reserves in place for situations like these' and the proceed to make their point as to why they'll be deploying their reserves to 'help'. The counter argument is, 'Tenant's should also have 3-6 month's in reserves in place'... those that don't just like those investors that don't should not be expecting help from those did prepare appropriately.
But sometimes it's wise to look at the big picture and help someone in order to help ourselves. Giving some upfront may create goodwill in the tenants. I've had my share of tenants that packed up in the middle of the night and just disappeared, because they didn't have rent money. When people lose their income, not everyone calls the landlord. If they don't have it, they don't have it. So, I dropped my April rents to just above my mortgages to help tenants be able to pay rent with their stimulus checks, instead of just disappearing. We have a moratorium on evictions, so I don't have much I can do.
Sure, I could be strict and rigid and insist on the full rent, as I would in normal times, but those that can't pay, can just ride it out on eviction.
It's much harder for a good tenant to screw over a landlord, that has been good to them, than to justify it to a landlord, that , even in emergencies, shows they have no regard for anyone or anything but money.
This is a huge situation and we're all in this together
- Investor · Union, NJ · Member since 2020 · 81 posts · 312 votes6y
@Jay Hinrichs for sure and I agree with it all. The interesting take however, are those 'investors' / landlords on here which take it upon themselves to 'help' by forgiving rent payments all together claiming that they have reserves in place for it - more power to them but, really... For those looking to 'carry' their tenant's debts... an honest question... 'who will carry your debts once you have blown through your reserve and you are then facing a leaky roof, a leaky water heater, taxes, insurance, mortgage and utilities'? - It's almost akin to an airplane going down and instead of these investors downing their O2 masks on first... they attempt to help someone else thinking that they're in a position to do so, only to later find themselves out cold between a rock and hard place.
Help where you can... but realize that your reserves are meant to get you through long evictions... execute a payment plan with your tenants, if needed (don't broadcast it.. FGS) and still file for eviction so that it is ready when the courts open back up... if the tenant is paying as agreed under the new agreement no harm no foul... but if still not... you can proceed swiftly through an eviction when they open up... it really is that simple.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes6y
Originally posted by @Heather Frusco:
@Jay Hinrichs for sure and I agree with it all. The interesting take however, are those 'investors' / landlords on here which take it upon themselves to 'help' by forgiving rent payments all together claiming that they have reserves in place for it - more power to them but, really... For those looking to 'carry' their tenant's debts... an honest question... 'who will carry your debts once you have blown through your reserve and you are then facing a leaky roof, a leaky water heater, taxes, insurance, mortgage and utilities'? - It's almost akin to an airplane going down and instead of these investors downing their O2 masks on first... they attempt to help someone else thinking that they're in a position to do so, only to later find themselves out cold between a rock and hard place.
Help where you can... but realize that your reserves are meant to get you through long evictions... execute a payment plan with your tenants, if needed (don't broadcast it.. FGS) and still file for eviction so that it is ready when the courts open back up... if the tenant is paying as agreed under the new agreement no harm no foul... but if still not... you can proceed swiftly through an eviction when they open up... it really is that simple.
I'm one of those investors and I'm willing to forego my PROFIT for April, not the total rent payments. Yes, I have reserves, but I wouldn't have to touch them, except for repairs. I can hold out for a while. This is my offer for April. I'll see what happens afterwards.
I believe in karma. It all comes back around
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Heather Frusco:
@Jay Hinrichs for sure and I agree with it all. The interesting take however, are those 'investors' / landlords on here which take it upon themselves to 'help' by forgiving rent payments all together claiming that they have reserves in place for it - more power to them but, really... For those looking to 'carry' their tenant's debts... an honest question... 'who will carry your debts once you have blown through your reserve and you are then facing a leaky roof, a leaky water heater, taxes, insurance, mortgage and utilities'? - It's almost akin to an airplane going down and instead of these investors downing their O2 masks on first... they attempt to help someone else thinking that they're in a position to do so, only to later find themselves out cold between a rock and hard place.
Help where you can... but realize that your reserves are meant to get you through long evictions... execute a payment plan with your tenants, if needed (don't broadcast it.. FGS) and still file for eviction so that it is ready when the courts open back up... if the tenant is paying as agreed under the new agreement no harm no foul... but if still not... you can proceed swiftly through an eviction when they open up... it really is that simple.
Bottom line real estate has risk.. in all facets of it be it new construction commercial MF SFR rentals no matter what it is .. its a for profit or loss business.. and sometimes we lose.. Lord knows I have had my loss's.. So it appears to me that some that got into landlording maybe did not understand or they glossed over the risks inherent in real estate.. When people lose money in the stock market .. its like Shoot I lost money.. but the thought of losing money in real estate seems to be a different emotion in most folks and for those that went out and got deeply in debt only to bring in maybe 100 or 200 a month per door.. I can see that as being very concerning or all out panic if they feel that rents wont come in.
Dont want to cross across as un-sympathetic, but this corona event should serve to remind all investors that when the value is NOT there, don't buy the asset even when the whole world is buying...
For years, investors are buying up stocks and real estate even when the math does not make sense, just because other people are buying, just out of fear of missing out....Those will be at the risk of heavy loss...
Full disclosure - I kept my 401K in cash for the past 2 years, until last Thursday.....
So my fellow investors - keep dry powder and stay on the sideline when the numbers do pan out...For example, a forward P/E of 20 does not make sense in my books, a purchase to rent of 18 years in SF does not make sense....Wait until that P/E is 16 or the purchase to rent of 15 years..
Best wish to all
- Investor · Union, NJ · Member since 2020 · 81 posts · 312 votes6y
@Michaela G. I think that is commendable and in my honest opinion on of the most kind things one can do, you have my respect. But that doesn't mean it makes any sense as an investor. For instance, would you pay for other tenants which are not in your own properties... would you help other tenants make rent?.... if the answer is 'No' then I can assure you didn't get into rental properties to provide housing for free or to break even. Is CVS, Walgreens, your mortgage company, your insurance company foregoing their PROFIT... they are after all in a much stronger position that all of us... the answer is 'NO' the best you see is a delay in responsibilities... not because they are callus but because it is a business... the moment you forget that and cross that line (with good intentions)... you will be corrected for it... the market will correct it and remind you that you're either a running business (profitable) or a charity... it'll make that decision for you based on how you address situations like these - some will soon see their rentals needing serious cash infusions for a myriad of reasons i.e. maintenance, repairs, debts and will soon wish they would have protected their reserves.
I hope that your tenants will come through for you and pay you the decreased amount you have worked out with them but, just my honest opinion... because you have 'forecasted' your willingness to 'help' you will likely see many more problems with payment and for a longer period than those which don't forecast and instead take it on a private case-by-case basis while still filling for eviction (or getting in line for it)... just my take... I hope I'm wrong but...only time will tell.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes6y
Originally posted by @Heather Frusco:
@Michaela G. I think that is commendable and in my honest opinion on of the most kind things one can do, you have my respect. But that doesn't mean it makes any sense as an investor. For instance, would you pay for other tenants which are not in your own properties... would you help other tenants make rent?.... if the answer is 'No' then I can assure you didn't get into rental properties to provide housing for free or to break even. Is CVS, Walgreens, your mortgage company, your insurance company foregoing their PROFIT... they are after all in a much stronger position that all of us... the answer is 'NO' the best you see is a delay in responsibilities... not because they are callus but because it is a business... the moment you forget that and cross that line (with good intentions)... you will be corrected for it... the market will correct it and remind you that you're either a running business (profitable) or a charity... it'll make that decision for you based on how you address situations like these - some will soon see their rentals needing serious cash infusions for a myriad of reasons i.e. maintenance, repairs, debts and will soon wish they would have protected their reserves.
I hope that your tenants will come through for you and pay you the decreased amount you have worked out with them but, just my honest opinion... because you have 'forecasted' your willingness to 'help' you will likely see many more problems with payment and for a longer period than those which don't forecast and instead take it on a private case-by-case basis while still filling for eviction (or getting in line for it)... just my take... I hope I'm wrong but...only
we'll just have to agree to disagree.
I'm also an excellent chess player.
- Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes6y
Originally posted by @Alyssa Dyer:
Originally posted by @Mark Whittlesey:
Originally posted by @Alyssa Dyer:
Originally posted by @Arthur P.:
@Brian Boyd I am actively looking for out of state investment but having a hard time finding good information and everywhere I look seems overpriced. I’m in FL now and trying to learn the area. NY investments I’ve had for years now and provide a great return but I’m thing I have to change my expectations or wait a year or two. I think this is the beginning of the next recession.
Oklahoma might be worth a look. 60-80k purchase price, 8% cap rates and Forbes called us recession proof in the last downturn. Might be worth some exploration!
The problem with Oklahoma are the property taxes and the hazard insurance. Both are CRAZY high. But if the deal makes sense even with those 2 costs factored in.... then yea.
Taxes are actually pretty low in Oklahoma! We're typically seeing 1% of the purchase price annually for property taxes. Maybe you're thinking of the taxes in Texas? Our insurance is higher than you may see in other markets. We're generally right around 1% of the purchase price annually for insurance as well, but if you drop below 80k it creeps up closer to 1.5% annually. We're generally getting 8% cap rates with those things factored in.
I am actually comparing them to AZ. Taxes are 3x in OK for a property with a FMV of 50% more than what I have in AZ. Hazard insurance is a little more than 3x what I pay in AZ. Im sure there are other states that have higher property taxes but they are not bargain in OK.
- Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes6yWow, just spent several hours reading through all 22 pages of this thread because, hey, what else do I have to do these days of quarantine?
As an owner and manager of a fairly large portfolio of SFH in Tulsa area, let me say that I am closely monitoring the situation with my tenants. While I have yet to send out a blanket email to all, I have been in communication with those that I consider to be at risk. Also, I have had one tenant let me know they will be one day late paying in April (her part-time job as a waitress was eliminated). I thanked her for proactively communicating and asked her to stay in touch as the situation develops. I also had one tenant, who had just renewed her lease, let me know she now needs to break the lease due to COVID. I let her know that I would immediately start looking for a replacement tenant and will only hold her responsible for the lease for the lesser of 30-days or until a replacement tenant can be found.
All the other tenants that I've communicated with are so far not impacted enough to suggest rent payments will be effected. But, the message to them is "stay in touch, let's communicate and work together and we will all get through this together". As a Christian, I want to deal with tenants with compassion while also letting them know that how I earn a living is by them paying rent. Without them paying rent, I can not keep the properties going - which means we will all be out of business. Will some take advantage of this? Maybe, but hopefully not - as I've done my best to screen the tenants up front. I've been doing this for 10+ years and have learned the hard way that some will take advantage and you must weed them out as quickly as possible. But, the vast majority will respond positively to a landlord that treats them with respect and compassion.
The other lesson that many have mentioned is "take this as an opportunity to learn from mistakes and get your "house" in order". Are you over-leveraged thinking money is cheap and therefore the risks are small? Well, guess again. For myself, I have very low debt to equity ratio so I can weather the storm longer than many. But, this situation has made me think about having greater cash reserves (I do have a business line of credit which is about as good as cash reserves).
God Bless you all and thanks for all of your input on this thread!
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