These are challenging times for everyone, landlords and renters included. While COVID19 rages on across the world, what can impacted landlords do to keep their businesses afloat?
Collecting rent in full and on time is the lifeblood of a rental business, but we must not forget that renting is a human-based business and that during this time, in particular, your renters are likely dealing with real issues that many of us are faced with.
So how do you approach rent collection at a time where your renters might be impacted by a global pandemic? The most important step is communicating with your renters to understand their unique situation and how their ability to pay rent might be impacted.
If your renters have been impacted, there are a few potential tools at your disposal to help collect rent while reducing your renters’ anxiety and ensuring they maintain a roof over their heads.
Collect Rent Online
Regardless of the measures you choose to take, setting up a way to collect rent online at this time is a must. Not only will it make your life easier, but taking unnecessary trips to the bank at this time is highly discouraged.
Collect Partial Payments
Figure out how much your renters can comfortably pay, and work out a payment plan that makes sense for both parties. Please refer to our partial payment blog for more information on this matter.
Defer and Spread Out Payments
If your renters are not able to pay the full month’s rent even in installments, you can consider deferring rent payments and spreading the owed amount over the remaining life of the lease.
For example, if your rent is $1,000 and there are 6 months left in the lease, you can defer the next month’s payment and spread the $1,000 owed over the remaining 5 months. So next month’s rent would be $0, but every month after that it would be $1,200.
Waive Late Fees
Late fees are designed to ensure timely rent payment and to capitalize on delinquent payments. During normal times, late fees are encouraged and serve as a great tool for landlords to maintain healthy cash flow.
While waving a late fee is a personal decision that every landlord should make based on their unique situation, these are not normal times, and waiving late fees during this crisis is the right thing to do if your renters are truly impacted.
Forgive or Discount Rent
If you can afford to do so, the impact of forgiving or discount rent on your renters speaks for itself.
This is another very personal choice that is extremely dependent on your financial circumstances, your relationship with your renters, and your overall outlook on life, but it is always an option.
Use Last Month’s Rent
Similar to using the security deposit, now would be a good time to potentially use the last month’s rent, assuming you collected it at the time of move-in.
This would buy your renters time which would hopefully be enough for them to be able to make payments in full through the end of the lease.
Use the Security Deposit
This is a last-resort tactic, since the security deposit should only be used for it’s stated purpose – to protect the landlord from financial loss due to renter damage.
Hopefully, you collected a security deposit from your renters prior to move-in. While this money is mostly meant to be used at the end of the lease period to cover any expenses relating to repairs, it can also be used to cover unpaid rent.
By using the security deposit now, you can give your renters some much-needed relief and time to recover from any hardship they might be going through at the moment.
If you decide to take this route, communicate this to your renters along with the expectation that they replenish the security deposit when they are able so that it could be used for it’s originally intended purpose when the time comes if need be.
Hopefully you can find ways to be flexible while maintaining rental income in some form. Being accommodating at this time is crucial to the recovery of our economy and society. In addition, your renters will really appreciate you for it, and happy renters tend to renew.