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
- Real Estate Agent · Gilbert, AZ · Member since 2019 · 3 posts · 1 vote6y
Hi Brian,
My understanding is Phoenix banned evictions ONLY on city government owned property. We have business friendly governments at the state and most local jurisdictions.
-Tim Gara
Originally posted by @Brian Boyd:@Arthur P.- TN is a very business friendly state and middle Tennessee is booming. I know Phoenix just put a moratorium on evictions but I haven’t heard about anywhere else yet.
I tend to believe a moratorium on evictions would violate property rights of the owner and is unconstitutional.
What part of NY are you currently invested?
- Member since 2017 · 11 posts · 12 votes6y
I only have a few units but one tenant works at 2 restaurants. I anticipated this was coming and decided to try to work out partial payments for her- and any other tenants who could not pay. As long as I meet most of my costs per unit I think I’ll be okay. Right now she has already applied to Amazon and few other places (she’s also a great tenant- I really want to keep her). She also reached out to me right away when she got laid off and told me she would do everything she could to pay the next rent bill.
I didn’t tell her right away that I would help her on rent - because if she knows that- she will pay the other bills first. I want her to treat rent very seriously and not like “the easiest thing to skip”. But I told her we would figure it out and have been offering some encouragement and suggestions. When we get closer to the end of the month we’ll talk and see where she stands. Obviously this is easy to do with less tenants. So long story short, I’ll work with my tenants to work out payment plans and perhaps some temporarily reduced rents - but the agreements will be in writing and will be addressed each month as things change. In the state where my rentals are, I cannot use the deposit for rent, as the law stands now. If it comes to the point where they are too far behind or can’t pay anything at all I will give them notice that I will have to move them out (assuming evictions are still allowed) (probably offering cash for keys) hopefully with at least a months notice. I will be as humane as I can but in the end it’s still a business. - Rental Property Investor · Ventura, CA · Member since 2014 · 4 posts · 1 vote6y
I've been working with my insurance brokers for about a week on this and they've come back saying they "think" I might be covered under my BI policy if a civic authority forces shut down. That said, there should also be a similar clause for my tenants and I will be encouraging them to attempt to file their own claims and SBA loans first. My own coverage should be a last resort. If in doubt, file a claim!
Los Angeles mayor placed a moratorium on landlord evictions for the next month. We could see that more across the country.
- Member since 2019 · 25 posts · 18 votes6y
I have a SFH in Rocklin, CA. The renter, who is sketchy to begin with, called my PM and said, "I'm not paying rent for this month (was due on the 15th) or any other month, because the news I was just watching on TV told me not to. The guy has been late 4 of the last 7 months anyways, and I know he is using this as a reason for not paying. I've served three 3-day notices on him already.
My PM said even if we don't have a hold on evictions yet in Rocklin, it's coming soon, as it's in San Jose already. He would NOT recommend starting it, as it's just gonna get put on pause anyways. I have 8 months of vacancies saved and Cap buffers...but I think it feels totally unfair that tenants can claim CV as a reason for non-payment and I have to eat all my funds for it. It just feels powerless as a owner right now, as our mortgage payment will keep on coming...
- Member since 2020 · 1 post · 12 votes6y
Out of curiosity, for those that had mentioned that you will be evicting tenants for non-payment of rent, with more and more people out of work, who do you think will be filling the vacancies?
- Member since 2018 · 70 posts · 89 votes6y
I've only been in the business for a year and a half and so far have been lucky enough to have really good tenants. I haven't had any tenants yet request a drop in rent or moratorium on rent but my PM and I have discussed it and know it's coming. My plan is to reduce rent as a first step and eat the loss for a few months. As long as I keep my day job I should be Ok for a while.
I contacted the local Housing Authority to ask if there was a plan to help newly unemployed tenants and they said there isn't anything at the moment and that they'd have to wait for about a year to get Housing Vouchers. I would hope there'll be some sort of assistance for landlords to give them an incentive to work with their tenants.
- Member since 2018 · 70 posts · 89 votes6y
Originally posted by @Scott Stevenson:
Out of curiosity, for those that had mentioned that you will be evicting tenants for non-payment of rent, with more and more people out of work, who do you think will be filling the vacancies?
If you can go without rent for a few months you could go HUD with your homes (if they are one's you'd be OK with doing HUD on). My big fear, beyond losing good tenants, would be the damage they may do on the way out. I don't need to add huge repair bills on top of zero rent.
- Investor · Missouri City, TX · Member since 2015 · 2 posts · 0 votes6y
The government is allowing Tax payments to be delayed for 90 days by certian businesses ... We experienced this in Texas before during a Hurricane ... People were out of work for a while ..
We knew who our good tenants were .. and treated them accordingly...
We cut the Rents 1/3 rd.. and 1/2 until for tenants until they got going again .. Most of our tenants are blue collar ... As they got back to work ... they paid additional on their current rents... We have 24 tenants at this particular location .. some for over 25 years ...
- Santa Fe, NM · Member since 2016 · 26 posts · 7 votes6y
I have a squatter in one of my SFRs in Detroit. The court date was Monday, but most court actions were cancelled until April. So neither I nor the PM have a legal way to evict the squatter until the courts start back up.
- Residential Real Estate Broker · Willamina, OR · Member since 2016 · 2 posts · 1 vote6y
I am guessing here in the land of tenants rights I won't even be able to touch their deposit, but I will check it out.
Also then I can see they won't be too motivated to do much of a cleaning when they do move out.
- 6yJonathan Taylor SmithBusiness MemberRental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 840 posts · 801 votes
Exactly 1/2 of my tenants are Section 8, and pay only a small portion of their rent directly, so I fully expect to get the government portion of rent on time - for which I'm grateful. Although my city is also working through a recent hack attack and still can't record deeds - which is holding up my closing of 3 additional properties. A recent new tenant couldn't even get water turned on in her name for this reason - so I hope it won't also affect the housing authority's ability to pay their portion of Section 8 rents.
For my non-subsidized tenants with no prior history of being late, I'll work with them - but will want some partial payment and documentation, including a promise to pay. For those previously and chronically late - I'll look to get them out. Because if they were having trouble BEFORE all this, they are not getting back on track anytime soon.
And I fully expect the government to step in with both a prohibition on evictions and some form of financial relief. How can they not, when they are the ones denying people the ability to go out and earn a living for the benefit of society. So then, wouldn't that society have an obligation to them? As often said, these are unprecedented times, so we cannot be "business as usual".
Blue Chariot Realty & Management4.915 Reviews - 6yJeff CopelandBusiness MemberReal Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
I suggest we start with a couple of evidence-based assumptions:
1. If you look at the data from China and Italy, we will likely be on the path to some level of normalcy within 90 days.
2. It's also very realistic to assume that eviction will no longer be an option for 80% of the country for the next 90 days.
Starting from these two very realistic assumptions, we need to work as an industry, and as professionals, with our tenants, landlords, property managers, government officials, charitable organizations, trade organizations (such as the National Association of Realtors, the National Association of Residential Property Managers, and the National Apartment Association) and financial institutions on viable alternatives to eviction.
As the broker/owner of a property management company, I already notified our property owners that, like it or not, I expect evictions to be taken away as a viable option. The sooner we all adapt our business practices to that fact, the sooner we can put other viable options in place, with the goal of weathering the next 90 days.
Sticking to your "we are going to evict them all" guns is a fallacy that will drive you to financial ruin just as quickly as "free rent for everyone". Neither will work.
That leaves us with alternatives such as:
- Payment plans
- Lease/Rent modifications
- Use of the security deposit and/or any prepaid rent (i.e. last month's rent)
- Rent reduction
- Rent deferment
- Mutual termination in lieu of eviction
- Referral to charitable and/or governmental sources of financial assistance
Unprecedented times call for unprecedented measures. I literally rattled these ideas off from the top of my head, so it's obviously not an exhaustive list.
Who has other/ better ideas to share with the BP community? Share your ideas and suggestions to make each other better real estate professionals!
Copeland Morgan LLC4.770 Reviews - Member since 2019 · 4 posts · 3 votes6y
I personally think if this goes beyond a couple weeks it will be much larger issue than landlord - tenant. this issue is not just our (landlord) issue but it's a complete economic and global issue. All industries, all up line, and down line segments are affected.
- Member since 2019 · 23 posts · 19 votes6y
@ David Adams. You are in a great position and banks love loans like this. When you end up over the 70% they get nervous in these environments. I hope all banks go to the choice of interest only or give investors the ability to skip a payment if necessary and build it in the loan. This all will pass and hope the banks can be level headed through these uncharted waters.
- Member since 2019 · 3 posts · 0 votes6y
Just remember evictions are very costly (and aren’t even happening for a month or so in some areas). If someone has been a solid tenant up to this point, it would be wise to work out a payment plan with them. You can come up with a solution that ensures they don’t get so far behind they can never catch up, but can also help them float until their job comes back or they get government assistance.
- Multi-family Investor · San Antonio, TX · Member since 2008 · 15 posts · 10 votes6y
To J. Lively, I would recommend starting the eviction process anyway. Because,
1. Good to have the paperwork already done, all that is needed then is for a court date to be set. And on first come first serve basis, you will be in on early court dates when it restarts
2. When the court delay is lifted, you can imagine the rush by landlords all at once, and the long lines,. and then where will be several court dates to be set to handle the overflow.
- Member since 2019 · 6 posts · 3 votes6y
Hello good people of BP,
I must say, the more of your comments I read, the more I felt fortunate to be among such great people!
Now, with that out of the way, I have not yet felt the impact of this horrendous virus, but am trying, mentally and financially, to prepare for it! If any one of my tenants are late, short or unable to pay, I will most certainly work something out with them as they’re all great tenants/people!
This includes lowering the rent amount to the exact amount of my monthly expenses until A. we put this behind us, or B. they come out of their financial hardship!
I agree wholeheartedly with forfeiting the deposit idea... that’s a great way to give them some room to breathe and figure out what to do! After all, it may be my property, but it’s their home!Looks like the next 2-3 months, maybe even longer, will most likely be choppy! We’re all gonna need to make sacrifices to get through this! I’m already lowering my monthly expenses any way I can to sail through this and carry on if they fall short or behind on rent. This really calls for ‘all for one, one for all’ type attitude.
Hoping everyone is and will be ok. Please stay safe.
- 6yRyan W. RamsayPro MemberInvestor · Silverthorne, CO · Member since 2016 · 1 post · 2 votes
I have 3 rentals placed in Colorado ski community. Two have mortgages with good tenants. All resorts forced to close so lots of un-employed now. I have not received any bad news from them yet..... Perhaps a bigger problem is I just paid cash for the third one, and had the crew demo it. So now I have a condo that is empty and gutted. At least I paid cash for it. At this point I have no other option than to finish what I started and then rent it. My wife and I use the BRRR method, and have bought and sold other properties this way. I have worked with tenants on late rent in the past. Throughout my experience as a landlord I have grown more hard hearted to this, but I will still work with a good tenant to keep them. In the end it is still a business. There are some local social posts in my community trying to get landlords to give free rent until this is done. What!?! What if you have 50-60 properties that all have mortgages with a net cash flow of $500 per month. The perception by the general public is that landlords are very wealthy, and in large part this can be true. Even the wealthy landlord would have a difficult time making mortgage payments on 50 properties for 4-8 months...
I know in Colorado you cannot use a security deposit for rent unless it is stated in the lease. So check your state laws. I require first, last, and security on every tenant. I live in a high demand area with very little vacancy (til now?). If I end up in the situation being discussed I have the security deposit and final month rent for leverage.
Hope this ride isn't as bumpy as it looks...
- Investor · Springdale, PA · Member since 2014 · 3 posts · 7 votes6y
Scott Stevenson has made the most sensible reply in this post. Why would you want to incur the cost of evection, the cost of readying for another tenant that will more than likely not be there. In most cases you will also be paying for utilities. I am convinced that setting up a written payment plan whether it is partial or deferred is the way to get through this while retaining good tenants. If you have good business practices you should already know that creating a win win will carry you for the long-haul. Returns in real estate will vary under many circumstances this is surely one of them. Shame on you if you’re not sitting with a reserve. You have spent too much time watching TV and videos on how to get rich at 3 o’clock in the morning. I feel fortunate that I am in a position to be able to help and work with people. Helping people has rewarded me tenfold in all of my businesses. Love thy neighbor!
- Member since 2019 · 4 posts · 3 votes6y
Originally posted by @Ramiro Burr:
To J. Lively, I would recommend starting the eviction process anyway. Because,
1. Good to have the paperwork already done, all that is needed then is for a court date to be set. And on first come first serve basis, you will be in on early court dates when it restarts
2. When the court delay is lifted, you can imagine the rush by landlords all at once, and the long lines,. and then where will be several court dates to be set to handle the overflow.
And you can always choose not to act on it...
- Rental Property Investor · Glendale, CA · Member since 2015 · 14 posts · 3 votes6y
Originally posted by @Anthony Luna:
Our team has already begun receiving rent release requests from our commercial tenants. We have not received any residential requests as of today. Below is the policy we have drafted for our commercial tenants and we plan to build a similar plan for our residential property and release it to our team tonight.
Rent Relief Requests
If a tenant is requesting a rent reduction or relief from their regularly scheduled monthly rent amount entirely, please follow the below guidelines and steps.
1. The written request is received from the tenant.
2. The Property Manager should confirm in writing that the request has been received and request the following data from the tenant:
a. Tenant’s financial reports
i. Profit and Loss for 2019
ii. January 2020
iii. February 2020
b. Balance Sheets
i. 2019
ii. 2020
c. Copy of their Business Interruption Insurance Policy
d. Copy of Tax Returns
e. A description of the efforts they have made to sustain sales.
3. Inform the tenant that we will notify the Landlord of their request.
4. Send the Rent Relief Request Form and the supporting documents to Anthony for review.
5. Once reviewed by the Leadership Team, the Property Manager will submit the request and supporting documents to the Landlord.
Thanks Anthony
- Investor · Canton, MA · Member since 2015 · 1 post · 0 votes6y
We have a property that’s vacant... and I’m not sure how this virus has impacted the Boston rental market...
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes6y
This is one of those unique situations beyond our control. I like standard policies and practices, but they don't apply here. I have a wait-and-see attitude and am prepared to roll with the punches.
I sent an email to all my landlords warning them of the increased risk of late rent, longer vacancies, etc. Every investor should be prepared to handle a couple months without income. That's my normal practice but many investors don't prepare properly.
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