Memphis/Shelby County Emergency Rent Assistance Program - Accept?

Question

I was just contacted by one of my PMs for one of my turnkey rentals in Memphis, TN. The PM stated that the tenant has applied and been approved for rent assistance through this program. I'm told the program will pay her June + July rent. One of the conditions is that we cannot evict for nonpayment for 45 days after the period covered (so, basically mid-September) if we accept the rent assistance.

She's been a great tenant and has been in the property for almost 2 years - always pays on time. I'm assuming she maybe lost a job and needs a chance to get back on her feet. I'm not sure what questions I can ask the PM about the situation (or if it even matters, quite frankly). I looked at the requirements to qualify for the program and it pretty much implies that there's no way she still has the same full-time job to qualify.

Trying to weigh the pros/cons and think this through. Here are my thoughts:

If we accept, rent is paid for next 2 months and hopefully she gets back on her feet. No current eviction / legal expense, no non-payment of rent for next 2 months, etc. If no improvement, can't evict for 45 days, but could have these expenses later.

If we do NOT accept, no rent for AT LEAST the next month or two, likely eviction/legal expenses sooner, etc. Also, this wouldn't seem to give her a chance to get back on her feet.

1.) What questions, if any, should I be asking PM?

2.) Based on the info above, would you accept rent assistance payments?

PM is encouraging me to accept. I am leaning that way. Just want to make sure there aren't considerations I'm not thinking through in the heat of the moment. Any thoughts/feedback greatly appreciated. Thanks in advance.

Reed Rickenbach · Answer

From my understanding (and experience) with the SCG Rental Assistance program, the tenant doesn't necessarily have to become unemployed to be approved. They just have to make less than 80% of the AMI (Area Median Income). I have seen many instances where this just allows the tenant to build an even better financial position to continue paying rent into the future.

AJ Singh · Answer

@Mark S.we have had four tenants get paid via this program. And tenants are current on payments after thatEvictions for non payment of rent are still taking 3 to 4 months. if you dont accept rental assistance, it will be be 3 to 4 months of no rent and then turnover rehab

Nathan Gesner · Answer

I've had almost 50 renters get assistance via ERAP and they're all doing fine. If she's historically paid on time for two years, why are you even worried? She's just taking advantage of what is possibly the greatest tax-payer-funded vote-buying program ever created. Take the money and I'm sure she'll stay on track once that runs out.

Alex Evans · Answer

Hello @Mark S. Aj is correct in what he is saying! We have seen a number of tenants using assistance programs here in Memphis so that they can stay in properties. A lot of them become current and it works out for everyone after they accept the assistance.Currently in Memphis Evictions are taking longer than they used to. Evictions here in town used to take 30 days and it was all done, but now it is taking 60 days or so just to get a court date, and then we have to go through the eviction process. If I had a really good (or believed they were a really good) tenant in the property I think I would allow them to accept the funds and hope it works for the best in the future.

John Teachout · Answer

If the property would be difficult to fill at the market rate, then go ahead and continue bending over backwards to accommodate this tenant. Otherwise, I'd definitely give them a move out date. (your choice of dates, not theirs). No matter how you slice this up you're likely to wind up with unpaid rent for a period.

Mark S. · Answer

Thanks. I got clarification from PM that she actually got 3 (not 2) month’s rental assistance and all the rent money was already in-houss, so we are letting tenant stay through September. At that point, she can choose to sign a lease (will probably increase rent this time - if she signed in July, was planning to not raise her rent) or move out, we turn it, and get it re-rented for even more.

AJ Singh · Answer

Just let her stay till mid sep. She could have signed a one year lease and still moved out middle of the month.You can have your PM do a pre move out inspection and that way you get an idea about turnover cost Check on ZIllow and Rentometer to get an idea about market rent and make sure PM is not too far from that. Shelby county has raised property taxes and its a min $70 to $80 raise for investors who bought the properties a few years back. WE are raising $100 min on renewal to make up the tax increases.... @Mark S.

Mark S. · Answer

@Chris Seveney, I get that part. But what about the Update section. Do I now allow her to stay without a lease for an extra 1.5 months or do I tell her to pound sand, rerent it for more, and move on? She originally gave notice to vacate at end of July and now wants to stay until mid-September without signing a lease.

Chris Seveney · Answer

We own mortgages with a lot of borrowers getting similar types of assistance. To me its a no brainer to take the $. Most after getting the assistance stay current as many just had some short term layoff or hardship.

Mark S. · Answer

@AJ Singh @Alex Evans @Nathan G.