The novel Coronavirus pandemic has created a crisis worldwide. Jobs are disappearing—and so are renters’ paychecks. Thankfully, the numbers are in from surveys conducted about rent payments in April and May: roughly 90% of renters were able to make payments across both months.
However, these figures include payments made using some form of payment plan. As an expert in Falls Church property management, we know that this makes crafting a payment plan more crucial than ever if you've been contacted by renters who are struggling to make payments.
Rent and mortgage payments are usually the largest monthly expense for any person—making them one of the most difficult bills to tackle every month. A lack of certainty combined with job instability has made such payments become the focal point of conversations across real estate as both local and federal governments struggle to figure out how to help our community through this crisis.
While many cities and states across the nation have implemented eviction moratoriums, as a provider of Falls Church property management, we do not consider this a lasting solution. We know that most property owners cannot afford multiple months of "free rent" with the looming costs of monthly overhead. This is why developing payment plans for the great people renting your great spaces is so crucial!
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 Falls Church property management experts at RentSimple!
Why Payment Plans Matter
It is important to understand that while we all want this crisis to end sooner rather than later, the ramifications are likely here to stay for a while. Nobody could have predicted the times we are in; yet, here we all are.
This is our "new normal" for the time being—and the reality is that it won’t be going away any time soon. With millions losing their jobs due to the novel Coronavirus, the great people renting your great spaces may not be able to make rent for quite some time. Eventually, they will have to pay it back; the question is when.
As we mentioned before, we know that plenty of property owners in Falls Church will be faced with maintenance and operation costs, mortgage payments, and property taxes. This is simply part of what it costs to provide a safe community and a safe home for your residents. When many property owners don't have an adequate savings buffer to weather times of hardship, this will, in turn, put a strain on banks, lenders, and other financial institutions. They then apply that pressure directly back on the property owner.
To have at least some of the income needed to meet the demands of these expenses, investors and property owners in Falls Church will need a payment plan in place to encourage renters to pay at least a portion, if not all of, their rent. While not receiving the fullness of rent being paid every month is hardly ideal, it is certainly more favorable than no cash flow at all. Plus, it gives your renters some breathing room as they get back on their feet—and this can generate some considerable goodwill for you during renewal time.
Tips for Creating Your Plans
Start With What You Can Afford
- Take a look at your budget.
- Consider how much flexibility you are able to give your renters.
- The more accommodating you can be, the more likely the great people renting your great spaces will be willing to work with you and do their best to generate some form of payment.
You will also need to consider what the lowest amount you are willing to accept. Be realistic: this should not be costing you. Make sure you are aware of your mortgage and any foreseeable costs that may arise as a result of owning rental homes in Falls Church.
Communication Is Crucial
- Reach out: contact your renters directly and leave a voicemail if they do not pick up.
- Follow up with a text or email to notify them that you are willing to arrange a payment plan.
- Be friendly, empathetic, and approachable.
Ask them what they can afford financially and keep the parameters you developed in mind. Having an idea of what you need before you discuss terms with your residents will help you negotiate better and keep you in a position that works for your finances.
Always Get Everything in Writing
- Be clear in your agreement: put in place due dates and distinguish late fees (if there are any).
- Get your agreement in writing: both parties will need to sign the document.
- There are plenty of online services you can use to obtain a signature. This is crucial should questions arise later about the agreement between you and your tenant.
Creating a payment plan that assists with rent payments will be even more beneficial to you than your tenants. Ultimately, responsibility for your Falls Church rental home falls on you: do not wait until rent payments are due to start this dialogue with your renters. Be proactive and make sure you have a good grasp of the entire financial picture!
Your Falls Church Property Management Partner Can Help!
Although we are all still deep in the grasp of social distancing here in Northern Virginia, compassion and empathy are even more valuable than in normal times of unemployment.
People need a roof over their heads so that they have a place to stay-at-home in! Developing a payment plan can help you make it through a crisis—but you don't have to build it on your own. This is where partnering with a professional Falls Church property manager can help you pull through! Here at RentSimple, we are your experts in Northern Virginia property management—and we know how to help the property owners we serve not only recover but grow during these trying times.
For more insight into payment plans and rent collection, download your free copy of our Collecting Rent in a Crisis Handbook to get started!