How do you make up the extra profit and payments?
This might have been the only reason you clicked on this (video, blog,etc). If it is, I hope I can answer all of your questions here. For right now, if your tenants can’t afford to pay. There is not much you can do as unemployment benefits are pretty difficult to obtain right now, and so many industries are simply closed. With so much happening at the same time, I would advise you not to set any kind of deadlines or harsh rules to try and comply with during this time period. Don’t pressure your tenants or threaten them with eviction. There is currently a lot going on with the media and those who are suffering as a result of those in power. Many tenants are reporting the unethical treatments of their landlords to media outlets, police, and more. Becoming a bad guy in a media hailstorm is not where you want to be at the moment. I would advise you to not charge any extra fees, interest, or payments of any kind on top of what you should be getting in this time period. Not doing anything foolish during this time period and being empathetic to your tenants’ situations will help you avoid a lot of trouble in the short term and long term future.
After you’ve avoided the major mistakes of being the “evil landlord”, you can start figuring out your more pro-active options. You could ask for a convenient payment plan from your tenants once they are able to either get some kind of stimulus check, unemployment insurance, future stimulus bill like checks, etc. Ask your tenants politely, and make sure to follow up with them once every 3 weeks or so. Also ask your tenants about their current financial situations, do they have a lot of savings, are they in any position to pay with their savings, be it retirement or personal. Once you are aware of their options and have a more in depth knowledge of their situation you can start understanding how to help them throughout all of this.
What NOT to do: Charge tenants extra fees for trying to move out of your property if they can’t pay. Do not try to make up lost money by charging people if they can’t afford to pay and have to break their lease.
Focus on how your mortgage loan is structured and see if there is any kind of loan modification magic you would be able to work on in order to change it. Remember, your mortgage loan can consist of property taxes, interest, principal, and insurance. Understand that in order to properly modify your loans in this time period, you should speak to a real estate expert who can offer you free tips.
Find out your local laws. Different states have enacted different eviction policies, have different foreclosure time periods. Etc. The laws have changed drastically right now and the best resource you can find for the changes of these laws is https://www.valegalaid.org/resource/housing-rights-tenant-and-foreclosure-amid-covid-19#i14BB6709-3C4B-446D-B6A4-8DFC01453BCB.
Another legal advice blog is https://www.seyfarth.com/news-insights/10-considerations-for-landlords-during-the-coronavirus-crisis.html.
Make sure to check these laws out once every two weeks or so to make sure you’re keeping up with all of the events.
Easy to read document on tenant laws during Covid-19:
Tip 3. Communicate with your tenants
Always make sure to communicate with your tenants and keep an open (but very professional relationship) between the both of you.
(To Rob: Since the beginning of this, a lot of landlords have been accused of sexual harassment. The amount of sexual harassment occuring from landlords at this time point is large, and many tenants have started taking legal action over this. Don’t know how to mention this in a professional manner to you, but I think you should put something in your videos outlining what could be appropriate interaction (advise against “hey how are you today, maybe we should meet up to speak about the rent kind of encounters) (just so landlords don’t spook the tenant.) Source:https://www.buzzfeednews.com/article/amberjamieson/landlords-sexual-harassment-coronavirus
Keeping a professional and understanding relationship between your tenant would create trust between the two of you and your tenant will be a lot more willing to pay either a bigger portion of any aid they may be receiving in the near future.
Tip 4. Ask for verification
Politely ask your tenants for verification needed
Ask tenants to pay what they can for now
Set up a reasonable payment plan and make sure to have your drafts written up by someone who either works in the law or real estate industry.
Apply for an EIDL loans. People who own real estate are allowed to apply, as the CARES act has a subtext outlining the laws landlords will be allowed to follow.
- The loan offers up to $2 million in assistance
- The loan terms are 30 years at a rate of 3.75%
- No payments are necessary for the first 12 months
- There’s no prepayment penalty
- Funds are to be used for working capital needs
Also consider doing virtual tours for any vacant properties you might have.