The COVID-19 saga continues. Despite seeing improvements in the economy and taking steps toward reopening, it’s become clear that we’re not out of the woods yet. For landlords and rental property managers, that raises some scary questions, like what to do if your tenants can’t—or won’t—pay rent.
Small rental property managers struggle with uncollected rent
Assess your situation
Landlords across the nation are struggling but none more so than small landlords. Those who own a single rental property, or a small handful of properties, are in a much more precarious situation than landlords who have a large and diverse portfolio of properties. If you only have a few tenants, it really hurts when even one of them can’t pay rent.
So, begin by asking yourself some hard questions to assess your situation. How much of a nest egg do you have set aside? How long will it last? What’s the least you can charge for rent and still make ends meet? How long can you stay afloat with a tenant who can’t pay rent?
Be compassionate, but not a pushover
Property managers and owners are being forced to approach our current situation with a difficult balance between doing what’s best for them, and what’s best for their tenants. You have to acknowledge that your tenants are struggling, but also make sure they understand that you rely on rental income for your livelihood.
Encourage open communication between your tenants and yourself. If you have tenants who are out of work due to the pandemic, let them know you’ll work with them as much as possible. But if you have tenants who have not been affected, or who have been able to return to work, make it clear that they are still expected to pay rent.
Many of your tenants may also be eligible for government assistance and other programs to help them pay rent. A good property manager will stay informed, and help their tenants access these resources.
Work with tenants as much as possible
We’re living through unprecedented times. Most property managers aren’t used to accepting partial or late rent payments, but these days, exceptions sometimes must be made. After all, some rent is better than none.
Work with your tenants as much as possible to arrange a payment plan that works for all parties. That could mean reduced rent, or accepting partial payments with the balance to be due at a later date. There are countless possibilities, but property managers and landlords are learning to adapt, and it’s possible to come up with a rent payment plan for almost any situation.
It’s also important to document everything. Whatever arrangement you make with your tenants, make sure to get it down in writing. Keep careful track of how much each tenant has paid, and how much is still owed. Now is not the time to let bookkeeping slip!
Use eviction as a last resort
Evicting a tenant is seldom the best option for the tenant or the landlord, but there are situations when it is necessary. With the federally-mandated moratorium on evictions set to expire before the end of July, the prospect of eviction may be back on the table. But it’s not an action to be taken lightly.
Finding a new tenant is always harder and more expensive than keeping a tenant you already have. In an unprecedented situation like the COVID-19 pandemic, evicting an otherwise honest and reliable tenant is not necessarily to your advantage.
Contact us today to learn more about getting through the pandemic as a landlord and gain the property manager resources you need to keep your rental business going strong through the challenging times ahead.