Landlords: Collecting Rent and paying mortgages during the Pandemic

PaulR

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I happen to be a commercial landlord, but very little difference now between that and residential. Being stuck in the middle between people that may not be able to pay and the bank with it's hand out.
I've been thinking a lot how this is going to work in the short term. Luckily I'm not spend-thrifty, live within my means, and I'm relatively prepared for a long drought....but it makes me less than thrilled to have to take a hit for those who are not.
Anyways, I spoke to my commercial banker guy the other day who is a lender at a large regional bank, within a lot of compassionate words he said this
"We are working to implement a program that will defer principal and interest payments for 3 months."
Good to hear. But in the end if I give my tenants a break I'm out that money forever, and I still have to pay my mortgage.
 
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Roland Deschain

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I am not a big time landlord. I told my tenants that I will work with them if some kind of mortgage relief is on the table, but advised them of the numbers and that its a new purchase and there are slim margins to work with to keep the lights on. There have been no issues so far. I will say that nationwide there seems to be a movement to paint us all as Scrooge McDuck swimming in piles of money.
 

Cowgirlup

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I happen to be a commercial landlord, but very little difference now between that and residential. Being stuck in the middle between people that may not be able to pay and the bank with it's hand out.
I've been thinking a lot how this is going to work in the short term. Luckily I'm not spend-thrifty, live within my means, and I'm relatively prepared for a long drought....but it makes me less than thrilled to have to take a hit for those who are not.
Anyways, I spoke to my commercial banker guy the other day who is a lender at a large regional bank, within a lot of compassionate words he said this
"We are working to implement a program that will defer principal and interest payments for 3 months."
Good to hear. But in the end if I give my tenants a break I'm out that money forever, and I still have to pay my mortgage.
Maybe instead of giving them a full break you could ask for a temporarily reduced amount if necessary. I'm still getting a check this week from the past weeks of contracted work. Since this check is near the end of the month it's likely the one people would use to pay rent. Also depending on their jobs they may not be unemployed. There is a huge misconception that everyone is out of work when it's only certain sectors. Also, if people have applied for unemployment part of that is so they can pay rent and mortgages.
 

TomMontana

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One of the tenants is a couple of weeks late this month. I didn't make a fuss about it. The mortgage on the rental house is paid off. So no pressure from the banks, but I don't want to lose out on income either. Not looking forward to next few months if this keeps up.
 

Jason Flare

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The best strategy IMHO is for me to keep my trap shut and deal with my tenants individually as problems arise.

I can’t evict anybody in a residential unit and I can’t/shouldn’t auction anybody’s junk who has a self storage contract with me but I can keep my mouth shut and not give hundreds of tenants the message that they don’t have to pay me.

Everything I have read in the self storage industry is that NOBODY is waiving late fees and I think for good reason.

Late fees are the teeth in the contract. Late fees provide an incentive to pay.

Now though, when someone comes in late to pay we waive the late fees.
 

caboose84

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I own a campground, scheduled to open for the season April 15th, my county directed all short term lodging had to close until May 1. Had to refund or reschedule any reservations, if we had longer term tenants they could stay, any guest could stay for one night in an emergency but then had to leave the next day. Any stays for more than one night require county health director written approval, they will only approve emergency workers. We aren't on a major travel route, so staying open for "maybe" business didn't make sense. Help keep the utility bill lower.

Got plenty to cover the May expenses (as a seasonal operation we have to plan for a tight spring due to weather), things will get very tight in June if the closure drags on.

Other campground owners who cater to long term stays (think workers on projects, retirees) are getting tossed under the bus by the law signed last week forbids any evictions. They have tenants on a month to month basis. They'll get uglier quicker, because those guests are running up electric expenses, and campgrounds don't normally have individually metered spots with the electric company dealing with each spot.
 

NH_Realtor

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These are very strange times. My business partner and I are closing on a 3 family on the 31st. Who knows if the tenants will pay on the 1st.

I also own and operate some vrbo properties. We received our first cancellation this week for this upcoming summer, they didn’t say it was due to covid but who knows. Within 2 days someone else booked it, they said they were going to go to Europe this summer but cancelled that due to covid.

If most or all of our summer bookings cancelled within the next 30 days no only would we not be able to pay the mortgage, we would have to pay back 10K + in deposits taken. Problem is that money has gone to float the mortgage through winter and spring, always our slow time.

Anyone wanna buy a vacation home? May or may not come with vacation rental tenants.
 

peterk123

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I own a commercial property management business and own some real estate myself with partners. We have had smaller tenants approach us with issues. I am telling my owners to offer a 60 day grace, then blend the missed rent into the remaining term of the lease. Also told them to speak to their attorney and have a one page lease modification drawn up to make it binding.

I am also an exbanker and still have many banking friends. I have spoken to some. They will make you liquidate some your assets before they start traunching any loans. I went through shit like this as a lender. Trust me, your balls will be in a vice. No such thing as a nice bank. Just desperate ones that can't afford losses (usually smaller banks). For most bigger banks, you are nothing but a rounding error. You will be in workout faster than you can say "I love real estate". Start communicating early and often. Remember, you have 90 days before you go non-accrual. Non-accrual is the trigger to get aggressive with a borrower.

Good times are a comin' Pete
 

JayMcB

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One of our tenants is a teacher, and walked up to me yesterday with the April rent while I was working at the property.
Another is retired, so as long as Uncle Sugar sends the SS checks, etc, they should be fine.
The third one is in an essential business, and is working OT right now, so would have zero excuses.

That'll at least cover the taxes, insurance and utilities.

The downstairs commercial tenant is closed by the state. That's going to hurt if they don't pay.

We'll see....
 

PaulR

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I own a commercial property management business and own some real estate myself with partners. We have had smaller tenants approach us with issues. I am telling my owners to offer a 60 day grace, then blend the missed rent into the remaining term of the lease. Also told them to speak to their attorney and have a one page lease modification drawn up to make it binding.

I am also an exbanker and still have many banking friends. I have spoken to some. They will make you liquidate some your assets before they start traunching any loans. I went through shit like this as a lender. Trust me, your balls will be in a vice. No such thing as a nice bank. Just desperate ones that can't afford losses (usually smaller banks). For most bigger banks, you are nothing but a rounding error. You will be in workout faster than you can say "I love real estate". Start communicating early and often. Remember, you have 90 days before you go non-accrual. Non-accrual is the trigger to get aggressive with a borrower.

Good times are a comin' Pete
Excellent thoughts and ideas, thank you. More please. 🤓
 

GaryO

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If the bank is willing to defer principal and interest for 3 months, tell your tenants that you are willing to defer rent for the same period and give them 4 months to pay it back with no penalty. Make sure that you write a airtight contract that spells everything out so you don't get screwed.
I am glad i am not a landlord anymore.
 
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I happen to be a commercial landlord, but very little difference now between that and residential. Being stuck in the middle between people that may not be able to pay and the bank with it's hand out.
I've been thinking a lot how this is going to work in the short term. Luckily I'm not spend-thrifty, live within my means, and I'm relatively prepared for a long drought....but it makes me less than thrilled to have to take a hit for those who are not.
Anyways, I spoke to my commercial banker guy the other day who is a lender at a large regional bank, within a lot of compassionate words he said this
"We are working to implement a program that will defer principal and interest payments for 3 months."
Good to hear. But in the end if I give my tenants a break I'm out that money forever, and I still have to pay my mortgage.

If your bank defers payments but your tenants dont pay, I dont see how you are out money. You will be out money when the businesses you rent to go tits up and theres nobody to fill the vacancy. Then you (and all of us) are in trouble.
 

JayMcB

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If your bank defers payments but your tenants dont pay, I dont see how you are out money. You will be out money when the businesses you rent to go tits up and theres nobody to fill the vacancy. Then you (and all of us) are in trouble.
in case you're not paying attention, taxes, utilities, upkeep, landscaping, snow removal/sanding, trash removal, insurance and everything else still has the meter ruuning. So you ARE being fvcked out of money. Plus there is wear and tear. The mortgage payment is the easy part.

Why did you let her get within six feet?
She set it down near me, but didn't break the 6 foot limit. I was gloved when I picked it up; it's already deposited.
 
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We have two higher end rental townhouses in Boston, one is rented to a restaurant owner who asked if they could use the security deposit to pay the April rent. They are 1 year into a 2 year lease, we told them we are not legally allowed to use the security deposit but we can apply the last months rent to April as long as long as they agree to pay it back in a few months. They ended up paying for April and not using the last month, we'll see how it goes. My brother n law has 50+ units in Lowell... Curious to hear how April 1st goes for him.
 

kiver

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I rent to an elderly lady that was just recently treated for cancer. She has been my tenant for 16 years and never missed a payment. I don’t want her leaving the house as she has always paid me in cash. It can wait. If she ends up with the virus I am sure the place will end up vacant. Her health is way more important then the rent. Luckily I own the property outright
 

Cowgirlup

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These are very strange times. My business partner and I are closing on a 3 family on the 31st. Who knows if the tenants will pay on the 1st.

I also own and operate some vrbo properties. We received our first cancellation this week for this upcoming summer, they didn’t say it was due to covid but who knows. Within 2 days someone else booked it, they said they were going to go to Europe this summer but cancelled that due to covid.

If most or all of our summer bookings cancelled within the next 30 days no only would we not be able to pay the mortgage, we would have to pay back 10K + in deposits taken. Problem is that money has gone to float the mortgage through winter and spring, always our slow time.

Anyone wanna buy a vacation home? May or may not come with vacation rental tenants.
I was in the travel industry around 9/11. People still took vacations but just stayed closer to home and in the states. I think you will be OK.
 

icyclefar

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I'm also on the commercial end of things, 100+ tenants. The first week of April will be interesting.

There are a few things I've accepted: Everyone must pay something, I will not collect any late fees, and the courts will not process any evictions any time soon. The rest of the details are yet to be sorted out.
 

one-eyed Jack

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I rent to an elderly lady that was just recently treated for cancer. She has been my tenant for 16 years and never missed a payment. I don’t want her leaving the house as she has always paid me in cash. It can wait. If she ends up with the virus I am sure the place will end up vacant. Her health is way more important then the rent. Luckily I own the property outright
Very considerate of you. Every situation is different. I have commercial tenants at the mill in Littleton who pay half or sometimes a third of what they would be paying elsewhere. Many have not had a rent increase for years. My biz model is to keep the building as full as possible, pay ourselves and our bills. We don't have a huge cash surplus but have the equity. As a result, I can't support the tenants who get in a jam. Jack.
 

NH_Realtor

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I was in the travel industry around 9/11. People still took vacations but just stayed closer to home and in the states. I think you will be OK.

9/11 didn’t impact the potential health of someone renting a home. Yes we have a cleaning company that comes in between renters but that doesn’t change people’s perception and worries.

9/11 also didn’t have anywhere near the economic impact that it looks like this thing is gonna have. If people lose their jobs or have to close their business, they ain’t takin vacations.
 
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Rent to my sister and she works for a mental health faculty that's about a mile from here so no self quarantine for her.
My only problem is remembering to pay the mortgage missed this month distraction and stupidity on my part.
 

PaulR

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Very considerate of you. Every situation is different. I have commercial tenants at the mill in Littleton who pay half or sometimes a third of what they would be paying elsewhere. Many have not had a rent increase for years. My biz model is to keep the building as full as possible, pay ourselves and our bills. We don't have a huge cash surplus but have the equity. As a result, I can't support the tenants who get in a jam. Jack.
Pretty much my exact situation. I haven't gone up in years even though taxes have been going up significantly. I've been bending over for quite a while now, I really hate to have to bend over any farther.
 
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