Good Communication Between Tenants and Landlord is Important
In the wake of the Corona Virus pandemic, landlords across the US, UK, Australia, Canada, and Germany are bracing for rent payment defaults, conflict, and cash flow problems.
This might be the worst cash flow issue many landlords have ever faced.
The word eviction is high on everyone’s vocabulary with some jurisdictions placing bans on evictions temporarily, if tenants notify their landlord in time. Landlords will be willing to work with tenants if the tenant acts responsibly.
One of the keys to get through this period is good communication between landlord and tenant because this recession will likely not be extended. However, for some tenants job losses could be significant and they should handle the situation professionally to avoid future trouble in renting.
The US rental market of almost 40 million renting households has been strong, but as the slowdown lengthens, new construction will slow, investment will slow, and tenant rent defaults could increase. Landlords face some challenges, which we’ve listed below. Their viewpoint needs to be stated.
Landlords Need Support Too
The media and tenant forums are full of support for tenants who may not have many paychecks in the next month or so. Yet support for landlords is decidedly lacking. The Covid 19 pandemic might not last long (China is recording no new cases), but it is cutting deep and it may be all on the backs of landlords.
A few landlords, especially in the multifamily apartment sector in some cities may be seeking temporary help from their banks with a loss of revenue. President Trump’s cash infusion will certainly help ease the pain of this market drop.
Landlords with No Cash Flow and Writing off Losses?
Many landlords will likely have to write off the coming losses in rent, because using the courts to collect it will be tough. Some landlords may see tenants simply leave and vacate the units.
Other landlords are waving a month’s rent which is very generous, while others are looking to the eviction process.
Tenants are concerned and are hoping they can work with their landlord to avoid eviction for unpaid rent. One renter who works 3 part time jobs is quoted in a post in the Cedar Rapids, Iowa Gazette says:
“I am not struggling yet,” said Schumacher, 49, of Cedar Rapids. “I haven’t gotten to that point. I have a little cushion. But I also don’t know how long this will this go on. I work with people, and it is so up in the air. Knowing your landlord is willing to work with you and you will not be out on the streets with nowhere to go is reassuring.”
Her landlord is quoted as saying that 10% of his tenants already are impacted economically and believes that over the next 90 days, that could grow to 30% of tenants.
That leads us to the point that if the recession does extend to 3 months, there will be evictions. Many tenants live paycheck to paycheck and can’t handle any break in income. It’s important for tenants to do all they can to pay their rent.
To be fair to landlords, it’s not only tenants who are about to suffer through this period of financial loss. Landlords and property managers already have plenty of challenges throughout the year. It’s assumed by some that landlords are wealthy and can ride this out well, while not receiving rent from 20% to 30% of renters. In reality, landlords may be in big financial trouble, which could result in their own home losses.
What is likely pressuring landlords most right now?
- inability to collect rent from those who pay by cash or check
- month long delay in receiving April’s rent
- NSF checks bouncing
- cash flow downfall and may not be able to meet some debt payments
- it’s tax filing season and they owe money
- tenants terminating their leases
- handling future evictions against government tenant eviction prohibitions
- handling much more tenant inquiries
With flexible financing help and tax relief plus stimulus funding, it’s hoped that everyone will get through period safely.
Old Style Landlords Face a Mountain of Tasks
Many landlords are still managing old school style with face to face collections and telephone communications. Many will need to manage conflicts in the rental units due to so many people confined to their homes for an extended period. There will be more mechanical or other breakdowns during the period and more calls for repairs.
It will tax landlords energy and time. Having to face a looming cash flow problem is something landlords may not have planned for.
Tenants should keep in mind that although landlords cannot evict them quickly due to new regulations, an eviction via non-communication would stick to the tenant’s rental record and show up in tenant screening reports. With today’s severe shortage of rentals, that mark on the tenant’s record could prevent them from renting again.
Speaking With Your Landlord
It’s very important for tenants to communicate their financial position and an inability to pay the rent. All other bills should be set aside and rent should be paid. Whether the banks show mercy to landlords remains to be seen.
Good communication with your landlord or property management company allows them to plan accordingly. When they must work hard to contact you and collect rent, it is a lot of time and work. Some landlords have hundreds or thousands of renters to collect from. Payment efficiency is part of their business model.
If landlords business fails, it can have a big impact on those renting in the buildings. The properties may be sold and renters asked to leave. I’ve been a victim of this buying and selling several times so it’s good to ensure your landlord is well financed and doesn’t sell. The status quo is good.
The government is doing what it can to help tenants through this period, but landlords have some serious business challenges in the months ahead.
Check out ManageCasa Property Management Platform, and see how you can automate rent payments, improve tenant communications and lower your cost of doing business.
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