Tenants want rent reduction due to virus?

Question

I still have to make mortgage payments and my tenants want to “figure out a rent plan”. I think business as usual unless the government says otherwise am I correct? Thanks

Greg Dickerson · Answer

You should definitely work with those who are suffering a hardship like job loss etc. Unfortunately there will be those who will game the system and with eviction moratoriums and rent controls there will be little you can do.

Lenders are preparing contingency plans to work with property owners facing these challenges so reach out to them and find out what your options are.

Patricia Steiner · Answer

The corona virus impact is yet to be felt.  Just now are small businesses closing down and many are still operating "differently." The airlines and cruise line industries are the hardest hit. To have tenants crying already shows less of a hardship incurred than one that is either anticipated or being used as an opportunity.

I appreciate the need to be compassionate and I hope tenants will so as well.  This is a relationship that is interdependent with the landlord being the greater stakeholder.  Try asking to delay paying your mortgage, insurance, property taxes.  When I've shared this with tenants in the past, I've been amazed to discover that they had no idea about the financial liability carried by the landlord.  Don't be quick to say yes or no. My recommendation is to ride this crisis out for a while before making concessions.

Lynnette E. · Answer

I would ask them to do a new financial summary.  They may not get their salary, but they now get unemployment and food stamps, or are they getting vacation time/sick leave paid at their salary?

Once they can give you a list of all their new income, including the extras like food stamps  amount, then consider asking for 30-40% of that amount NOW with the remainder due when they are back to work, get the $1000 check that the federal government is working on handing out or their tax return.  Only offer one month at a time, and tell them they need to find a supplemental job, etc. or consider moving to subsidized housing.

Repeat the process each month if needed, but always say the other part of the rent payment is DEFERRED, but due, not forgiven.  IT is possible that they will eventually get rent money from the government so you do not want to reduce it, but defer it so that money can be given to you.

I would also not set up a payment plan until it is over because if the government does give out rent money to them  you want it all due, not paid back over a year..which you may never see.

Kevin Sobilo · Answer

I liked the responses from @Lynnette E. and @Theresa Harris. I also think the first step is to talk to them and to assess their situation.

If the tenant was laid off from their job, they should be applying for unemployment. They also should apply for rental assistance from any charities that provide that sort of help. I have had tenants in the past get a months rent paid this way when they got laid off.

I would discuss how much they can pay and when. I would discuss how much they would put towards rent out of any monies that might come along like the direct checks the government is talking about.

Then I would follow up with them regularly to keep up on anything that changes with the situation.

If a tenant needs to flexibility and are a decent and communicative tenant it is worth giving the situation some attention and working harder to manage through the difficult period rather than giving up on them. Decent tenants are valuable treat them as such.

Russell Brazil · Answer

Turnover is costly. Id figure out a way to make things work.

Theresa Harris · Answer

@Anthony Zotto  Talk to them. I wouldn't give them a break on the rent, but I would work out a payment plan where they pay part of the rent and pay back the rest on a monthly basis. This applies if they are out of work due to the virus though in some cases the government has programs to help.

Account Closed · Answer

When your tenants sent in an application, did you ask them for their profession?  You may be able to tell if they will be affected based on their profession so weed out those wanting to take advantage of the situation vs those who may actually need the help.

I saw someone in another thread say that they will reduce payments in the short term, only to be made up later.  So not necessarily forgiving the rent, but readjusting the payment schedule of the lease.

Adam Tafel · Answer

@Anthony Zotto - in a state with already liberal tenants rights laws, corona virus is only going to give them more ammunition. If they ever consider playing hardball you've already lost the battle, so it's time to be flexible and generous and amicable, for your own sake as well as theirs. I've heard owners offer deferred rent over the remainder of the lease, tenants forfeiting security deposits - if you can afford it waiving rent would be a kind gesture, but that move might not encourage financial responsibility on their part.

Karl B. · Answer

I had to replace three water heaters in 4 months. I didn't cry to my lenders asking for a lower mortgage and neither should tenants. Perhaps working out a bit of extra time to pay rent is realistic due to circumstances though asking for a reduction in rent is nonsense as lenders won't be reducing mortgage payments nor will tradesmen be lowering their prices due to the Corona Virus.

Mardica Henderson · Answer

It depends on your numbers and how good your tenants are. If you have COH to cover, potentially months, of a vacancy, proceed as normal.

I think people will try to stay put. So you may have trouble getting new tenants and deposits.

Tenants want rent reduction due to virus?

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