Rental Risk with COVID-19?

[Fermion]

It depends on the state and to some extent the city. Evictions for non-payment already banned in San Jose. Will be statewide at some point, if it isn't already.

The law should be that when an order goes out like this, the state or city steps in and makes the payment to the landlord.

 

[Another Reader]

The law should be that when an order goes out like this, the state or city steps in and makes the payment to the landlord.

This is California. Landlords are evil capitalists.

 

[ut2sua]

Oregon just banned evictions for tenants unable to pay due to financial hardship caused by Corona. At the same time I need to pay the mortgage on the rental as well as my own bills. So yes, I am concerned if the tenants quit paying because there is nothing I will be able to do about it.

Is the eviction ban just a form of delayed payment? In other words, the amount will still need to be paid by the renters at some point(?) The vast majority of folks will pay rent before other things.

 

[Another Reader]

Is the eviction ban just a form of delayed payment? In other words, the amount will still need to be paid by the renters at some point(?) The vast majority of folks will pay rent before other things.

In some cases, that's true. In others, they figure it's better to pay for food, the car, and the utilities and hope they find a job before they get evicted. It can easily be 90 days to evict in California even when there is no ban. I haven't read any of the new laws and orders in California, so I don't know what the payment provisions are, if any.

I e-mailed with the Arizona property manager this morning. She has gotten several calls this morning from tenants that lost jobs. None of mine yet. Arizona is overall conservative and the law and the courts have historically favored landlords. That's changing as Californians flood in.

 

[Sunset]

This is California. Landlords are evil capitalists.

Plus there are many voting renters compared to voting landlords.

 

[ut2sua]

In some cases, that's true. In others, they figure it's better to pay for food, the car, and the utilities and hope they find a job before they get evicted.

Rental application/credit check includes search for eviction record. For renters who got evicted, it will be difficult to rent again. I don't know how long the eviction record will stay though.

 

[Running_Man]

Look at one of the most conservative of rental companies Realty Income stock is down 55% to 40 from 83. The new rules being proposed are very unfriendly to landlords and retail operations are in the midst of total destruction by online sales.

 

[BreathFree]

I sold half of my rentals last year because the real estate values were up and I wanted to reduce my hurricane risk. Just seemed like a good time to sell. Was kind of an impulse sale.
I'm so glad I did! I never foresaw a situation where all units proceeds would be zero.

Im down to three duplexes and own them free and clear, so for any tennant that is unemployed, I plan to forgive their rent. I have enough in my rental account to cover one years worth of expenses, so no worries. Unknowns such as this crisis is why I was never comfortable with leverage.

 

[Luck_Club]

Got the first call/text today, the one I most suspected. 3 earners, 3 verifiable days no income, wanting to know if it would be ok to be late on the rent?

On the casino worker, the household has 3 incomes. They are less than a year in the house, and I have a feeling they will not let this crisis go by without an attempt to squeeze me.

My thoughts:
No it is only 9 days, if you can't make it missing 9 days you aren't going to make it next month either.

How to explain I feel your pain but no, maybe next month depending on how things work out over the next few weeks.

 

[jollystomper]

If layoffs occur due to pandemic, won't they receive a unemployment stipend? Won't discretionary expenses be down since they can't blow it at the bar or mall? If one is confined to their home/ apartment/shelter, wouldn't they think that was their first/major expense they would pay?

If they live in a state that has banned evictions, I wonder if a renter would consider that expense the least important to pay for now. Yes, it will accumulate, but some do not think that far ahead.

I would also not be surprised to see some argue that since the state has banned evictions, they feel they should not owe rent for the months the state has banned them, if they have lost their job due to coronavirus spread prevention actions.

 

[BreathFree]

If they live in a state that has banned evictions, I wonder if a renter would consider that expense the least important to pay for now. Yes, it will accumulate, but some do not think that far ahead.

I would also not be surprised to see some argue that since the state has banned evictions, they feel they should not owe rent for the months the state has banned them, if they have lost their job due to coronavirus spread prevention actions.

I read an online news article today of renters organizing in refusal to pay rent. They were banding together in solidarity and marking their apartment with a white flag to designate those that refused to pay rent. I can't find the link to the specific article, but there are several on the subject via a quick google search.

 

[jollystomper]

I read an online news article today of renters organizing in refusal to pay rent. They were banding together in solidarity and marking their apartment with a white flag to designate those that refused to pay rent. I can't find the link to the specific article, but there are several on the subject via a quick google search.

Interesting. I found an article along those lines, for Toronto:

https://www.blogto.com/real-estate-toronto/2020/03/people-all-over-toronto-not-paying-rent-april-1/

From the article:

"We should keep our rent. Our landlords will be fine. We may not be. No tenant should feel forced to hand over so much money when faced with so much uncertainty," a provided document titled Why Keep Your Rent? says.
"It will go in their bank account and it will secure their investments. While you and everyone you care about stares down the barrel of insecurity."

 

[MRHARDROCKCAFE]

I have four rentals with property managers. These are all single family homes B class. The managers have all sent out letters to be contacted if there would be a problem paying the rent. No letters were received for month of April. Should i be proactive and start to work on some things to keep them from folding? I can get time to pay from my banks if needed. Or should let the managers contact me if there is a problem? They are all good tenants.

 

[Sunset]

I have great tenants, occasionally pre-covid-19 they have been late a few days on the rent, and notified me ahead of time. I didn't charge anything for it.

Should they tell me they are too tight to pay rent, I'll be telling them to pay 1/2 and I'll consider the remaining as owing without interest for 6 months.

Tenants may not realize it, but property taxes, water bills, insurance, repairs, mortgage costs are not optional and need to be paid.

 

[FIREd]

I received 100% of my rents in early April. Most workers are still on temporary furlough, getting 80% of their pre-Covid net income thanks to emergency government measures. The question is: what happens when those measures lapse.

 

[LRDave]

Different ballgame from the the above, but vacation rentals are shot in the US for the summer.

 

[Face The Facts]

I have a few rentals.
I'd consider them all A/B level except for one.
I have one that is more of a B-/C+ level where that tenant is moving out.
I posted an ad for it at the same price and response has been overwhelming.

I refuse to show it until the current tenant is out and I'll have "spacing" in my showings.

Knowing many potential tenants are aware of the "can't evict" policy we have, I may drag my feet on letting the next tenant in or see if I can do more to leverage a stronger deposit or some other risk mitigation strategy that's legal in my area.

 

[Face The Facts]

I know someone with a weekly vacation rental who has been hit hard by this.
It was a large part of their retirement income. (He and his wife still work "hobby" businesses part time).
But it's affecting them in a big way. Suddenly 8,000k or so a month not coming in.

Of course their "hobby businesses" are both slowing down greatly at this time as well.

 

[Sunset]

I have a few rentals.
I'd consider them all A/B level except for one.
I have one that is more of a B-/C+ level where that tenant is moving out.
I posted an ad for it at the same price and response has been overwhelming.

I refuse to show it until the current tenant is out and I'll have "spacing" in my showings.

Knowing many potential tenants are aware of the "can't evict" policy we have, I may drag my feet on letting the next tenant in or see if I can do more to leverage a stronger deposit or some other risk mitigation strategy that's legal in my area.

I could see, someone renting a place with the full intention of not paying any rent, knowing they will possibly get 6 months or more of "free" rental due to the no-evict rule abuse.

 

[Winemaker]

I could see, someone renting a place with the full intention of not paying any rent, knowing they will possibly get 6 months or more of "free" rental due to the no-evict rule abuse.

In order to get into one of my rentals, one needs the last 2 pay stubs in order to confirm stated income on application, pass a criminal check, and pay damage and sewage deposits, first months rent in cash.

 

[Scuba]

We have one rental and our tenant has paid on time every month. He has a good job in an industry that is still very busy during this pandemic so hopefully we’ll be fine. We could survive a long period with no rental income but it would certainly cramp our style.

 

[Starsky]

The problem is that someone eventually has to get paid. Whether it's the bank, the tax collector, the landlord, or utilities, someone is expecting money that is in short supply. As a landlord with no leverage, I still have to pay my primary home mortgage, plus property taxes, insurance, etc. for all the properties we own.

If my bank said that I didn't have to pay my mortgage, and the government gave some kind of temporary tax relief, this would be a lot less painful than it is likely to be. For this to work properly, everyone has to sacrifice all the way down the line...

[Mod Edit]

 

[NgineER]

We are also in the middle of a major renovation of a new acquisition, and we are running low on cash. We are in the process of financing it, and are a little concerned about our ability to secure financing all of a sudden.

We were able to secure a LOC for the latest property, so now we finally have access to cold hard cash. We have invested about $170k including purchase. We were able to get a LOC for $150k. This will help with continued renovation as well as with additional cushion from eventual rent fall off. The contractors are grateful for continued work and we are getting closer to a second unit being ready.

 

[splitwdw]

Thanks to all the landlords for posting. I was curious how some of you were doing with your real estate/rental investments.

 

[michelek]

We have several rentals. The Airbnb has gone to half income now/ we luckily got a monthly rental from a young couple who needed a place to stay for the duration, the other two houses will continue to pay (one is a long term 10 yr tenant, the other works for HUD), the only question mark is the house we rent to college students by the bedroom. If college doesn’t come back on campus in the fall, we will switch it to an annual rental for less than we would have made renting it by the bedroom. Either way we can’t lose too much, bc all are owned free and clear. The break even point is low.