Are you a Real Estate Agent that is helping your client manage a rental property? Has the tenant stopped paying rent because of something related to COVID? Maybe the tenant had their hours cut or they have lost their job altogether. Unexpected medical bills may have come up. As you may know, there have been new guidelines issued at the state and federal level so you can no longer evict a tenant for non-payment of rent. This is a good protection for tenants. But what about the property owners? Many owners count on the incoming rent to pay their mortgage, insurance and other costs. This article provides seven tips on what you can do if the tenant has stopped paying rent.
1 - Keep up communication
You may not be getting the rent you would like but keeping up communication now can pay dividends later. It’s stressful enough now that you are not getting rent from the tenant. Imagine if you weren’t getting rent and hadn’t heard from the tenants in a few months. Keep up amicable two-way communication lines. Use email, text and phone calls. Do your best to communicate empathy but let them know you are still expecting the full rent to be paid. It’s a good idea to set payment goals – for example: “OK, so you can pay $200 this week and $500 at the end of the month? Great!” Keep track of your communication and promises made by the tenant.
2 - Consider an alternative payment plan
Sure getting the rent on the first of the month is what you are accustomed to. Maybe an alternative payment plan would get at least some rent flowing. For example, ask the tenant if they can make a small weekly payment every week. Or maybe a partial payment every two weeks. That flexibility may get a portion of the rent paid.
3 - Take advantage of relief programs
Recently President Biden passed a $1.9 Trillion dollar COVID relief package. In that bill, congress approved $25 Billion dollars for Housing and Rent aid. Some of that money is distributed through the individual states in different programs. In New Jersey, check the state website www.NJ.gov. Then go to the Department of Community Affairs web page. Make sure your tenants are aware of these programs. You may have to do the research for them and give them specific instructions. If they follow through though, the owner could get some or all of the rent money they are owed.
4 Refinance
Mortgage rates are still historically low. If the property owner has good credit and income from other sources, they may qualify to refinance their mortgage at a lower rate. Lowering the mortgage rate or extending the term can lower the mortgage payment. That could relieve pressure on the owner with rent payments not getting paid.
5 – What not to do
I have had some frustrated owners say they would like to turn the water off to the rental home. This is against the law. You cannot turn off utilities or do similar illegal acts to try to force the tenant out of the property.
6 File Eviction
The courts are closed but you can still file eviction. The eviction will not be heard by the court for now. There is a backlog of evictions waiting to be processed. In addition, there may be new bills passed at the state or federal level that negatively impact these filings. That said, you can file your eviction now and at the very least it will be put in the queue with other filings. In addition, your filing will be ahead of other owners that have not filed yet.
7 Hire a Property Manager
The reality is Property Management companies collect more rent than property owners. The difference is the Property Manager is an impartial, third party. The owner likely had a good relationship for many years with the tenant when they were paying the rent on time. It can be hard for the owner to switch into being more of a collection agency. It’s uncomfortable for most people to call and ask for money. For the Property Management company, it’s just part of our services. We have a structured system for sending calls, texts, emails and even written letters. We have the experience to know what works and what doesn’t. As a result, our collection rates are often much higher.
If you have questions about rent collections or evictions, contact us today -I’m sure we can help
Sureway Property Management
NJ and PA
856-552-0505
Kwolson@surewaypm.com