Most tenants spend up to 30% of their income on rents. When many have lost their jobs, it has made precarious finance even in the best of time. Now that thousands of Alaskans have suddenly found themselves without jobs, it has created a temporary problem with being able to pay rent that might have long-lasting impacts.
Recorded:
April 9, 2020
Host:
Kassandra Taggart
Dave Stroh
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Show Notes:
Introduction
What happens in your industry on April 1?
Rent is due; however, many won’t be able to pay and many will be getting in line to obtain resources, causing another delay.
Did the worst-case scenario happen as rents were supposed to be due on the first?
At RPM, rent is due on the first, and late by the 3rd. We watched our trends from month over month and did a survey of the landlords to see their percent of non-payers.
At RPM, we have a lot of middle-market buildings, not low or high end.
Due to being middle market, our non-payer percent was nowhere near as bad as what landlords reported in the group.
What do you expect will happen in May, June, and even July.
There is a concern that tenants that paid in April used their savings and credit cards so they might not be able to pay in May. However, others might finally obtain funds that will help pay their back-rent.
So it is possible the % of non-payers might remain flat.
As an investor, how are you handling the situation?
As a business owner, this did reduce our income because we can not charge late fees, yet the work was still needing to be done.
As an investor, I’m proud we spent the time to own properties in the middle market. All of my tenants have paid.
Why Erik and I stayed middle market.
Less stress and they are always employed and working.
With so much vetting of tenants that we do, what changes are we making?
Glad that you asked. Everyone needs to remember, this is a key time for tenant hopers.
Define tenant hopers.
Most Landlords Don’t know how to navigate courts, collections, or credit.
Right now, we have made it a bit more difficult, during prime time, it will be more stringent.
A list of things we are doing to screen more strictly.
Go look at the mortgage lending environment.
Did you already have systems in place to help with this transition?
I do wonder how others are doing this. However, we are in a franchise, we were already ready and tested in the earthquake.
Lots of conversations about being a community. Should landlords reduce rents?
The reality is, we need to be human and landlords should have had r