“We have all heard stories about some landlords going to battle with tenants who have lost their job or have seen their income dramatically cut during COVID-19,” commented experienced real estate investor Eduard Shapshovich. “However, there are some landlords who are rising to the occasion and realizing that they have a moral and ethical obligation to try and make things at least a little easier for their tenants during a difficult time.”
According to Eduard Shapshovich, here are four ways that some landlords are leaning forward when it matters the most to their financially struggling tenants:
- They are speaking directly and privately with each affected tenant to learn about their situation.
A survey has revealed that 53% of renters have lost their jobs due to COVID-19. And thousands of other renters have seen their income drop rapidly and significantly, forcing them to make impossible choices such as pay for their child’s medication or cover the rent. In light of this, landlords should take the time to speak with each tenant to learn about their unique situation.
“Nobody wins when either party becomes hyper-aggressive and hostile,” commented Eduard Shapshovich, who prior to becoming a real estate investor was a city planner. “While an authentic and personal conversation will not instantly facilitate a compromise, it can go a long way to establishing empathy and understanding, and potentially fostering a mutually acceptable solution. Sometimes landlords need to remind themselves that tenants are real people, and similarly, sometimes tenants need to realize that most landlords are not giant corporations — they are very hard working men and women who are, themselves, under tremendous financial strain at the moment.”
- They are offering short-term discounts.
A portion of something is better than all of nothing. Some landlords are demonstrating that they understand this pragmatic advice by offering tenants short-term discounts. While this obviously does not allow tenants to live rent-free, it nevertheless enables them to pay their (reduced) rent — which is good for all parties.
“The amount of short-term discount depends on a variety of factors,” stated Eduard Shapshovich. “Obviously, a drop in revenues is going to financially harm landlords regardless of their size. But it may be the better part of wisdom — and also simply the right thing to do — to try and help their unemployed tenants make ends meet.”
- They are allowing tenants to make payment arrangements.
A payment plan, or a pre-payment plan, can help renters meet their financial obligations, and also allow landlords to generate the revenues they need to take care of ongoing operating costs and other expenses, such as property maintenance, property taxes, and so on.
“A fair and feasible payment or repayment plans allows tenants to pay their rent owing in smaller amounts, which are spread over time,” commented Eduard Shapshovich. “This can be a very effective compromise for tenants whose industry has been temporarily devastated by COVID-19, such as hospitality, restaurant, tourism, and many types of retail. Then, when a vaccine is widely distributed and the economy bounces back — which hopefully will start happening in the summer or fall of 2021 — unemployed tenants will get back to work, and can resume paying the pre-COVID-19 monthly amount once they have taken care of all amounts owing.”
- They are waiving lease breaking fees.
In normal times, tenants are typically obligated to pay a hefty fee if they break their lease and move out. However, these are certainly not normal times, and some landlords are waiving this fee as a gesture of goodwill.
“While agreements vary, it is not uncommon for tenants to be obligated to pay one or two months’ rent — and in some cases more — for breaking their lease early,” commented Eduard Shapshovich. “This penalty is in place to protect landlords from suddenly dealing with unexpected vacancies, which may take some time to fill. However, given the extraordinary nature of what is happening, some landlords are waiving this fee for tenants who can legitimately demonstrate that they need to move elsewhere due to financial hardships related to COVID-19.”
- They are helping tenants take advantage of financial assistance programs.
There are several financial assistance programs currently being offered by federal, state, and city governments. Furthermore, some private corporations are offering discounts or relief for individuals and families that can demonstrate financial need. Landlords do their tenants and themselves a favor when they research and share this information.
While landlords should try and help all of their tenants learn about and take advantage of applicable financial assistance programs, they should particularly pay attention to their older tenants who may not necessarily have the internet to research skills to discover all of the information that is relevant to them.
The Bottom Line
One day the coronavirus pandemic will be over, and the focus will shift from simply trying to endure and persevere for another day, to reflecting on lessons learned. Landlords who rose to the occasion and helped their tenants during an unprecedentedly difficult time — and landlords who did not — will be remembered for many years to come.
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