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.
Try owning rentals in Massachusetts. You can't take their security deposit if they miss a month's rent. Heck, you can evict them for non-payment and no matter how much money they owe you, you still can't take their security deposit unless it's for damage or repairs caused by the tenant, which, by the way, you have to prove. I wouldn't even bother going to housing court over non-payment due to the Coronavirus because I know the judge will give them more time to pay, probably months.
This is a very relevant topic at this point. We're a property management company and own quite a few rentals ourselves. Mixed student & working class, but more heavily on the student side. Students are beginning to leave for home now, but we have had a few requests (minimal at this time) to get the rent refunded due to this viral outbreak. Since the University isn't starting up again (at least at this point) until Sept we're quite concerned we'll have students requesting or cancelling rent payments over the break OR what if their parents loose their jobs? And since our courts are closed there's nothing we can do. File the proper forms, sure - but then what? We're trying to game this out, but it's difficult to come to a solution, especially if this starts happening on a large scale. (Note we oversee approx 3,500 student rooms).
Investor · Idaho Falls, ID · Member since 2016 · 935 posts · 629 votes
6y
@Jennifer Rysdam Let's hope that if a 6 month forbearance passes, that it will also be for investment loans and not primary only. The ones making that deal should understand that rental properties are dependent upon the renters having income to pay. In any case I guess worse case scenario, they won't be foreclosing anytime soon, but it may damage your credit, unless they put a credit freeze out there as well. Lots of different things that affect others. Overall I think this will have a much larger economical impact than anyone can predict. Too many unknowns and every piece of industry depends upon another.
Cheshire, CT · Member since 2018 · 87 posts · 60 votes
6y
How many of you are leveraged to any extent and now think it's on the tenant to make up for YOUR leverage situation?
This is completely uncharted territory. Our economic capacity was reduced by an extreme percentage compared to literally any other time in history.
Stop pushing back on your tenants and start pushing back against the banks. Kicking people out will only exacerbate this situation. It's temporary, don't make it worse than it already is.
Investor · Clifton, NJ · Member since 2016 · 42 posts · 10 votes
6y
Similar situation in Clifton, NJ... Courted halted evictions for at least 2 weeks now (even the ones that were filed way before Coronavirus, and were scheduled this week)... New evictions, filed during this time, might take months... I am planning to work with tenants (especially good ones) to make it work, however; might file for eviction to be at the safe side (if someone doesnt pay rent completely, however; promises to pay in a month or so).
BTW, check laws if you want to take out money from security deposit for the month rent... At the very least, I would get it in writing from the tenant that they are allowing you to do that. In addition, you still have to replenish it once things get back to normal.
Does anyone even know how Mortgage forebearance would even work? Would every mortgage just freeze or would each person be required to apply and be approved? The latter seems nearly impossible to process in any timely fashion.
Rental Property Investor · New Castle, DE · Member since 2017 · 95 posts · 102 votes
6y
Actually SHOCKED by how many hard lines I'm seeing in here. You're telling me if they provide legitimate job loss due to the virus and can't pay you would take their deposit then evict a month later? This isn't a normal blue sky day where they can't get work. The government legitimately shut down their ability to go to work. I'd like to think I have a good reputation in my community and with my renters. They never I wouldn't dream of shattering that over a situation like this.
Maybe it's just me but I plan on working with my tenants that have a legitimate financial burden.
Rental Property Investor · New Castle, DE · Member since 2017 · 95 posts · 102 votes
6y
@Account Closed
I don't see how it's kicking the can down the road, it's dealing with the direct problem for majority of people which is mortgage payments. I mean I've already have emails from my mortgage providers saying they will provide assistance. Just because everyone can't be helped doesn't mean no one should.
Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes
6y
Originally posted by @Account Closed:
Actually SHOCKED by how many hard lines I'm seeing in here. You're telling me if they provide legitimate job loss due to the virus and can't pay you would take their deposit then evict a month later? This isn't a normal blue sky day where they can't get work. The government legitimately shut down their ability to go to work. I'd like to think I have a good reputation in my community and with my renters. They never I wouldn't dream of shattering that over a situation like this.
Maybe it's just me but I plan on working with my tenants that have a legitimate financial burden.
Sure, I get that and to an extent I agree. But again, for how long. 3 months, 6 months, 12 months, etc.
Eventually there's a point where you will need to move on as painful as that is.
No one likes evicting honest hard working people, but there may eventually be a point where that has to happen. Like I said. I'm prepared to help people for 2-3 months. After that need to plan to unfortunately move on. I would hope that any tenant unemployed during that time would also be reaching out to receive rent assistance and also applying for new jobs. I understand that those systems will be overloaded, but I'm not in a position to carry a significant number of my tenants for a long time if they aren't helping themselves.
Property Manager · San Diego, CA · Member since 2018 · 7 posts · 1 vote
6y
I'm following this thread and was wondering how or if views change for retail tenants? All my tenants are retail and although they haven't asked for rent relief yet, I am expecting it. What would you do?
I think if it ever go to a multiple month shutdown the government would have to step in and provide some relief in the form of mortgage loan deferral etc. Which will also trickle down to utilities. I think with the FED going to a 0% rate they've shown they will do anything and everything in their power to avoid a situation like 2008 repeating.
If we get to 3 months of a shutdown with no relief in sight that's a nightmare on a macro scale and "tenant rent payments" would probably be the least of my worry. So I agree with you, let's just all hope this doesn't last that long and people can get back to work.
Rental Property Investor · Chicago · Member since 2019 · 17 posts · 19 votes
6y
I manage around 500 doors, and I have several college students who will be returning home for the semester. None of them have asked for lease terminations. A few of them prepaid their rents for the next 3 months, and one asked if she could mail me her rent checks from her home state.
The issue will be with my residents who work in the service industry. That is around 20% of my tenant base, if you include substitute teachers, restaurant, retail and service workers. Some have reached out to me already to let me know they are uncertain about their ability to pay the rent for next month.
IL is preparing to offset the cost of living losses incurred by people out of work, and I am willing to work with them until this support arrives.
3 months, 6 months, 12 months, eventually you need to take some action.
I don't think there will have to be a line drawn. This will end at some point in the next few months and people will get back to work. We'll all know when that happens. I'm not really worried though because the government is putting together a package to get people money starting in the next 2 weeks. At that point they will have no reason not to pay their rent. You just have to play it by ear. You will know who is trying to screw you.
It seems like most jurisdictions have or soon will be suspending all evictions until further notice, so it probably isn't up to us. Personally, I advocate leniency. If your business can't withstand a few months of no rent, you probably should have planned better.
Investor · Shelton, CT · Member since 2018 · 7 posts · 26 votes
6y
I keep seeing "this is a business", but "this" is also something else. It's a national emergency (already officially designated as such), and for some tenants (I have one in food service for example, and in my state all restaurants and bars have just been closed except for pickup/delivery), it may become a personal disaster as well.
In times of emergency, where we as a society have to face a foe larger than ourselves, I for one will be working with my tenants. If that involves some sacrifice from me, for example in the form of some rent forgiveness for a truly distressed tenant, then so be it. I will be glad to have been in a position to provide some real relief to someone deserving in a time of need.
For many of us, and I can only hope we are in a majority here, this is more than just a business. As landlords, we are in a position of great influence over other people's lives, and they deserve our compassion and understanding in a time like this.
Alistair, exactly. Putting somebody on the streets over the next few weeks is likely to result in a death. Maybe more than one. It might not be the death of the tenant, but exponential growth means they are likely to be a carrier and infect 2 more, who will infect 2 more for a few weeks, which will result in at least one death. The math is fairly clear on this point. A few thousand extra bucks isn't worth that.
It seems like most jurisdictions have or soon will be suspending all evictions until further notice, so it probably isn't up to us. Personally, I advocate leniency. If your business can't withstand a few months of no rent, you probably should have planned better.
Are you saying what i think you are saying? Because if it is what i think you are saying i think you are right.
In a sane world Airlines would have had $100,000,000,000 in the bank. Just for times when they had to drop 90% of seats.
Kinda, but not really. The airlines are a completely different situation. If this lasts 6 months we will all need to be bailed out. There is only so much in reserves that is prudent. I don't think the airlines keeping $100 billion in the bank qualifies as prudent.
My wife and I own three units. We have no mortgage on these so we are not pressured to make a payment. We have decided to let our renters know that they will no have to worry about eviction or late payment. We will suspend our rents if needed until this crisis is over. maybe not a good business decision but we feel it is the right thing to do. Dan Lee
Rental Property Investor · Chicago · Member since 2019 · 17 posts · 19 votes
6y
Here is some information from NAA-
Small Business Administration Will Provide Disaster Assistance Loans SBA's Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Further resources can be found here and on SBA's websites: www.SBA.gov/coronavirus and www.SBA.gov/disaster.
DOL Announces New Guidance on Unemployment Insurance Flexibilities DOL announced new guidance outlining flexilibilites that states have in administering their unemployment insurance (UI) programs to assist Americans affected by the COVID-19 outbreak.
Department of Energy Coronavirus Resources DOE is coordinating closely with the White House and its interagency partners in the unified response to the Coronavirus. DOE leadership will be issuing further guidance as the situation evolves.
Rental Property Investor · Lafayette, LA · Member since 2019 · 40 posts · 42 votes
6y
@Mike Bonn
I deal with a local community bank and have loans that will be paid off in 18 months - 4 years. I owe 1.1 mil on about 7 mil of value . My bank is willing to do interest only if needed for 3 months and then see what happens . Offered to refi the entire 1.1 for 15 yrs . Would bring monthly payment from 24K to 10K
Investor · Boston, MA · Member since 2017 · 1 post · 12 votes
6y
I believe this is a time to be guided by compassion and humanitarianism not hard line business practices, which if you do try to take I’m sure the government is enacting measures to prevent that from happening, also hopefully the banks will grant reprieves on mortgage payments which I heard them saying today on CNN for possibly 3 to 6 months which would then allow you to extend the same to your tenants as I plan to do with mine. People need to be mindful and think how they would like to be treated if they were in a similar situation just because you are on top today does not mean you will be tomorrow...