With no foreseeable end to this pandemic, many landlords are fearful that they won’t be able to maintain their properties, pay their insurance and property taxes, or make their mortgage payments. An estimate shows that about 11% of renters across the country fell behind on rent in June 2020. That’s better than April, when the National Multifamily Housing Council reported 15% of renters were struggling with payments.
However, even with all these challenges, there are still methods property management companies can take to make sure payments are collected while also retaining a solid relationship with their tenants.
Struggling to figure out how to collect rent during social distancing? The first step is to make it easier than ever for residents to make their payments.
Start by Documenting Everything
Documenting every piece of communication between proprietor and renters during this time is crucial. It shows an earnest effort on the proprietor part to work with their renters to meet their needs in the middle of a crisis, so it’s a good idea to send out a letter reminding tenants that rent is due. Regardless of how one phrases it, the bottom line is that rent is still due. Phrasing one can use is, “We know times are hard, but rent will still be due on August 1, 2020.” Hence, reinforcing careful communication with the renters that can spare considerable grief down the line.
Documenting the details also protects the property owner in case one is forced down the path to eviction. Also, check local laws associated with the CARES Act.
This strategy works for numerous reasons. First, it doesn’t immediately divulge information about payment plans. Be firm about rent, and then be flexible and clear about the intention to collect rent. Flexible payment plans provide residents hope and allow them enough time to set goals to catch up on payments before the end of the year.
Work With the Renters
It’s important to remember that renting properties is a people business, but it’s still a business. Showing compassion while maintaining professionalism in every aspect is primarily important. Compassion is essential to be a good landlord. However, one also has to be able to uphold the terms of their lease.
Point out alternative forms of payment that may help the renters cover their expenses in installments, and consider installment-type payments on the property as a final option. For example, If the rent is $1200 per month, see if they can pay $200 per month over the next 6 months. If one still can’t pay rent next month, extend the payment period for an additional 6 months. Once the crises is over, one can add the additional $200 to their normal monthly payment until the debt is repaid.
Online Rental Payments
Online payments have grown in popularity over the last decade. The modern renter expects online options to be available to pay their rent and not just because of the rise of social distancing during the COVID-19 crisis. This is a great place to focus one’s efforts on making the payment process easier for the renters during social distancing. Having residents utilize payment portals helps automate payments at a certain date or time each month. It also allows residents the option to pay via credit card, in the event they fall short due to personal emergency.
Reward the Responsible Tenants
One way to ensure a continuation of this model behavior is through payment incentives. Residents who are able to pay their rent on time will want to keep doing so, especially if they’re recognized with an incentive such as a gift card for a local takeout business, a future rebate or a special price that can be redeemed once the pandemic is over.
Moreover, if a person makes less than $75,000 a year, there are relief options out there. The government has begun issuing relief checks to individuals and families during the COVID-19 pandemic. Individuals will get $1,200, plus $500 per child under the age of 16.
In real estate, rent collection is vital to keep one’s business running. However, one should not put too much pressure on tenants who are out of a job and may have trouble with their monthly payment. Furthermore, communicating with tenants is the key to success in property management in this hard time. It is the time to stay calm, come together and fight this global pandemic together. Be kind to each other. Presently, that’s one thing we do have control over.