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
- Member since 2018 · 16 posts · 17 votes6y
Originally posted by @Arthur P.:
Since it’s your duty to help. How much money are you going to give me??
Why can’t people have reserves?? We can’t stop cancer but we can save and be responsible.
it’s not about wealth. It’s about being responsible and not allowing irresponsible people ruin you!!I imagine you would get quite a bit of my money if this stimulus package is passed. People can have reserves. But not everybody does. And for a lot of reasons, most of them having absolutely nothing to do with being irresponsible. Life happens. Not being able to pay rent for a few months during the worst public health crisis in a century doesn't automatically make one irresponsible. Have a bit of compassion and we will all be better off. But also be pragmatic: if you evict a tenant, what are the chances you'll be able to find a replacement right now? They are low. Very low. When you went into this business you accepted this risk. That's why returns on equity investments tend to be so generous: they are RISKY.
- Cheshire, CT · Member since 2018 · 87 posts · 60 votes6y
From CNN about multifamily:
"The US Federal Housing Finance Agency stepped up today to protect renters in multi-family properties.
Fannie Mae and Freddie Mac will grant owners of multi-family properties who are "negatively affected by the coronavirus national emergency" forbearance of mortgage payments -- as long as they don't evict renters who are unable to pay their rent because of the coronavirus impact.
“Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus," said FHFA director Mark Calabria in a statement."
Get in touch with your lenders, if applicable, and negotiate terms. There is flexibility given the situation, and you can pass whatever flexibility you can negotiate on to your tenants.
If you think rushing to evict at this point is wise when we have no idea what the next 6-12 months is going to look like, you may be thinking a little too short term.
- Member since 2020 · 1 post · 0 votes6y
@Brian Boyd except it is illegal to evict right now.
- Norman, OK · Member since 2017 · 6 posts · 1 vote6y
Can someone please post an example of a letter they sent to tenants about helping them during this time.
Thanks! - Port Richey, FL · Member since 2016 · 129 posts · 48 votes6y
This will be a crap storm at best. The government will send emergency stimulus package with a bunch of crap attached to it with out much help to the people in need. Yes people should have an emergency fund for these types of scenarios and we know that people/tenants/landlords wont. This is also why I am a cash investor and do not like leverage. Basically if I have tenants that cant pay then I will work with them because I am in a position to do that. I took a lot of time vetting my tenants and have great tenants in place. To me that is priceless. I will not allow anyone, unless the government tells me I have to, to miss payments. I will 100% work with my tenants within reason. At the end of the day whoever said that "its not my fault that people are not prepared" I agree with. Hopefully real estate will be on sale soon because of this :)
- 6yJohn KennedyPro MemberRental Property Investor · Indianapolis, IN · Member since 2012 · 17 posts · 21 votes
Originally posted by @Andree Axinn:
Can someone please post an example of a letter they sent to tenants about helping them during this time.
Thanks!This was ours (it's already a week old!) It's an amalgamation of thought from myself and a couple of other earlier posts that I liked...
3/17/20
Dear Tenants:
First of all, we hope you and your loved ones are healthy and remain safe during this difficult and crazy time! Some of you have reached out indicating you have suffered layoffs related to the recent pandemic. We are certainly sympathetic and just want to assure you that we will be working with each of you that have been negatively impacted financially to ensure that housing is not added to the list of your worries.
We, like you, are a little nervous because we still have to make mortgage loan payments on each of your homes as well as pay property taxes, insurance and other operating expenses. So, it is crucial that we work together in order to get through this.
While the situation seems to change on a daily basis...here are some of our initial thoughts on what “working together” might look like for tenants suffering corona-layoffs:
- First, if you are experiencing financial distress due to this crisis, reach out to us immediately. Proactive communication is key (thanks to those who have already reached out!). We can afford maximum flexibility if given the courtesy of knowing what’s going on with you before it’s too late.
- Please research and take advantage of any personal/family resources and rental assistance programs you may be eligible for, as well as unemployment and other governmental benefits. Be aware that there is typically a three-week delay in receiving unemployment benefits from the time you apply (hopefully that will be expedited).
- We plan to waive late fees for those of you that are unable to make your full payment on time, effective with the April 2020 rent.
- Upon request, we may defer a portion of your rent payment (on an individual basis) while you are unemployed with the understanding that once this crisis has passed you will resume regular rent payments plus an installment of deferred rent (interest-free) on a schedule mutually agreed upon.
- If you determine you need to “move back in with the ‘rents, or some other such arrangement in order to survive...we will be happy to negotiate a fair early exit from your lease.
For those of you that are suffering from layoff, cutback, etc., we want to help you through this and are hoping and praying that this doesn’t last long. Hopefully, some combination of belt tightening, side-gigs, unemployment insurance, assistance from your own families, and possible stimulus funds from D.C. (seems like there may be some of that in the works) will help you and us stay above water.
Again, communication will be key; please stay in touch and if you haven’t already, please contact me (John) asap if you anticipate having trouble keeping current on your rent so we can plan accordingly.
Sincerely,
John & Sally Kennedy
- Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes6y
@Arthur P. Might consider lost rent insurance. I know NREIG has a product like that. Other companies may have as well.
- Member since 2018 · 70 posts · 89 votes6y
My agent says the lost rent coverage I have doesn't match the current situation.
- Member since 2018 · 16 posts · 17 votes6y
Originally posted by @Brian Boyd:
Originally posted by @Kyle Bumpus:
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'?@Arthur P. @Mike Wood @Brian Boyd Account Closed
It is absolutely callous. IT IS ALL OF OUR DUTY AS HUMAN BEINGS TO CARE FOR OUR FELLOW HUMAN IN TIMES OF CRISIS. You don't get to behave callously and then say "oh, but I'm not callous." Yes, you are. Sure, everybody should have 3-6 months of reserves. Cancer also shouldn't exist and money should grow on trees. While it may be true you will be hurt if one of your properties is foreclosed on, you will survive. The same can't necessarily be said about those you evict. One is CLEARLY more important than the other. In times of crisis, we prioritize the survival of the vulnerable, not your wealth. Sorry. To do otherwise would be deeply immoral.
Kyle- You do you. But the next time you decide to call out investors for protecting our properties, you are going to see what a federal lawsuit looks like. I am tired of those that disagree with us defaming us because you choose a different course. You crossed a line today and you are going to have to answer for it. I have already reported your post to BP. My next step is to find you and serve you with papers. I suspect you are in Bellevue, Washington.
Reported.
- Member since 2019 · 11 posts · 1 vote6y
If you evicted and your city goes on lock down, that means no showings or moving in or out. I'm working with all tenants to repay. Assumption is good tenats prior and pay on time.
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes6y
https://www.wsj.com/articles/f...
Pretty much anybody can go into forbearance right with minor consequences at worst. It took a 15 minute phone call and one follow up email to get 3 loans into forbearance this morning. The banks are willing to work with landlords right now. Federal and State governments are looking out for both tenants and landlords as much as they can. Look out for your tenants in a reasonable way too.
- 6yOleksandr IvanovskiyPro MemberRental Property Investor · Member since 2019 · 124 posts · 38 votes
@Don Spafford
Agree. You have to evaluate situation individually.
As some can and will take advantage of situation. I already contacted my tenants.
- Contractor · Chicago, IL · Member since 2017 · 102 posts · 181 votes6y
@Arthur P.
To everyone posting on these threads that is taking an incredibly hard line:
1. Your response to your tenants should focus on being solution based. You are the more sophisticated party in this scenario. This is important because most of your tenants who find themselves unable to pay rent in a scenario like this are not going to be people with options.
2. For those of you in larger cities where they have halted evictions-take into consideration that you will more than likely receive no sheriff or police response if you take matters into your own hands. In some areas, it will be you that ends up being held legally accountable if you defy your city's order.
3. The most important thing I think everyone should keep in mind is that this situation is unprecedented. It will cause people to react in very unpredictable ways. If you invoke fear by reminding people that there is no help or assistance in the already desperate situation - you're inviting conflict, confrontation, property damage and violence.
It's not fair to you as landlords by any means but the large majority of posts I'm reading on here just assume everyone is going to respond peacefully to being told rent is still due despite the fact that they're out of options.
Desperate people react desperately. Try to work with your tenants as much as you can.
- Member since 2020 · 87 posts · 22 votes6y
What do you do in student rentals when students are threatening to break leases en masse because their university has got online and the odd jobs they were doing to to support themselves have closed?
- Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes6y
Originally posted by @Joe M.:
My favorite remedy that I heard if a renter loses his or her job...
use the security deposit for next months rent. In the meantime, the renter should be able to get unemployment. Possibly eat some profit til things improve.
Joe,
I thought just like you when I first heard this idea. After more thought, however, I did a 360 and now think it's a terrible idea. Here's why.
First, it lets the tenants completely off the hook for what, ultimately, is their responsibility. They feel they're all paid up, but in reality I received no rent. Second, in Ohio there is no escrow requirement for security deposits of a month's rent or less. Consequently I'd have to take money I already have and re-classify it from a liability to income. This would create a new tax liability for money I have previously received. If I do this for the 100+ rentals I have, the tax liability would be extremely significant. Third, and most important to me, renters are still renters. Yes most are fine people, but there is a reason we collect security. It is to help incentivize them to keep our property in good shape. Since we typically are forced to charge some tenants some or all of their deposits anyway, I fear the damages would be worse without this incentive.
My bottom line: I'll work with folks on a case by case basis. I don't mind sacrificing some for my fellow man, but they have to sacrifice some as well.
Gary
- 6yCrystal DudleyPro MemberRio Vista, TX · Member since 2016 · 15 posts · 5 votes
@Brent Freeman I too would like to see these documents and possibly use with my tenants.
- Investor · Chattanooga, TN · Member since 2016 · 146 posts · 108 votes6y
Originally posted by @Brian Boyd:
Originally posted by @Kyle Bumpus:
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'?@Arthur P. @Mike Wood @Brian Boyd Account Closed
It is absolutely callous. IT IS ALL OF OUR DUTY AS HUMAN BEINGS TO CARE FOR OUR FELLOW HUMAN IN TIMES OF CRISIS. You don't get to behave callously and then say "oh, but I'm not callous." Yes, you are. Sure, everybody should have 3-6 months of reserves. Cancer also shouldn't exist and money should grow on trees. While it may be true you will be hurt if one of your properties is foreclosed on, you will survive. The same can't necessarily be said about those you evict. One is CLEARLY more important than the other. In times of crisis, we prioritize the survival of the vulnerable, not your wealth. Sorry. To do otherwise would be deeply immoral.
Kyle- You do you. But the next time you decide to call out investors for protecting our properties, you are going to see what a federal lawsuit looks like. I am tired of those that disagree with us defaming us because you choose a different course. You crossed a line today and you are going to have to answer for it. I have already reported your post to BP. My next step is to find you and serve you with papers. I suspect you are in Bellevue, Washington.
WAIT WHAT? What lawsuit are you threatening here? I'm so confused, is it illegal to call someone Callous?
- Investor · Houston Minnesota, DMV · Member since 2019 · 2 posts · 1 vote6y
This is obviously a delicate topic and can go either way based on your perspective. For me it’s more of a personal decision as we are all in a very difficult and unprecedented situation.
My belief is that if I have the means to provide assistance I will do that. Having someone evicted from their home to no fault of their own is awful and will further the economic downturn for this country. Many people will not agree and strictly base it on a business decision but my true belief is we should assist where we can.
Obviously, some people will take advantage of this gratuitous gesture, but we as landlords can put measures in place to avoid this.
In the end I hope we can all work together and get through this thing. If history means anything, the writing on the wall certainly says we will.
Cheers everybody.
Sig
- Brookfield, WI · Member since 2016 · 191 posts · 108 votes6y
Originally posted by @Arthur P.:
What is the plan when tenants can’t work and cannot make rent payments?
It has already started for me.
I call B.S. on them. Nobody has actually missed a check yet, the shutdown orders literally started less than a week ago (in most places), unless they are paid DAILY, even weekly paychecks haven't been missed yet. But let's assume they have missed a single two-week paycheck. Why exactly can't they pay rent THIS month. Assuming they had the verified rent to income ratio, they surely should have TWO weeks worth of reserves. There are plenty of things they can choose not to pay this month, rent should be priority #1. I know this sounds harsh, but it's a load of bull. I'd ask them this: So, let's say the furnace went out, you'd be ok without heat for say, 5 months while I collected enough rent to pay for a new one, right. I don't have the reserves. No, ok, but you WOULD be willing to pay an extra $500 a month for a few months to cover it? No, huh. So, why then why exactly are you asking me to pay an extra $1000 a month to cover your lack of planning? Pointing out rent is YOUR paycheck, and you need about 6 of them to make what they made in a month(best case, 2% property). Now, if they are legit, good tenants, and have a plan to pay it back, etc. Sure, try working something out, but man sure sounds like all the "takers" I've encountered in my life.
Originally posted by @Gary L Wallman:
Originally posted by @Joe M.:
My favorite remedy that I heard if a renter loses his or her job...
use the security deposit for next months rent. In the meantime, the renter should be able to get unemployment. Possibly eat some profit til things improve.
Joe,
I thought just like you when I first heard this idea. After more thought, however, I did a 360 and now think it's a terrible idea. Here's why.
First, it lets the tenants completely off the hook for what, ultimately, is their responsibility. They feel they're all paid up, but in reality I received no rent. Second, in Ohio there is no escrow requirement for security deposits of a month's rent or less. Consequently I'd have to take money I already have and re-classify it from a liability to income. This would create a new tax liability for money I have previously received. If I do this for the 100+ rentals I have, the tax liability would be extremely significant. Third, and most important to me, renters are still renters. Yes most are fine people, but there is a reason we collect security. It is to help incentivize them to keep our property in good shape. Since we typically are forced to charge some tenants some or all of their deposits anyway, I fear the damages would be worse without this incentive.
My bottom line: I'll work with folks on a case by case basis. I don't mind sacrificing some for my fellow man, but they have to sacrifice some as well.
Gary
Hey Gary. Thanks for the post and countering to see the other side. I think my idea would be good for previous great renters and great people and if it was on a smaller scale. If you have a lot, that might be more work.
- Baltimore, MD · Member since 2019 · 23 posts · 6 votes6y
Really appreciate the detail you provided on the options you identified, pros/cons for each, and how you are moving forward.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Meryl McElwain:
@Arthur P.
To everyone posting on these threads that is taking an incredibly hard line:
1. Your response to your tenants should focus on being solution based. You are the more sophisticated party in this scenario. This is important because most of your tenants who find themselves unable to pay rent in a scenario like this are not going to be people with options.
2. For those of you in larger cities where they have halted evictions-take into consideration that you will more than likely receive no sheriff or police response if you take matters into your own hands. In some areas, it will be you that ends up being held legally accountable if you defy your city's order.
3. The most important thing I think everyone should keep in mind is that this situation is unprecedented. It will cause people to react in very unpredictable ways. If you invoke fear by reminding people that there is no help or assistance in the already desperate situation - you're inviting conflict, confrontation, property damage and violence.
It's not fair to you as landlords by any means but the large majority of posts I'm reading on here just assume everyone is going to respond peacefully to being told rent is still due despite the fact that they're out of options.
Desperate people react desperately. Try to work with your tenants as much as you can.
YUP investors do this for profit and or loss .. you cant bully your tenants to pay you when they have no means. Just becasue you have bills they are your bills not the tenants they live their lives completely different think different react different etc.. If they thought the way landlords did they would not be renters they would buy a home to live in.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joshua Myers:
https://www.wsj.com/articles/f...
Pretty much anybody can go into forbearance right with minor consequences at worst. It took a 15 minute phone call and one follow up email to get 3 loans into forbearance this morning. The banks are willing to work with landlords right now. Federal and State governments are looking out for both tenants and landlords as much as they can. Look out for your tenants in a reasonable way too.
when i started a thread 2 weeks ago now.. most folks answers were I need to pay my mortgage so tenant has to pay rent..
I was of the opinion that this is going to be so severe for some landlords , and that banks and mortgage holders dont want a repeat of 08 to 2012 they will be very proactive this time around to help with mortgage payments so they do not have mass defaults.. which no one wants.. this would cause a credit freeze all over again.. So glad you followed up.. It just is what it is.. some tenants simply wont have the money and you cant get blood from a rock.. These things happen in real estate.. I know not every deal i do works out and some dont and we lose money.. so in this case were its affecting landlords some times you just lose money thats the risk reward of being in the landlord business. As builder developers we know this .. sometimes we hit a home run ( thats a tenant who stays 10 years) some times doubles and single 1 to 3 year tenants.. and sometimes we strike out project does not work and we lose 50k.. thats what happens when you have a bad tenant that trash's your unit.. maybe not 50k but you get the point.. and now we have this world wide situation that no one is to blame but we have to deal with reality all of us.. AS a developer we have the most risk no one is coming to our rescue if we need work outs its with our commercial banks
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe M.:
Originally posted by @Gary L Wallman:
Originally posted by @Joe M.:
My favorite remedy that I heard if a renter loses his or her job...
use the security deposit for next months rent. In the meantime, the renter should be able to get unemployment. Possibly eat some profit til things improve.
Joe,
I thought just like you when I first heard this idea. After more thought, however, I did a 360 and now think it's a terrible idea. Here's why.
First, it lets the tenants completely off the hook for what, ultimately, is their responsibility. They feel they're all paid up, but in reality I received no rent. Second, in Ohio there is no escrow requirement for security deposits of a month's rent or less. Consequently I'd have to take money I already have and re-classify it from a liability to income. This would create a new tax liability for money I have previously received. If I do this for the 100+ rentals I have, the tax liability would be extremely significant. Third, and most important to me, renters are still renters. Yes most are fine people, but there is a reason we collect security. It is to help incentivize them to keep our property in good shape. Since we typically are forced to charge some tenants some or all of their deposits anyway, I fear the damages would be worse without this incentive.
My bottom line: I'll work with folks on a case by case basis. I don't mind sacrificing some for my fellow man, but they have to sacrifice some as well.
Gary
Hey Gary. Thanks for the post and countering to see the other side. I think my idea would be good for previous great renters and great people and if it was on a smaller scale. If you have a lot, that might be more work.
in most states the security deposit cannot be taken as rent.. I guess maybe if both parties agree to move it from security to rent.. But i dont think it can just be moved.. good point on tax ramifications.
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