Millions of landlords across the U.S. are dealing with a surge of late and unpaid rent. An estimated 1.3 million Texans have lost their jobs since mid-March, leaving many without any source of income.
If you own a property with a federally-backed mortgage or get a federal subsidy, the CARES act establishes a moratorium on evictions through part of the summer. That means your tenants are still required to pay rent and will accumulate a rental debt, but you’re not allowed to begin the eviction process until the moratorium ends.
If your property isn’t affected by the CARES act, you’ll still need to handle late and unpaid rent. However, since emotions are running high and people are worried and stressed about money, approaching the situation requires extra care.
Whether your property is governed by the rules of the CARES act or not, here are some powerful tips for handling late and unpaid rent during these unprecedented times.
Approaching tenants with late rent payments requires understanding during these tumultuous times. Demanding tenants pay immediately or face eviction won’t get you paid any faster, especially when a tenant is having trouble paying rent. However, as a landlord, it’s still your duty under the rental agreement and lease agreement to request payment of rent and inform tenants of the consequences when past due rent goes unresolved. You just need to do it in a way that makes tenants feel understood and encourages them to avoid late rent payments in the future.
Nobody asked to be laid off from work for this extended period of time. If a tenant stops paying rent altogether or can only manage partial rent payments, approach the situation with understanding and compassion. If you must send a late rent notice, word it in a way that communicates empathy for their circumstances. For example, say something like, “We understand that times are tough and you may not have a source of income right now. We’re all in the same boat until the economy reopens.”
Be firm in your request for rent due, including any applicable late fee, but don’t be overly callous or robotic in your communication. Remember that every letter you send to your tenants could one day be used in court during the eviction process. Request rent payments as usual according to Texas and federal landlord-tenant laws, and consider safeguards such as rent guarantee insurance, but always add a pinch of compassion to your approach.
From the 5,000-foot view, no Round Rock, Texas property investor can truly afford to forgive rent for months on end and remain profitable. However, these are unprecedented times and everyone is suffering financially. If you can waive rent for your tenants without hurting your ability to put food on the table for your family, do it.
You don’t have to give huge breaks to everyone, but whatever you give, make sure it’s even across the board. For example, some landlords have waived one month’s rent, while others have forgiven up to three months.
Do whatever you can for your tenants. If you own just one small apartment building in Round Rock with only a few units, give your tenants any break you can afford.
The way you handle late and unpaid rent could get you in trouble if you’re not careful. One minute the law could change and you could make some costly mistakes. Familiarize yourself with the current federal and state protections for tenants before taking any action for unpaid rent.
The official Round Rock government website is another great source of information pertaining to city and state orders.
Staying up-to-date with all proposed changes and even pending lawsuits is the best way to protect yourself during this crisis. For example, a rental company in Fort Worth filed a lawsuit to end the moratorium on rent. The company is arguing that the moratorium prevents access to due process in the Texas court system.
Since federal law is higher than state law, if the state of Texas ends the moratorium, it may not be legal since the CARES act comes from a federal mandate. Be vigilant with the information you receive, especially from other Round Rock landlords.
Most tenants will be happy to agree to a payment plan for missed rent, especially when they’re experiencing financial hardship. You can work out an arrangement with tenants even before they find a replacement source of income, and in some cases, connect them with rental assistance or emergency rental assistance programs. For tenants who don’t yet have a new source of income, negotiate a tentative agreement for repayment based on the job they expect to secure when the economy reopens, while clearly outlining expectations for returning to normal rent and paying rent on time after any agreed grace period.
Call your tenants personally to let them know you’d like to work with them rather than immediately moving toward eviction, which is often governed by state landlord-tenant laws. Many landlords rely solely on letters, emails, or notices when collecting rent, but a personal call can be far more effective. Reaching out directly shows that you value clear communication, helps maintain accurate payment records, and encourages cooperation on resolving late payments. It also allows you to discuss practical options, such as scheduling payments or continuing to rent online, making it easier for tenants to meet their obligations.
If you don’t already have rental loss insurance, it’s probably too late to pick up a policy for a reasonable amount of money. The next best thing you can do is report lost income on your tax return.
There are already existing deductions for real estate losses that should apply to losses caused by the coronavirus situation. If you’re not 100% sure whether you can deduct your rental income losses, talk to a CPA or tax professional.
Your tenants may not know they have options for getting financial relief from the government and non-profit organizations. Send your tenants a list of available COVID-19 financial assistance options in Texas that includes information on:
Some of your tenants would greatly appreciate a list of all food banks in Round Rock and adjacent areas like Austin. Most of your tenants have probably never needed to use a food bank before this crisis.
Along with a list of local food banks, provide a list of programs your tenants might qualify for like food stamps and unemployment. These are obvious programs, but sometimes people forget about the obvious when they’re stressed.
If you’re struggling with your landlord duties and want someone to handle everything for you, Green Residential can help. Our team of professional property management experts will handle all your landlord duties from tenant screening to rent collection and evictions.
Contact us today for more information about how Green Residential can help you and your tenants during this worldwide crisis.
TREC Broker License # 9001367
CALL US