In the current climate, landlords and tenants are both concerned about how to handle rent, especially if the renter’s employment status was impacted by shutdowns due to the outbreak.
Importantly, please note that this is a very difficult and uncertain time for everyone. This is not to be construed as legal or financial advice, but a collection of resources and landlord discussion around how to cope during this period of uncertainty. Please consult your financial and legal counsel to better understand what resources are available to you and how to best proceed should any of your renters be affected.
Contact your tenants preemptively
Contact your tenants preemptively and ask them to reach out to you if their employment status has been impacted by closures. If their job status has been affected by the shutdown, you might want to lower the rent temporarily.
Lower the rent temporarily
Keeping tenants is critical, especially if you consider the cost of evictions vs. the cost of temporarily reducing the rent for the month to keep a good tenant who is otherwise typically able to pay rent. You can work out arrangements on a case-by-case basis and agree to accept partial rent until this dies down and work out delayed payment plans.
Use the security deposit
Use the security deposit for a month to allow renters time to get unemployment or other government assistance if their job status was impacted by shutdowns and closures. You and the tenant can sign an agreement that if they use the deposit now, they will have to repay it by a certain date to recoup the forfeiture of their original security deposit.
Use your rental reserve
Some landlords suggest that you should have 3 months of backrent in your rental account saved to cover contingencies. Use this savings to continue to pay the bank while you work out a deal with your renters.
Rent default insurance
Look into rent default insurance which can provide you coverage and protection from financial drain due to unpaid rent.
Many states are enacting a moratorium on evictions to halt evictions during this time. While it might be difficult, if your tenant is typically able to pay rent and has experienced recent job loss or layoffs due to the coronavirus, it might make better sense to have laid off or unemployed tenants pay 25-50% rent for a few months to ride out the storm.
Especially because evictions might cost more (with property cleaning, vacancy period, and new tenant screening process) than temporarily reducing rent. It is a difficult situation, but it will be more difficult to begin eviction proceedings with the courts closed and finding a new tenant with social distancing, quarantines, and shelter-in-place order enacted will be extremely difficult.