With the current economic conditions, recent or ongoing shutdowns, many tenants have suffered job losses, layoffs and/or significant reductions in hours worked. This coupled with the federal eviction moratoriums which keep getting extended is causing a lot of hardship for landlords, especially if they still have a mortgage to pay.
I have been speaking with some landlords who are owed literally tens of thousands of dollars in past due rent with little or no hope of recovering those funds, and their options are limited by the governmental restrictions currently in place.
Even after this current eviction moratorium is lifted landlords will face months of court backlogs to process these eviction cases once they are filed, and have little to no hope of recovering lost rental income.
So you might be asking yourself, “What can I do?”
Here are a couple of suggestions and strategies that we have employed to help these landlords in need.
- Look into any federal local and state reimbursement programs. Including but not limited to local charitable organizations that are giving landlords relief from some or all of that past due monies owed for rent.
- Meet with your tenants and figure out if they have a plan to get back on track paying their current rent, and if they are able to do a payment plan to catch up on the past due rent.
- Based on your meeting with the tenants decide what is the best plan of action for your and your business going forward. Remember, being a landlord is a business! It must be treated as such. Too often I see landlords who are overly emotionally involved with their tenants often to their own detriment. This is a business and must be treated as such.
- If you decide, based on your previous meetings, that you can no longer continue with this tenant, meet with them yet again and offer them a Cash for Keys Offer. I highly recommend that you consult your real estate professional in this process to make sure that is done correctly and remember that a “Cash for Keys” amount should be a sufficient amount for the tenant to be willing to vacate and able to rent another place that fits their budget. I usually recommend 2-3 months times the rental amount as a good starting point for your cash for keys offer. You might also consider including past due rent forgiveness in the form of a notarized letter stating that you have forgiven their past due rent and will pursue no legal action to collect such past due rents.
- Remind the tenant of their contractual obligations and let them know that should they not wish to take whatever you may offer, you are willing to file an eviction and a collections lawsuit. That may take some time and effort on your part to complete but the law will side with you the landlord as they signed the lease agreement obligating them to pay. While this is always the least appealing and longest approach, most tenants who will wish to lease another home will shy away from having an eviction filing on their record.
Once you have come to an agreement with your tenants and have agreed upon a plan if they are vacating the property decide if you are going to lease the home again or if you are going to sell it. Should you decide to sell please make sure you choose the right real estate professional to help you sell.