In the wake of businesses shuttering their windows, shelter-in-place orders, and the economy practically coming to a halt amid the COVID-19 pandemic, landlords are becoming increasingly worried about how rent collection will play out.
Thankfully, a much larger number of surveyed households were able to make their rental payments in May—but this doesn't answer the question many landlords are thinking as we reach the middle of the month: What will happen in June? With the extension of stay-at-home orders blanketing Northern Virginia, delays in benefits, and no additional stimulus relief guaranteed as of this writing, it's no wonder property owners are worried.
As an expert in Ashburn property management, we know that your renters could have difficulty paying rent in full, on time, or even at all. For property owners who still have a mortgage to cover or property taxes to pay, it could mean serious financial trouble. Many landlords would prefer to work with the great people in their great spaces rather than evict them because they are unable to pay rent due to the consequences of a global pandemic.
If you find yourself in this situation—or are worried you could be in it soon—there are options for you. Here are some of your options to consider from the perspective of Ashburn property management when facing late rental payments during COVID-19.
A quick note: This article is not intended as legal advice. However, it can be a great introduction to steps landlords can take to remain professional in the face of late rent payments. If you're facing a situation that requires legal counsel, work with a competent attorney or get in touch with the Ashburn property management experts at RentSimple!
Balance Compassion With Reality
This time is unprecedented for both landlords and tenants alike. Every interaction with your renters becomes a balancing act, and as you make decisions moving forward, you’ll need to manage your financial priorities with empathy.
Treating people well in these turbulent times could potentially help you keep your tenants happy, and allow them the security they need to recover and start making recurring rent payments again. This definitely does not mean you need to disregard your own needs! However, if you can withstand any amount of leeway for your renters who have proven themselves reliable, it could help your business down the road.
There are a number of solutions that property owners can turn to:
- Offering renewals to current renters without an increase in the rental rate
- Waiving late fee as a gesture of goodwill to encourage your renters to make payments
- Accepting partial payments of whatever your renters can put forward is a great first step
- Creating payment plans that roll past-due rent into future payments can bring relief.
Offers like these allow you to work with the great people renting your great spaces, and help you keep them occupied long term. For many property owners, some rent is still far more cost-effective than a vacant rental and no rent at all! That said, as an expert in Ashburn property management, whatever plan you choose needs to be put down in writing. Your renters need to know that these are only short-term solutions.
Create Payment Plans
Regardless of the financial difficulties facing the community in the wake of COVID-19, as a property owner, your overhead will still be there. If your residents are unable to pay their rent in full, consider allowing them to pay a certain portion upfront and then spread the remaining balance over the rest of their lease. This could help you manage some of your expenses and 'keep the lights on' while hopefully avoiding default on your own payments.
Tap Into Savings
As the experts in Ashburn property management, we always recommend to property owners that they have a savings buffer for each of their rental homes. Generally, you want to have at least three-months' worth of rent saved up to act as your padding. Although this might not be enough to cover everything, it is important to try and pay what you can to keep your head above water until work opens back up for your residents.
Eviction Should Only Be a Last Resort
The worldwide pandemic has proved immensely challenging for many. With that in mind, it's worth considering that eviction is not your only option in a circumstance where your renters are having difficulty meeting the demands of their rent.
In some cases, it may be entirely off the table due to active executive orders that suspend eviction proceedings until a set date. However, you can use this time to document your interactions with your renters and the status of their payments. If you are forced to pursue eviction in the future after the crisis passes, you will be more prepared to do so.
Understanding your financial needs as the landlord and respecting the great people renting your great spaces will be important in maneuvering this unprecedented time—especially if you want to try and collect rent. For more tips on how to approach this topic from the perspective of an Ashburn property management specialist, download our free Collecting Rent in a Crisis Handbook!