Mulltifamily Coronavirus has reshaped our way of life in the last 30 days because many people have been unable to go to work since most states have shelter at home orders.
The big question is what should you do if one or more of your multifamily tenants are unable to pay their rents? In this article, we will answer this question and provide you with some tips for how you can handle this situation.
Multifamily Coronavirus – Start Creating A Plan Now
With the first of the month fast approaching, it’s more important than ever before to have a plan for how you’re going to deal with those tenants who may tell you that they are unable to pay their rent due to being out of work from multifamily coronavirus.
Having a plan is important because you don’t want to be coming up with responses on the fly, especially when you start getting calls from tenants who tell you about their job losses. It’s best to have your responses ready and be prepared for those calls if they come.
Be Ready to Empathize with Your Tenants
Coronavirus is a once in a lifetime event that will leave its mark on the world forever so when you’re speaking with your tenants remember to empathize with your tenants.
If you take the time to listen to what they are going through and show them that you care, they are going to see that you value people first instead of profits and will ultimately respect you more as a human being in the long run.
Make Sure Your Tenants Understand That the Rent Still Has to Be Paid
And now the hard part, even though coronavirus is still out there and many people are not working temporarily, you have to explain to your tenants that rent is still due.
Besides confirming that the rent is still due, you also have to remind your tenant about the late fees that they will be incurring when they don’t pay their rent on time.
Being straightforward with your tenants will help them to see that they may have to prioritize which bills get paid first because even in situations where the money is tight, most people will pay bills that give them the greatest financial consequences if they don’t pay them.
Most people (hopefully) will want to keep a roof of their heads and eliminate paying for things like their monthly Xbox Live or other streaming subscriptions rather than paying those other bills first and incurring late fees until they pay their rent.
As the owner of a multifamily investment property, you have to remind them that you have bills to pay as well including a mortgage so the decisions that they make do affect you. It’s best to make sure that they are clear in their understanding that they have to pay their rent or face eviction once the courts open back up.
Give Them Options for How They Can Pay Their Rent
Yes, your tenant may not have cash in hand right now to pay their rent but that doesn’t mean that they don’t have other ways to pay it.
When communicating with your tenant, you should ask them if they can pay their rent via a credit card or borrow money from a family member to pay rent.
You should also keep an eye on what the Federal Government is doing because as of the date that this article was written (3/25/2020), the Fed is in the White House and Senate have agreed on a 2 TRILLION dollar stimulus package that will send $1,200 to individuals who make up to $75K per year.
This stimulus check may also be directly deposited into your tenant’s account just in time to pay rent so it’s important o remind them of this and make sure that they are on the lookout for it.
Also, if you don’t have a method for accepting rent via credit card, you should set up a payment system NOW because many tenants won’t hesitate to pay their rent via credit card while they are not working and it’s best to capitalize on this opportunity rather than missing out on it.
PayPal is by far one of the easiest payment processors to set up for accepting rent via Credit Card but there are also a variety of other payment solutions that you can tap into as well including AppFolio, Buildium, and Cozy.
Be Ready with A Last-Ditch Scenario
Let’s say that the bailout check isn’t deposited in time for your tenant to pay their rent, and they have no money coming in. What should you consider next?
Landlords in some cities are considering radical options including offering their tenants free rent until July.
Before considering offering your tenants free rent, you should first talk with them about how much money they have to work with right now and then consider offering them the ability to pay the remaining balance that they owe you over 12 months.
How would your rent deferral program work? Let’s say that your tenant only has $200 to pay to their rent right now, but their rent is $1000. You could offer to accept that $200 now and defer their remaining $800 balance in payments of $70 per month over the next year.
This solution will give them the ability to take the next 30 days to get back on their feet financially until that stimulus check arrives from the Government or they can get back to work.
Since the President has stated that his goal is to have the economy up and running again by Easter, we could likely most businesses that have shut down back to work by Easter unless of course Coronavirus continues to hit the United States hard and requires a longer quarantine nationwide.
With coronavirus happening concurrently with the stock market meltdown, we’re seeing a lot of economic changes happening right before our eyes.
The good news is that everyone has more economic solutions available to them than our great grandparents did during the Great Depression so if you utilize some of the tips that we’ve offered you in this article both you and your tenants should be able to withstand the fallout from coronavirus until the economy gets going once again.