Corona Consequences - Landlords Are Part Of The Solution

Corona Consequences - Landlords Are Part Of The Solution

Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes

We have all been thinking about and living the Corona Virus. I suspect that most of the BP community is in the same state of mind as me which is, doing everything I can to work it out in my head but obvious and definitive answers to all questions seem hard to come by. 

I have been preparing my own house as has everyone else. My properties are part of that house, and the people that live there are people I am responsible for. You can argue that point if you like but you would be wrong.

I don't want my people to get hurt if possible. I don't want my buildings to get hurt either if possible. I want my people to stay where they are, and my buildings need to stay there too for the sake of they're lives first, and my financial interests second. I am not saying my financial interests are not a major consideration here, just illustrating how the one protects the other.

How one protects the other. My story is going to skip over all the little stories in-between and is going to jump to the end. There is no time to waste. The State Of CA quarantined the entire state today (March 20, 2020). The rest of the country will follow. I expect this to last 2 months, equal to Asia. Our renters are going to panic, as they should. In my opinion, in the best interest of everyone, for sometimes the same and sometimes different reasons, the people who can step up and do something ought to do something. The thing landlords can do, that's all of us, is get in front of this thing and take measures to settle the panic.

I am going to get in touch with all my tenants today and let them know I am accepting whatever they can afford in rent for this month and for the near future. I am going to tell them to purchase groceries instead. A frank and honest talk of the financial challenges for all is going to be had. My people need to know that they have food on the table and a roof over their head. If too many people are unsure of these things, people will become desperate and irrational, leading to desperate things, leading to irrational things. The suicide stories are already coming around. Just like I am frustrated to go through all of this without enough information and answers, so too are the people who rent from me, WONDERING WHAT MY ANSWER IS. I intend to give it to them in no uncertain terms.

I ask all landlords to do the same.

I predict my call for landlord unity to take similar measures will be futile in many cases. I get that. But I urge you to use the speculative mind I know you have and see the different outcomes. If we take the harsh and self-serving at-all-costs approach, the suffering for all will be worse. If we were to seize the moment and take the we're-all-in-this-together approach, it is very possible those efforts could really go far to HELP EVERYONE, saving lives even, quite literally. Maybe we won't be thought of as greedy and heartless afterwards either. Much talk of our tenants true colors showing though has been made in this forum. What are your true colors?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y

this will be interesting to see how the NO Pay No Stay landlords on this site react to that. I know when I posted this question 3 weeks ago 75% or more of the responders were of the mind if their tenants don't pay its not their problem.. they are running a business not a charity etc etc.. well I guess we will see how it all play outs. 

what I am coming to realize is that a lot of landlords that are worried about paying their own bills  APPEAR to maybe not have taken the advice of many and have proper reserves that you dip into during this type of situation. 

As painful as this is.. this is a wake up call to buy and hold investors that reserves are a MUST not just something to gloss over.. if you never use them that's great but if you need them you don't have to panic.

In one thread a person was talking to their lender.. and the lender said well U should be stacking cash so you can pay your mortgage and you should put off capital improvements.. I suspect lenders will want to see that.

this is not owner occ issues landlords are a for profit business profit or LOSS.. so they will be treated differently I suspect. 

but end of the day i don't think those holding mortgages want a repeat of mass defaults and will come up with creative workouts for borrowers.. 

I just had my talk with my Banker on Wed to go over our projects.  Banking relationships will be a key component as well. you dont always get the best rate.. but you certainly can talk to the guy that holds your mortgage instead of a servicing company.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y

    this will be interesting to see how the NO Pay No Stay landlords on this site react to that. I know when I posted this question 3 weeks ago 75% or more of the responders were of the mind if their tenants don't pay its not their problem.. they are running a business not a charity etc etc.. well I guess we will see how it all play outs. 

    what I am coming to realize is that a lot of landlords that are worried about paying their own bills  APPEAR to maybe not have taken the advice of many and have proper reserves that you dip into during this type of situation. 

    As painful as this is.. this is a wake up call to buy and hold investors that reserves are a MUST not just something to gloss over.. if you never use them that's great but if you need them you don't have to panic.

    In one thread a person was talking to their lender.. and the lender said well U should be stacking cash so you can pay your mortgage and you should put off capital improvements.. I suspect lenders will want to see that.

    this is not owner occ issues landlords are a for profit business profit or LOSS.. so they will be treated differently I suspect. 

    but end of the day i don't think those holding mortgages want a repeat of mass defaults and will come up with creative workouts for borrowers.. 

    I just had my talk with my Banker on Wed to go over our projects.  Banking relationships will be a key component as well. you dont always get the best rate.. but you certainly can talk to the guy that holds your mortgage instead of a servicing company.

  • Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    6y

    I think we may be looking at 2 months of stay at home also.

    With so many businesses closing up, I wonder what percentage of them will simply not be able to reopen when this thing blows over, leaving more people out of work than there are jobs available.

    In that type of scenario people who lose their living situation, tend to bunch up with friends and relives who still have a place to live. Multiple families in one rental.

    That might be step 2 for a lot of renters after things start coming back on line.

    This is going to require a lot of Quick Fixes by the Federal Government to get things back to MAGA (which is now broken).

  • Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    Ill take the same approach @Account Closed

    I have built my business on the way I treat people, and the type of personality I have. Im not in this for money alone. Im in it to make a difference, not only for my family, but for those that need shelter, the community, and the society as a whole. 

    I believe I have the ability to help others in a time like this, if for some reason my tenants choose not to work with me then I will end up in the same position if I fret or start evicting. One way or another I am going to have to hustle, and I have no problem doing that.

    Lets hope for the best outcome.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    6y

    This morning I set down and made a list of all of my mortgage payments and what I can reduce rents to for every property, so, that I can still pay my mortgages and give relief to my tenants. 

    I would rather give up my profit for a month or 2, than lose tenants by them either just moving back in to relatives or deciding that they will take the hit of an eviction (they just put in an eviction moratorium in Atlanta) and ride it out as long as they can, which would give me no payment to cover my mortgages. 

    It would be hard to fill vacancies right now and I think I'd lose more than just losing 1 month's profit. The rents will be low enough that the expected stimulus payments can help them ride this out for a few months, especially since many of my units have 2 or 3 people. 

    And I think in the big picture - it'll come back  in karma in some way. My tenants will be happy with me and it's much easier to do someone wrong, if you feel they've taken advantage of you. And this is a difficult time for everyone.

  • Rental Property Investor · CA · Member since 2019 · 27 posts · 13 votes
    6y

    How would you guys work this out with your tenants if you don't manage directly, but via a Property Manager? 

  • Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    6y

    @Account ClosedI am fortunate to have good tenants who pay on time and for the better part are respectful. I will be lenient with them. Not a hero it is just the timing and my current ability to do so. Not judging those incapable of giving a break. For many this is a paycheck that pays their personal bills.

  • Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Scott Doyen:

    How would you guys work this out with your tenants if you don't manage directly, but via a Property Manager? 

     I think if this is something you are willing to do, it's simply a matter of getting in touch with your management company and letting them know your wishes. My cynical minds says make sure the PMC doesn't just screw the tenant and pocket the money - lol. Calling your tenants personally to confirm the management company is doing what you asked would do the trick with that.

  • Rental Property Investor · CA · Member since 2019 · 27 posts · 13 votes
    6y

    @Account Closed Thanks! Yeah we will hang tight for now- we just contacted our Property Manager and they told us they will let us know if anything comes up. So far they have not heard back from tenants, but if our tenants are indeed impacted by the lockdowns/virus and can’t make rent, our PM will reach out to us and we are willing to listen and work it out. 

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    It also depends on how many properties you have and if they have mortgages.  For those with multiple properties and mortgages, zero money in rent will quickly wipe them out even with some reserves.  Most plan for one or possibly two properties to be a problem at one time, but to have all of them is a bit much for a landlord to jump in and say don't worry about paying any rent especially if that landlord also lost their job.  

    I think looking at it as a case by case basis is the best option and have tenants pay what they can and catch up later.

  • Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Jay Hinrichs:

    this will be interesting to see how the NO Pay No Stay landlords on this site react to that. I know when I posted this question 3 weeks ago 75% or more of the responders were of the mind if their tenants don't pay its not their problem.. they are running a business not a charity etc etc.. well I guess we will see how it all play outs. 

    what I am coming to realize is that a lot of landlords that are worried about paying their own bills  APPEAR to maybe not have taken the advice of many and have proper reserves that you dip into during this type of situation. 

    As painful as this is.. this is a wake up call to buy and hold investors that reserves are a MUST not just something to gloss over.. if you never use them that's great but if you need them you don't have to panic.

    In one thread a person was talking to their lender.. and the lender said well U should be stacking cash so you can pay your mortgage and you should put off capital improvements.. I suspect lenders will want to see that.

    this is not owner occ issues landlords are a for profit business profit or LOSS.. so they will be treated differently I suspect. 

    but end of the day i don't think those holding mortgages want a repeat of mass defaults and will come up with creative workouts for borrowers.. 

    I just had my talk with my Banker on Wed to go over our projects.  Banking relationships will be a key component as well. you dont always get the best rate.. but you certainly can talk to the guy that holds your mortgage instead of a servicing company.

     Yea...I knew when I wrote it that it's easier for me to consider the idea than it is for many/most. I get that.

    I also realize it would be really great if I said more with less - lol. (My wife wishes that too - says so almost every day)

    But for a second I ask everyone to take a deep breath, and take a good look at what's happening. Take it in. What do you all really see? Forget about what people are telling you. Answer your own question. What are we looking at here?

    Nobody has any real answers do they? And isn't that really the problem? Some say don't worry the sun will shine another day. And they're right. My first question to that is this, what will mankind look like in that light tomorrow? My second question is what can I do to make my world better? I find it easier to answer the second than the first. Maybe I read too much history. Maybe I'm too cynical. Maybe I'm a fool. Maybe I'm dead-to-the-nuts right-on-the-money with what's going down. I know this, not one person here can tell me definitively one way or the other what's really happening, and that's the heart of the problem for today.

    I can't even ****ing explain it. I'm going to fix what I can today and fix tomorrow what I can fix tomorrow.

    I own a whopping two duplexes with three tenants, one vacancy. I'm a small minnow in RE. I have never advertised otherwise. I recognize the people with tons of properties have more on their hands than I do - not even comparable. The only thing that is comparable is that we're all in the same boat, all of us, all of our tenants, and everyone else who could give a **** about real estate too.

    Today I personally went to my properties. I purchased lint-traps for the washing machines, wire-catches for the sink drains, plastic snakes, and garbage bags for all my tenants. I was able to meet with all of them personally. I told each of them I was waiving this months rent entirely, not a deferment, a gift. I told them to go buy food, today. I explained to them that when the world becomes quarantined, I will not be able to come to the building to fix anything, so it's on them to make sure they don't break anything, most importantly the plumbing. We went over stupid stuff like flush-able wipes are not flush-able. I showed them how it all worked as best I could. I told them we would see what the world looked like in a month and revisit the issue, but in the meantime the only thing to do right now is treat each other with love, so the world doesn't go crazy. Have to have a roof and food to do that. Maybe the people with A-Class (I always hated rating property like that) don't understand. Those of us with D class get it. The people who live in D class get it. And let me say this, the gratitude I received back was more than just a little genuine. It was massive relief, tears in one case. I gave them a touch of hope. Hope that maybe, just maybe, the world is not full of ******** and maybe we will all get through this, if we love one another and work together. One tenant lost their job today, the other two are already struggling with hours and see the loss of theirs coming soon. Screw it. We shall all live today and figure out tomorrow tomorrow.

    Maybe some of the people reading this understand why I did what I did and maybe some don't. Peace to all and I aint judging. As I started this post, this stance is easier for me to take than most. I feel just as bad for the landlords who stand to lose their properties as I do for the tenants who stand to lose their housing. Would I do the same if I was over-leveraged? Hard to say definitively, but I think I might.

  • Investor · IL · Member since 2019 · 151 posts · 135 votes
    6y

        I sent a text to my tenants last week to tell them I was concerned about them and I am willing to work with them on the rent. I did not make any specific offers only that I can be flexible.

         I am new at this so I was pretty nervous that I was training my tenants to think paying rent is not a priority. I want to thank @Jay Hinrichs for his post that made me start thinking along these lines. I am lucky to have a couple of good tenants and I will do what is needed to keep them.

  • Investor · IL · Member since 2019 · 151 posts · 135 votes
    6y

    @Account Closed

         My motivation doesn't seem to be as honorable as yours is. I have a ton of respect for the position you are taking and I know there are some who just won't be able to stand the loss. Not taking anything away from them.

  • Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Gail W.:

        I sent a text to my tenants last week to tell them I was concerned about them and I am willing to work with them on the rent. I did not make any specific offers only that I can be flexible.

         I am new at this so I was pretty nervous that I was training my tenants to think paying rent is not a priority. I want to thank @Jay Hinrichs for his post that made me start thinking along these lines. I am lucky to have a couple of good tenants and I will do what is needed to keep them.

     Hard to get an eviction through court when the courts are closed and the police that are tasked with escorting people from your property are quarantined or told not to do it - lol. I don't think people are really grasping the gravity of the situation and what everything that is happening really means. It's one thing to take a stance of no stay no pay - it's another to enforce that. What then??? I'm not saying I have the answers, I don't, just saying I think people have ideas of how they want this to shake out that are different from how it's really going to happen.

    And yes, it's never good if your tenant thinks paying rent is not a priority - lol. I've been using the "gift" and "I'm paying your rent for you" rhetoric whenever I've had this sort of conversation with tenants that want some slack on paying. I'm not normally tolerant of failure to pay whatsoever. I have actually said, "No pay no stay" to certain tenants, which is always a crowd-pleaser let me tell you - lol (there are better ways to communicate that sentiment).

  • Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    I don't disagree with anything in this thread. However, if I told all our tenants that they didn't have to pay rent this month, our income would drop to....zero... We live off our rental income. It's our full time job and there is no W2 income to live off of if the rents are reduced or stopped. So not getting rent would immediately be a really bad situation. We can't file for unemployment like the laid off factory worker and "evicting" someone doesn't really solve anything. We'll work with our tenants to the extent they need help but we don't plan on forgiving any rent. Late payments we could forgive but the rent is needed even if they don't get us paid up for several months. I don't see this situation as being as dire as many. Possibly because I'm older than many on this forum and I've seen "the end of the world" multiple times and it's rarely as bad as predicted. We have good relationships with most of our tenants and keep the properties in good condition. Our turnover rate is low and we don't want vacancies resulting from this but the rent is essential.

  • Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @John Teachout:

    I don't disagree with anything in this thread. However, if I told all our tenants that they didn't have to pay rent this month, our income would drop to....zero... We live off our rental income. It's our full time job and there is no W2 income to live off of if the rents are reduced or stopped. So not getting rent would immediately be a really bad situation. We can't file for unemployment like the laid off factory worker and "evicting" someone doesn't really solve anything. We'll work with our tenants to the extent they need help but we don't plan on forgiving any rent. Late payments we could forgive but the rent is needed even if they don't get us paid up for several months. I don't see this situation as being as dire as many. Possibly because I'm older than many on this forum and I've seen "the end of the world" multiple times and it's rarely as bad as predicted. We have good relationships with most of our tenants and keep the properties in good condition. Our turnover rate is low and we don't want vacancies resulting from this but the rent is essential.

     What an interesting post. Thank you for it. You illustrate a place in the cycle that most of us are working to achieve, where our monthly rents serve as our personal incomes today. The younger people who are in a leveraged position actually have much more ability to offer grace than you do, though most of them are either failing, or unwilling, to recognize it.

    I think you are wrong on some other things. I hope you're right. I was going to write a long response explaining why I think that, but decided to let it be (for now - lol). Be well.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    6y
    Originally posted by @John Teachout:

    I don't disagree with anything in this thread. However, if I told all our tenants that they didn't have to pay rent this month, our income would drop to....zero... We live off our rental income. It's our full time job and there is no W2 income to live off of if the rents are reduced or stopped. So not getting rent would immediately be a really bad situation. We can't file for unemployment like the laid off factory worker and "evicting" someone doesn't really solve anything. We'll work with our tenants to the extent they need help but we don't plan on forgiving any rent. Late payments we could forgive but the rent is needed even if they don't get us paid up for several months. I don't see this situation as being as dire as many. Possibly because I'm older than many on this forum and I've seen "the end of the world" multiple times and it's rarely as bad as predicted. We have good relationships with most of our tenants and keep the properties in good condition. Our turnover rate is low and we don't want vacancies resulting from this but the rent is essential.

    I think that many people, and it seems you as well in this post, overlook that it's not 'black or white' - as in 'pay all the rent or pay nothing'. There's a huge number of shades of gray in between and the decision that I made falls into those. My rental income is my only income as well. No job, no W2. I have 60K cash reserves and I have about 90K credit cards that are clear. I have no car payment and the mortgage on my own home is under $ 800.00. I don't have an expensive life style or expensive hobbies or habits. 

    So, for April I offered to forget about my profit. I can live without profit and use my savings for my own living expenses. It won't cost much. If my tenants can pay enough so that I can pay my mortgages, then I think that's a win-win for everyone. Sometimes you have to give some to get some. If you're too rigid and never bend , you'll break. 

    This is an unusual situation and we all have to work together. It's not just that tenants need us, we as landlords need tenants. It's not a one-way street. Some tenants don't start the conversation of having difficulties - they will just move out, ashamed or just broken because of the situation. I could survive a long time that way, if my mortgages are being paid. I would not be able to hold out very long, if my tenants move or not pay (can't evict) and just stay. 

  • Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    6y

    Well in full-circle through BP I have come back to my own thread. I don't start many threads - LOL - that's probably best for everyone.

    I took the idea presented in this thread and made an attempt to spread it in other threads. Silly me. Futile. Pointless. Made a pretty solid fool of myself in the process. So now I can talk to myself - I deserve that.

    I am not wrong here. Landlords could be part of the solution. Emphasis on the word could. I could be president too. I've obviously allowed my idealism and view of what could be to get the best of me. I suppose in normal times that could be annoying, amusing maybe I might hope, but harmless. In times like these, it's important to speak up and react, and equally important to shut up and respond. I guess my scorecard there is not the greatest as far as my forum posts are concerned.

    This is crazy **** happening - it does not add up - more accurately put it's not adding up to what I want it to, and what I have always believed others want too. My tenants see it too. We see it together. That's why I gave them the free month. I know I'm not the only person on this forum that is adding it up and asking WTF? I'm not talking about your stupid portfolios people. I'm talking about things more important than money, even the lives of yourself and others if you're a patriot and if you love your fellow man. What I've written lately is not particularly helpful, maybe to a handful at best. Just like heads in the sand are not helpful. Heads in the sand has gone on quite long enough IMO. The thing is, you can't hear the screams from others to pull out when your head is buried in sand.

    Peace and best wishes to all. Time for a BP break.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    6y

    @Merritt ,

    I believe in times like these, in the big picture of things, those that create some goodwill with tenants will persevere better than those that won't give an inch. When a tenant has nothing to lose by not paying, because there are no evictions, It's better to be seen as a landlord that's willing to be a good person, than to be seen as one that is only out for their money. Because it's so much easier to justify screwing over someone that's only about money than someone that has shown humanity. 

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