If you work in real estate, rent collection during the coronavirus pandemic can be vital to keeping your business afloat. However, you won’t want to put too much pressure on tenants who are out of a job and may have trouble with their monthly share. To keep your rental business afloat, here are a few tips on collecting rent during the lockdown:
Tip #1 – Research local regulations
Many local governments have passed temporary bans on evictions, along with other rules and regulations. Depending on your city’s circumstances, you’ll want to take a look at your region’s official website and note important information. Keep in mind that though your municipality may allow evictions, you may have a difficult time finding new tenants due to strict stay-at-home orders.
Tip #2 – Check in with your tenants
Regardless of local laws, it’s likely that some of your tenants won’t be able to pay rent at all. Most cities require tenants to inform home rental companies ahead of time should they be unable to pay rent due to COVID-19. Depending on your property location, these timelines can vary, so make sure to check local regulations and keep in touch with your tenants.
Tip #3 – If permitted, ask for verification
While it’s important to be considerate of a tenant’s circumstances, especially now, you’ll want to prioritize the ones that are experiencing a total loss of income. If your city permits you to request documentation, use it to determine who can and cannot pay full rent. If a tenant is completely out of a job, they should have the right to defer an entire month of payment. If another has experienced a partial loss of income, you should still be able to serve a notice to pay.
Tip #4 – Enforce a pay-what-you-can system
Partial payments are better than none at all, so work closely with tenants to determine who can cover a portion of their rent. It’s important to have in writing that partial payments do not satisfy full rental obligations. Once your tenant is able to achieve a full income, you can prorate owed amounts over a specified span of time.
Tip #5 – Create a payment plan
If needed, work with tenants to come up with a feasible payment plan over several months. Note that some states disallow renters to sign one, so be sure to check in with your local municipality to see if this can be done.
Tip #6 – Reach out to your lender for assistance
While tenants may experience a loss of income due to being let go or laid off, landlords may experience a loss of income due to lack of collections. If you’re having to tap into mortgage payments, reach out to your lender with a breakdown of monthly expenses. If you’re losing a considerable amount over partially-paid or unpaid properties, you may be able to qualify for a low-interest loan or lower monthly payments.
Tip #7 – Consider a government loan
Some lenders won’t be as forgiving as others. If you’re in desperate need of one, you can apply for a disaster loan directed towards home rental property management purposes. The SBA Economic Injury Disaster Loan (EIDL), for example:
- Offers up to $2 million in assistance
- Loan terms are up to 30 years at 3.75% rate
- Payments aren’t necessarily for the first 12 months
- No pre-payment penalties
- Funds contribute to capital needs
Tip #8 – Conduct virtual tours and offer large incentives for vacancies
Because of social distancing, conducting physical tours to fill vacancies isn’t the easiest task. However, you can make up for lost bookings with a virtual tour via FaceTime, Zoom, or Google Meets. This way, you’ll get to cover all unit features and answer questions in real-time.
Convincing a prospect to move into a brand new unit during a time of crisis is a challenge, to say the least, so you may want to offer incentives to direct their buying decisions. You might offer a month or so of free rent or waive security deposits, among other things.
Unfortunately, while no landlord wants to force a tenant to pay rent, collecting it may be their only form of livelihood. If you’re looking to collaborate with a leasing company in Indianapolis, give us at Polaris Property Management a try—we can help make the process a little less daunting.