Banks, federal and state government bodies... no one is helping so, what can you do?
While eviction moratoriums and forbearances for homeowners prevented a major increase in homelessness, property owners have been left to risk foreclosure on their investments. For some, this has even meant loss of primary income.
With that being said, here are some options for property owners.
My top suggestion is this:
The best option is to apply for Section 8 voucher approval. Most states provide rental assistance and it is possible that your tenants could secure all or part of their rent and remain in the unit.
You and the property also have to meet certain requirments, but it is worth the effort if it means securing your income and property ownership.
Here are other suggestions from outside sources.
Leverage the full range of solutions available to landlord
(Excerpt of "The Right Way to Handle Tenant Relief Requests")
Here are a few options to avoid complete loss of rental income:
— Rent deferral. “Rent deferral” just means that the landlord postpones the due date of all or a portion of the tenant's rent to some future date(s). Landlords can work out with the tenant whether the deferred rent will be due in a lump sum or through increasing subsequent payments. This is a nice starting point from a landlord that wants to show sympathy, while securing a valuable contract that settles the original lease value.
— Rent reduction. The landlord agrees to reduce the rent for either a portion or all of the term left on the lease. The usual forms of rent reduction are to reduce the base rent, operating expenses or both. However, under retail leases, it may be possible to convert base rent—a set monthly amount—to a higher percentage rent, where the tenant need only pay a percentage of their income when it resumes. This may be an attractive option to tenants, although it nevertheless represents a gamble for both parties.
— Rent abatement. If a tenant is already significantly past due on rent payments, a landlord may agree to forgive a certain amount of the past due rent under the condition that the tenant remains current thereafter. While not ideal, not evicting tenants is a prudent and safe choice in markets where vacancies are high and new tenants are far and few between.
— Loan conversion. Rather than abating past due rent, a landlord may agree to convert the past due rent into a loan payable over time. A loan conversion is similar in principle to rent deferral, except it is a backwards-looking agreement with tenants that have already failed to pay their rent. Under this kind of agreement, the tenant is still responsible for paying current rents, while the loan is then evidenced by a promissory note that is cross-defaulted with the lease.
— Application of deposit. If the landlord holds a deposit from the tenant, they may propose to have the deposit credited against any current obligations. If bankruptcy is looming, you need to be very cautious with this approach as courts could reverse this transaction.
— Subletting. The landlord could encourage or help the tenant find a new tenant to lease part or all of the rented space. Although it is unlikely that in a soft commercial real estate market tenants will have any better luck than landlords in finding a replacement tenant, the option of a shared space might make the space more attractive by offering the possibility for synergistic uses.
It's in everyone's best interest that homeowners, landlords and tenants support each other until we get beyond this crisis.
Jessica Bordelon, Agent,