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
Originally posted by @Jay Hinrichs:
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.
Good to know. Just trying to think of win-wins for good ppl who could use some help
What would you do? @jayhinrichs
- Specialist · Central & South FL · Member since 2019 · 8 posts · 2 votes6y
In an effort to plan ahead & in the event that my Tenants have income loss, I contacted my 5 mortgage companies and so far 4 out of the 5 have granted "90 day payment relief". I simply sent a message through my online account & it was granted (no documentation required, just an online message or phone call). And it doesn't negatively affect our credit, no late payment fees or anything else. Just a thought for those who are concerned.
I definitely agree that it's best to work with our great Tenants than to evict them, & deal with re-renting, make ready, etc. So this was a great solution.
- Investor · Dallas, TX · Member since 2016 · 84 posts · 33 votes6y
Originally posted by @Scott Kimberly:
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."
I wonder what's their definition of multi-family. At the beginning of the WSJ articlue they mention "Financially strapped apartment landlords".
Does a small duplex count? - Rental Property Investor · Mc Kinney, TX · Member since 2013 · 50 posts · 50 votes6y
Originally posted by @David Grabiner:
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?
Only if you inappropriately capitalize it.
- Rental Property Investor · Mc Kinney, TX · Member since 2013 · 50 posts · 50 votes6y
Originally posted by @Marcy Angulo:
In an effort to plan ahead & in the event that my Tenants have income loss, I contacted my 5 mortgage companies and so far 4 out of the 5 have granted "90 day payment relief". I simply sent a message through my online account & it was granted (no documentation required, just an online message or phone call). And it doesn't negatively affect our credit, no late payment fees or anything else. Just a thought for those who are concerned.
I definitely agree that it's best to work with our great Tenants than to evict them, & deal with re-renting, make ready, etc. So this was a great solution.
The critical question is, does interest still accrue? Or are they simply moving the next 3 month’s payments to the end of the mortgage? Or worse, are they expecting you to pay months 1-3 all at once in month 4?
- Madisonville, TN · Member since 2017 · 2 posts · 0 votes6y
@Brian Boyd Hi Brian, Im out here in E. Tn., I purchased a property at a great price, spent about 25k and 6 months on rehab. The goal was to have all repairs and rehab complete by Mar. 15, 20. The plan is to sell it on a lease-option.
But now this has happened. Do you think I should stick to my original plan?
- Investor · La Jolla, CA · Member since 2016 · 66 posts · 169 votes6y
Public sentiment is definitely not on property owner's side atm. This is the kind of stuff getting tons of likes and shares all over social media right now:
I wouldn't be surprised to see rental property owners get shafted when all is said and done.
- Specialist · Central & South FL · Member since 2019 · 8 posts · 2 votes6y
Hi Paul, every lender will be a bit different & it will be handled on a case by case depending on the borrowers situation. But generally speaking, yes the interest will continue to accrue but no they typically don't require all 4 months to be paid at once. Each borrower works out a plan that works with their lender (which could include payment plan, add it to the end of the loan or whatever they are able to work out with their lender).
Just sharing the options for those who find themselves needing alternatives. Stay safe!
- Rental Property Investor · Miami, FL · Member since 2019 · 10 posts · 2 votes6y
Just called my mortgage lender and after waiting for 2 hours and 14 minutes I was finally able to talk to a representative regarding the possibility of deferring my mortgage payments and they said that they’ll defer the payments for three months but that they will report the late payments to the credit bureau and that at the end of the third month all three payments will have to be paid in full. How’s that helping???
I have money saved up but with three mortgages to pay for almost 10k and the possibility of tenants not being able to make their payments I can only stay afloat for a limited amount of time
I really hope the government does something about this and quickly
- Cheshire, CT · Member since 2018 · 87 posts · 60 votes6y
@Danny Grey i cant say i disagree with those tweets. 11 years of a bull market and explosive, ridiculous, speculative growth is a hell of a drug for a lot of people.
- Specialist · Central & South FL · Member since 2019 · 8 posts · 2 votes6y
@Alejandro Valdes who is your lender? I'd send a message thru your online account to clarify.
All 4 of my lenders have said that they will NOT report to the credit bureaus, and that at the end of the 90 days, we'll discuss the options at that time.
- Member since 2018 · 70 posts · 89 votes6y
@Danny Grey What those people don't realize is that your stock's don't have a monthly cost tied to them. What the government is doing in many areas is telling Tenants that there's no penalty for not paying your rent and that landlords just need to keep up on the property taxes, maintenance, insurance etc and are greedy to expect any rent and/or assistance.
None of us want to throw people out on the street but none of us want to go deep into debt or deplete all of our reserves by being forced to support others with no assistance or choice in the matter. Don't get me wrong, I do not plan to try to evict anyone, even though it's still an option where my properties are. I don't think it's the right thing to do but that is different that areas where the government is mandating the point and telling landlords to just eat the costs and shut up.
I hope you all come out well after this and keep safe.
- Member since 2018 · 16 posts · 17 votes6y
Originally posted by @Danny Grey:
Public sentiment is definitely not on property owner's side atm. This is the kind of stuff getting tons of likes and shares all over social media right now:
I wouldn't be surprised to see rental property owners get shafted when all is said and done.
Sounds more like "letting property owners bare the risk they signed up for" rather than "shafting property owners." High returns go hand in hand with high risks. All business owners are in the same boat. We just have to do the best we can.
- Fitchburg, MA · Member since 2017 · 35 posts · 40 votes6y
Does this work both ways, as in
if I get sick and unable to perform my end of the deal (maintenance/repairs/make Mortgage,tax,water... Payments)
should the tenants pay more to help me???
- Cheshire, CT · Member since 2018 · 87 posts · 60 votes6y
The point is that no one should be so hopelessly dependent on one thing that they are screwed utterly when that thing vanishes. Landlords don't have to help tenants, but it's in their own best interest to do so, otherwise, they will certainly face vacancies or damages from eviction, plus eviction costs themselves.
Tenants don't have to help landlords because landlords need to be prepared for all of their risks. But, then again, it might be in their best interest to try to solve some of their own problems with maintenance or help out their landlord to ensure they have a quality home.
- Fitchburg, MA · Member since 2017 · 35 posts · 40 votes6y
I've been helping my tenants for years and will continue.
options as I see it are
- use their last months rent
- use the deposit
- average what's owed and add to the next ten months.
- have them do work around the property (cleaning, painting, yard work) that doesn't require power tools.
It just kind of rubs me the wrong way when the tenants expects me to pick up their pieces.
- 6yKenneth HynesPro MemberRental Property Investor · Easton, PA · Member since 2013 · 359 posts · 92 votes
Follow up . this may be a different topic, but what is your action if maintenance is needed at the property . A lot of states are on lock-down, only essential movement . is a leaky roof essential ? running toilet ? and do you commit your reserves to fix while this is going on . Also do you want to put your tenants and maintenance personnel potential at risk
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Marcy Angulo:
In an effort to plan ahead & in the event that my Tenants have income loss, I contacted my 5 mortgage companies and so far 4 out of the 5 have granted "90 day payment relief". I simply sent a message through my online account & it was granted (no documentation required, just an online message or phone call). And it doesn't negatively affect our credit, no late payment fees or anything else. Just a thought for those who are concerned.
I definitely agree that it's best to work with our great Tenants than to evict them, & deal with re-renting, make ready, etc. So this was a great solution.
2 and 3 weeks ago when investors on this site were so certain that mortgage companies would not work with them.. I strongly opined that I personally thought this would not be the case.. they dont want a repeat of the GFC.. so i am very happy , proud etc of our mortage industry to come to the rescue of our landlords that are proactive and talk with their lenders.. good job.
Originally posted by @Kenneth Hynes:
Follow up . this may be a different topic, but what is your action if maintenance is needed at the property . A lot of states are on lock-down, only essential movement . is a leaky roof essential ? running toilet ? and do you commit your reserves to fix while this is going on . Also do you want to put your tenants and maintenance personnel potential at risk
Can't speak for everyone else but I won't be doing non-emergency repairs for the next 30-45 days. Only major issues (Safety, life essentials). This would be things like major leaks, water issues, and any other major safety issues.
- Member since 2020 · 1 post · 0 votes6y
I’m a landlord FL and my tenant sent me an email stating that her salary is being cut by 30% and she is requesting relief, she also assumes my mortgage has a deferment option which I haven’t heard anything about at this point.
I am looking for some input on what other landlords are doing in the state of Florida. Tenant just moved in a month ago and I am trying to do the right thing and be considerate but I have a business to run.
Would really like some input from my Florida folks on what they are doing to combat this issue if presented or how to resolve it.
Any input would be appreciated!
- Member since 2020 · 137 posts · 158 votes6y
If/when direct payments arrive,are tenants expected to make payments? I’d have a hard time accepting excuses for absolutely no payment at that point.
- Casanova, VA · Member since 2015 · 21 posts · 12 votes6y
@Arthur P. I suspect this will be an issue for a lot of us. I have a buffer for vacancies and repairs but it will be gone pretty quickly if no one pays. I’ve been hearing from friends in the PM business that they’ve been flooded with calls and e-mails from tenants thinking they don’t have to pay rent. There is a rumor going around in my town (at least) that rent will be forgiven for at least 60 days, possibly more. It seems like there is a lot of misinformation out there.
- Lititz, PA · Member since 2013 · 595 posts · 272 votes6y
Originally posted by @Scott Kimberly:
@Danny Grey i cant say i disagree with those tweets. 11 years of a bull market and explosive, ridiculous, speculative growth is a hell of a drug for a lot of people.
Would you agree with those tweets if the the term "landlord" was replaced by "tax collector" Why isn't the heat on the tax collectors who can take your property by police force if the taxes aren't paid?
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