Jason speaks with a client about their experience with a tenant not paying April 1. What are some creative resolutions to a tenant not being able to pay in hard times? In most situations, being strict with your tenant is advised, but in times as tragic as these, compassion goes a long way. What’s to come of China’s role in the world?
In part two of today’s show, Adam checks in with a lender for updates on mortgage rates and what to expect going forward. Lenders are still wary about how the market will go but advances in technology are being improved to close deals remotely. This is because tools are becoming more readily available like online notary with video proof.
[2:30] Tenants aren’t paying rent, but it’s our time as landlords to adjust our strategies
[8:00] Have a little compassion for your tenants
[12:30] Look for creative resolutions to tenants not able to pay April rent
[17:40] Now, what is China’s role in the world, it’s changed so fast?
[28:00] When mortgage rates hit historic lows, and everyone is trying to refinance in one month, lenders hit capacity
[29:30] As we look for normalcy in the market, lenders are still very wary of where it may go
[25:15] Unemployment claims typically hover around $600k (weekly basis), predicted by Goldman Sachs to rise to $2.25 million
[39:00] If you want to know what’s best for your rate, you want to see the fed or other entities buying up mortgage-backed securities
[42:40] Technology is making advances so loans can continue to close, eg. online notary
What To Do If Your Tenant Can’t Pay Rent
You Have a Stronger Relationship to the Tenant with Self Management
This is really one of the other great things about self-management. Your tenant is going to treat you like a human and you should treat them like a human. They are your customer after all and the customer is the one who’s paying you, right? You have a much better bond with the tenant when you don’t have a property manager.
You Can Ask Your Lender for Forebearance
You could agree to do a forbearance, which is what your lender is going to do for you. If you go to the lender and play the game of hot potato, which I recommend, the lenders are doing bailouts and they’ll easily give a 90-day forbearance if you just ask for it. And all you have to say is “due to economic circumstances”, literally, that’s it. And they don’t ask you to provide any documents or anything. Although I will say when you go to your lender, get that in writing. You must have some document from them. They’re not supposed to do any negative credit reporting or anything, but they will let your loan slide for 90 days. That’s pretty much the universal thing, maybe up to a year, and then just tack it on to the back of the loan.
You Can Have Them Pay With a Credit Card
You could ask them to pay with a credit card if you have a merchant processing account, which, by the way, is very easy to get through Square or Stripe. It’s very easy to get a merchant processing account as an individual person.
Tenants Can Apply for Section 8
You can use government programs created for landlords and renters like Section 8. They could jump onto a government-assisted program.
You Can Allow a Missed Payment
If they lost their job, you could just do something charitable. Of course, that’ll reduce your income tax burden. So it is deductible. Remember, the government is your partner in all of this. Or you could reduce the rent, maybe you have $300 a month positive cash flow, you could reduce it by $300. I think this is the time to practice compassion.
You Can Ask for a Partial Payment
Remember, the tenant is not totally down and out, they are getting a 1200 dollar bailout check. And then if they have kids, they’re gonna get $500 for each kid. And if they’re two adults, they’re going to get 1200 each, that’s most likely what will happen that’ll just appear in their bank account. So remember, if they lost their job, they’re not getting zero, okay, the most likely scenario is they’re getting something from the government, or they’re getting some severance from their employer, or the payment doesn’t cut off right away. So you can offer you know, essentially like an emergency repayment program.