The evolving challenges of the lingering effects of the COVID-19 crisis have created many open-ended questions for landlords concerning how to address rent collection during this time. As Clermont property management experts, we have seen some instances of renters in our area who are having difficulty due to a very tough job market caused by the pandemic.
Many may be in a situation where paying their full rent on the right day is simply out of the question. In this instance, it can feel like your compassion as a human being is at odds with your needs, which include the steady, predictable cash flow of monthly rent payments. However, we know that many property owners in Clermont may rely on these payments to not only manage their rental overhead but also as a primary source of income.
Thankfully, you don't have to sit idly by and wait for this problem to escalate to the point where you and your family suffer directly. Instead, you can be the landlord that proactively reaches out and asks what's going on in your tenants' lives and see how they are doing.
As a Clermont property management provider, we want to emphasize that this outreach shouldn't be done in an aggressive way that attempts to gather proof of income. Instead, it should be focused on genuine concern for the tenant and approaching an understanding of their situation. Here are some tips about payment plans to consider from the perspective of a property manager.
Please note: This blog is not intended as legal counsel. When you need to develop a payment plan with hands-on legal guidance, speak with a competent attorney or your Clermont property management partners at Verandah Properties!
Remain Steadfast on the Key Point: Rent Is Still Due
Whatever plan you decide to develop, it should not rest on the idea of canceling rent entirely if you are in a position where you depend on payments. While some mortgages have been covered by protections included in the CARES Act, many private lenders have been less forgiving. If you can't maintain payments on your Clermont rental properties, everyone loses.
Rent is an agreed-upon payment for a space that you own, so the point is to work on how payments will be made that works for both you and your renters during this time. If you decide that discounting the rent is key to keeping great tenants who show signs of being back on their feet soon, that's fine, but remember: if adverse circumstances cause you to cancel rent this month, those unfortunate circumstances may prompt the same request next month. Your choices now should be focused on making a compassionate but firm plan for the future.
Consider Both Financial Situations
How generous your payment plan terms are can be driven by your own cash flow needs. A landlord who has multiple Clermont units where tenants are struggling will have to make a different set of calculations to pay their mortgages than, for instance, a landlord whose residents are mostly doing fine with just one or two exceptions. During a crisis, you need enough cash flow to be able to continue to provide great maintenance and upkeep while paying your own mortgage as well.
If you have been communicating with your renters and understand their individual circumstances, you can offer a more lenient payment plan as needed to provide breathing room. If you gain goodwill without losing your key cash flow, you may still come out ahead by retaining loyal tenants rather than suffering through expensive and stressful turnover. As a professional Clermont property management provider, we always recommend working with your renters rather than against them when crafting your payment plans.
Create a Payment Plan That Ramps Up Over Time
Tenants who are struggling don't want to have to choose between rent and food; they are understandably stressed about having to eventually make up for their current struggles. Work with them to consider a time horizon: can they, for instance, pay half-rent this month, three-quarters next, and then add $50 or $100 to all future months to make up for this loss? Talk through what your tenants can sign up for, and aim to roll payments into future months when the hardest times have passed for your renters who need aid.
One option that you can consider as well is whether they're considering renewing their lease. If they've missed less than a month or two of rent collectively, you might think about whether you can afford to forgive debt as a retention measure at renewal time. It might be a good move for keeping otherwise excellent renters who simply fell on a few hard months.
Property Management Can Take on Rent Collection for You
A Clermont property management partner can be a real asset during a crisis like the COVID-19 pandemic. While there certainly are things you can handle as a landlord by yourself, there is a tangible benefit to being able to have experienced property managers on your side.
They understand and spot the red flags that indicate when someone is trying to get rent for free versus a genuine need for leniency. When you are constructing a payment plan, they can be a go-between and help to smooth communication with tenants. The experts at Verandah Properties, for example, also understand other practical matters, from handling repairs during a crisis to analyzing needed cash flow through excellent financial reporting.
If you're a solo property owner, you can also rely on our Collecting Rent in a Crisis Handbook to get started on developing a plan that works for your finances. Get started by downloading your copy today!