Landlords, Do You Have Renters Who Cannot Pay Rent?

Posted on: June 18th, 2020 by , No Comments

Landlords, do you have renters who cannot pay rent? Almost half of all the landlords in America are unable to collect their rent, due to the Coronavirus pandemic. Around 80% of landlords said they are willing to work with their tenants, according to the American Apartment Association’s (AAOA) survey of more than 1,100 landlords across America. Some tenants are really having trouble in paying their rent in April. So the AAOA did another survey in May to ask similar questions and received 1160 responses from landlords saying they are having difficulty collecting rents.

We have to remember, that many of these landlords are small or new landlords with very little experience in real estate, much less as a landlord. These small or new landlords usually own between 2 to 10 houses. Which is fine, but there is very little if any room for capital loss. The bigger landlords such as those who own apartment complex’s may have a better grasp of how to avoid or handle such a loss of capital. Some States are able to help these small or new landlords by implementing emergency policies to help renters, including eviction freezes, late-fee waivers and payment grace periods. All the while, landlords are required to make their mortgage payments and cover expenses, such as taxes, insurance and maintenance on property.

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So, if you are a landlord and you do have tenants who cannot pay their rent, there are a few things that you can do-Tenant.

Start a Dialogue With Your Renter-Tenants

Most renters will contact their landlord to inform them that they are unable to pay their rent. With so much uncertainty with the Coronavirus pandemic, landlords should be pro-active in contacting they’re renters-tenants to ask prior to having any issues. As early as mid-March, some people were getting laid off and some businesses were closing down. Landlords should be encouraged to reach out to renters and communicate openly, in order to figure out who may be trouble paying rent, so says Charles Tassel, Chief Operating Officer of the National Real Estate Investors Association and owner of 118 rental units in Ohio.

Landlords, Do You Have Renters Who Cannot Pay Rent?

Landlords have to deal with non-paying renters-tenants from time to time. But during today’s pandemic. But during today’s pandemic, landlords should be wanting to help their renters with suggestions. So work out a rent payment plan that works for each renter-tenant. this cannot be a ‘one plan fits all’ program. So let’s now loo at what the U.S. Government can do to help both sides.

Our U.S. Gov’t has emergency rental assistance programs for renters-tenants. People need help in today’s rental world, help paying their rent. Landlords would be helping themselves to alert their renters about some programs that will help with rental payments. Rent is a basic expense, but not everybody can come up with this monthly payment in our current time. Here are several programs that can help you pay rent. Landlords, do you have renters who cannot pay rent?

Government Rental Assistance

For low-income renters. These programs are a bit different by City, State and budgets. But most local Gov’t have funds to help low-income residents.

Section 8 Program

The section 8 program housing choice voucher program pays rent and other utilities. Section 8 can pay for a privately owned property or an apartment-unit in a complex. Section 8 pays your landlord directly, and you can then cover what ever the rent balance is after they pay. All States offer section 8 programs. Your income must be below average in order to qualify. Go to https://hsvha.org/ for more information about Section 8 programs and get you housing voucher.

SSI Rental Assistance

Supplemental Security Income or SSI as it’s know, is a federal welfare program that helps with financial assistance. SSI helps with rent and utilities in times like these we are experiencing today. Some SSI programs will pay partial or full rental payments. Of course it all depends on your income as a renter-tenant. Click the following link for more information https://homeguides.sfgate.com/housing-assistance-people-ssi-56777.html

Department of Human Services

Here we have a special branch of our U.S. Government that helps with rental assistance. Calling it ‘The Emergency Rental Assistance Program (ERAP) which helps low-income residents by providing funding for rent. Look to https://dhs.dc.gov/service/emergency-rental-assistance-program for more information.

County Housing Assistance

Most Counties in Texas and several other States provide their residents with rental assistance of some type. This is especially true where there are many low-income  residents in a given County. Some of these programs receive funding from the U.S. Government of from Grants provided to the County.

 Hopelink Eviction Prevention Assistance

This program provides assistance to tenants that are close to being evicted because they have been unable to pay their rent, in some cases, the tenants have not been able to pay their rent in months. In any case, this program will contact the landlord or property owner in order to make financial arrangements. https://hopelink.org/need-help/financial-assistance

State Assistance

Then there is always State Assistance to help with rental needs. This is a federal program in which it provides block grants to each State via several smaller programs. https://www.ni.gov/dca/divions/dhcr/occies/sarp.html

Landlords_Do_you_have_renters_who_cannot_pay_rent?

Landlords Can Reach Out to Mortgage Lenders for Options

For landlords with a mortgage, having tenants who don’t pay rent could mean that you can’t pay your mortgage either. The new CARES Act (Coronavirus Aid, Relief, and Economic Security Act) can help borrowers (landlords and/or homeowners alike) b waiving late fees on mortgage payments and sometimes suspending foreclosure.
with that, if you are worried that you cannot pay all of your mortgage, contact your lender to see what relief is available. They vary by location, lender and the type of mortgage. For instance, Rocket Mortgage by Quiken Loans is offering mortgage forebearance or temporary pause in mortgage payments.

Most mortgage companies will work with landlords and generally create a new payment schedule. But you have to contact the lender to find out. The lender will want proof that tenants are not paying their rents, in order to show rental income losses.

Beyond Making Mortgage Payments, landlords have other bills and expenses that need to be paid as well. Property Taxes are always a headache to overcome. Because of the pandemic, some municipalities are allowing owners and landlords to defer tax payments or set up payment plans. Wisconsin for example is allowing their municipalities to waive interest and penalties on late property taxes. Though the taxes must be fully paid by 01 October, 2020.

It’s time to revisit your insurance policy! Another expense is your homeowners insurance in which landlords need to keep paying, no falling behind here. The cost of falling behind could be a big one. Now, according to the Insurance Information Institute landlord insurance  policies typically cost about 25% more than standard homeowners policies.

Some States have directed insurers to work with homeowners by creating payment plans, waiving late fees and not to cancel policies due to non-payment of premiums. Some insurance companies are even extending they’re grace periods and not charging late fees. Revising your insurance policy can help you save a few dollars.

It is very important for landlords to take a new look at their insurance policy to find out exactly what they have in it. Exactly what is covered, and try shopping around for a better quote. You may be paying more on insurance rates than you need to be. Shopping around may save you money now and later. But do not cut your liability coverages that could have added risk for landlords. Keep in mind, some tenants might want to sue the landlord because they caught the coronavirus on the landlords property, arguing that te landlord did not implement safety precautions for cleaning or maintenance. This type of lawsuit will probably not go far in a court, but will still be costly if filed. Good liability insurance coverage will be beneficial for you to have.

Small Business Resources

Small Business Administration has included the CARES Act in order to help small businesses, and landlords do qualify here.

First, you must own rental properties under an LLC, and you need to apply for the relief program as a business with no more than 500 employees. If you only have  afew employees, the Paycheck Protection Program (PPP) is probably a better fit and may even forgive loans for employers who maintain their payroll during the pandemic. Also, the Economic Injury Disaster Loan (EIDL) offers emergency grants to small business who suffered due to the Covid-19, up to $10,000. Remember, this is not like we are in a capital crunch as in a previous recession. So, if you own property with available equity, this can be a real benefit to you.

Evicting Renters Now, Could Hurt

In major cities and States across the country, even in New York and Washington, have all issued the emergency bans on evictions, due to Covid-19, and many courts have been closed anyway.

As landlords, we should be mindful of our tenants situations. As the courts start to reopen and most all bans expire,we landlords should still try not to file evictions. Now if you have a situation where the tenant is or has damaged your property, is involved in some type of criminal activity, or just not following social distancing rules and guidelines, you may want to have a chat with that tenant prior to filing an eviction. many of our tenants are are being affected and facing things they are not accustomed to and out of their control. Giving a tenant time to work out they’re situation or by giving the tenant a deadline, will help both of you. Remember, there is never a guarantee that a judgement will get paid. As well, it is just not an ethical thing to do in a unprecedented time such as we are in today.

You should work this situation by situation, and not a one deal fits all tenants. Once landlords look at their financials and see what they can afford, and work out a deal with their mortgage company, you begin to see what makes sense and can then determine how to work with your tenants who are having problems due to this current pandemic situation. Yes, it can be much easier when you know all the routes to be taken.

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