E21: Consequence of slow rent payments
We all want to be patient and find a way to help everyone being impacted by the pandemic. However, by allowing tenants a lot of time to pay their rent does have a consequence in the economy. Such as foreclosures might spike, rental applications need to be more strict, or those with cash will get a step up in the economic turn.
April 9, 2020
The Landlord's Almanac
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What happened on April 1 with the rents?
There were many that paid. However, in certain industries that tend to rent certain properties did take a larger hit.
At this moment, some landlords reported 45% non-payers.
Our local RPM office is mid-market, which at this time didn’t have a large job loss, so the majority did pay.
What will happen in May, June, July?
The real question is how fast the city will turn back on, when will assistance funds be received, and how willing are tenants in swiping credit cards and using savings to pay rent.
How am I dealing with this as an investor and as a business owner?
As a business owner, we still have to work even though we can’t collect revenue that we use to have to pay for the jobs that do collections.
As an investor, I’m proud that we own middle-market properties.
Kassandra explains why she enjoys being in the middle market rentals.
Vetting tenants prior to letting them move into a property?
Kassandra explains what a tenant hopper is and why it is important to watch out for them right now.
As a company, we are being stricter on the requirements to enter a property.
Review the mortgage requirements, they also have increased the requirements.
Landlords that have savings will be fine.
Did RPM have something in place to help in this environment?
We are already digital and it was tested during the 2018 earthquake in Anchorage.
Kassandra gives an example of how 450 landlords/tenants received calls within 48 hours and created priority lists for maintenance.
There is a lot of dialog in the community about landlords should forego or reduce rent.
There is the business answer vs the reality of America right now.
Landlords should have already had reserves that allow options.
Many landlords are low on reserves due to winter and earthquakes.
So, let’s start conversations with how to engage tenants and help them find resources to get the rent paid.
What do you tell tenants about paying rent or immediate expenses?
Many tenants are holding it because they are scared about what might happen.Support the show