At some point, every landlord has to ponder the classic “What If”: What if my tenant doesn’t pay their rent? First stepping into the ring, it feels rather scary. You can’t be a landlord if your tenant isn’t paying, that’s not a business model. That’s just a scam. Of course, as time goes on, there’s more to it. Over the years, what if they don’t pay, is less of a hypothetical and more of a when this happens, what’s the plan?
Now, apparently, now is when it happens.
All the doomsday preppers are sitting back comfortably right now, because in light of recent events, more and more tenants will not be able to pay their rent, and even if they can, they’re wondering if they should. People are losing their jobs left and right, are being furloughed, or are unable to leave their homes for work. With so many of your tenants out of work, what is the next step?
The best thing that you can do is to try and feel like you have some control and grasp of the situation. You are not alone in this situation. Not only is every landlord feeling the purse strings tighten, but every tenant is worried about the same thing. It is not their fault that they cannot pay their rent, and it is not your fault that you are losing money. It’s a good idea to keep perspective that no one knows what will happen next.
Even the doomsday preppers didn’t think today would come today. You are not alone. Hopefully you’re social distancing, so you are somewhat alone, but situation wise, you have support.
To keep your head on straight, try to look at this as a practical problem. What are the new eviction guidelines in your area? ApplyConnect is trying to keep up with country wide, coronavirus based eviction laws: this includes moratoriums, eviction bans, suspensions, and rent guidelines. Because things are changing so fast, we recommend checking back frequently or subscribing so you can stay informed as the laws change.
If you know the rapidly changing laws in your area, you can try to make some plans. What does taking the hit this month look like? If one of your tenants can’t afford to pay, what will happen without that rent? Looking forward with the What Ifs in mind will make the eventuality of it be a little easier to handle.
Hindsight is 2020
If you had savings, now is a time to employ them to stave off the longer problems. One landlord posted for advice: they run a 32-unit building as their sole source of income, and the entire building banded together to announce they would refuse to pay April’s rent, and each month after until the crisis was over. They would not be deferring rent and had no plans to pay it back once they went back to work. They simply informed the landlord that this was happening.
The sudden smack of every renter banding together against you is a very bitter picture, and could make anyone desperate and scared. One commenter hit the nail on the head:
They clearly view you as a “stereotypical landlord” who is rolling around in cash while they’re struggling. I doubt that they would all be banding together to avoid paying the local grocery store for food. This situation would be much easier if they viewed you as a small business owner rather than a landed gentry.
And that is a good place to start: do your tenants view you as the ‘landed gentry’ who cares not for those below him? Can you change that image so they can view you with more understanding that your job is at risk too?
1. Take a look at some small business loans, and the laws that are being written to help those businesses hit by the quarantine.
Many people are viewing these laws like they are only written for mom and pop restaurants, the tiny street corner vendors, and small shops that are part of local charm. That doesn’t mean they won’t cover you as well. Find out what relief efforts can help you so that you can help your tenants too.
2. Be open with your tenants.
You need them to see you in the same compassionate light that they view the mom and pop grocer. This is your job, not a cushy gig you do for fun. Talk about how you may be willing to do deferred payments or lowered rent, that you understand they are having financial problems too because of quarantine, but you can only help so much. Remind them that it’s your livelihood too.
3. Seek mortgage relief.
If the property you’re renting out is under mortgage and you’re worried about losing it entirely, see what financial aid is available for COVID19 relief. ApplyConnect will be keeping track of some of the major regulations being released to try and make things a little easier for you (subscribe to know when we release that guidance).