Although it was designed to assist tenants, the national eviction moratorium, including all of its extensions, has been devastating for landlords. While renters across the country have been skipping out on rent for more than a year, property owners have been on the hook for paying their mortgages the entire time.
By the time the Texas Supreme Court ruled the moratorium unconstitutional, the damage was done. Landlords were already out tens of thousands of dollars in rental income, while still being required to pay out of pocket for repairs, maintenance, and even utilities in some cases.
Many Houston landlords have a long road to recovery ahead of them. Others have already cut their losses by selling their investment properties. Those who can afford to take some losses are hanging on, but fear another, more permanent moratorium is just around the corner.
Evictions in Texas have resumed
Evictions have been legal in Texas since February 26, 2021, but the courts are backed up with cases. Despite evictions resuming, many landlords are still dealing with tenants who aren’t paying rent. Many are wondering if they should try to help their tenants by forgiving rent or cutting a deal. Evictions are costly and time-consuming, and it will take months to get a case heard.
Should you help your tenants who can’t pay rent? In most situations, its unwise to help a tenant who hasn’t been paying rent. If you’re considering cutting your tenant some slack, consider the following points before you amend their lease.
1. Texas and Houston have rent relief programs for tenants
Have your tenants taken advantage of rent relief programs? Before cutting any deals, talk to your tenant about rent relief programs and do what you can to help them apply. Some programs help with rent and utilities.
Give your tenant the following resources to apply for rent relief:
- The Texas Rent Relief Program
- The Houston-Harris County Emergency Rental Assistance Program
- Various national rental assistance programs
Some rental assistance programs require both the tenant and landlord to apply, so make sure you fill out your portion of the paperwork where necessary.
If your tenant doesn’t qualify for any of the rent relief programs, think long and hard before providing financial assistance. If your tenant has nowhere to go and no source of income lined up, any help you provide will only postpone their inevitable eviction.
If you really want to help, it might be better to offer your tenant financial assistance in the form of food and household necessities rather than rent forgiveness. If they’re going to get evicted anyway, helping them financially will be like throwing money down the drain. However, buying your tenant food will provide immediate and necessary assistance.
2. Help out, but don’t forgive unpaid rent
Helping tenants is one thing. Completely forgiving unpaid rent is another. You’ll never truly help a tenant when they’re already digging a deep hole. Some tenants can catch up after missing one month of rent. However, when rent hasn’t been paid for more than two months, there’s a slim chance that tenant will ever catch up.
Instead of forgiving unpaid rent, work out a deal that holds your tenant accountable in full or in part. For example, if your tenant is extremely behind on rent by several months to a year or more, you can:
- Ask them to pay any amount of rent each month. If their rent is $1,200 per month, but they can only pay $300, accept that amount. If the alternative is receiving no money, $300 per month will still pay some of your bills.
- Work out a payment plan with your tenants. It doesn’t matter how small their payments are. Don’t let them wiggle out of their financial responsibility. If they don’t pay you, you can’t control that. However, if you give them the option of not paying, you don’t stand a chance at recovering any money.
Doing favors for tenants is okay on occasion, but you don’t want to do favors for tenants when they’re already in a bad situation. Every favor you do for a tenant in a dire situation is a favor that will likely never be returned.
Before forgiving late rent in any amount, make sure you’re okay with never getting that money back. If your tenant is unemployed and doesn’t have any job prospects, every dime you discount will essentially be a donation.
3. Leniency can create dependency
Some tenants are extremely appreciative when their landlords cut them a break. These tenants won’t take advantage of their landlords and try hard not to break their word. However, leniency can create dependency.
If you cut your tenants large breaks, they can end up depending on those breaks to last long-term. If you’re not willing to provide long-term breaks, your tenants might feel slighted and this could lead to property damage and/or angry communications.
4. Postponing eviction can cost you thousands of dollars
The longer you wait to file an eviction, the more money you’ll lose. Evictions will take several months at minimum. If you don’t start the process now, you’ll continue to lose rental income each month you wait.
If giving your tenant a break now won’t help long-term, it’s not worth giving them a break. Helping people who can get back on their feet is the only way that help won’t cost you money. For instance, if your tenant just needs an extra month to catch up after landing a new job, they’ll have income to pay rent.
If helping your tenant won’t get them back on their feet, don’t wait to file an eviction lawsuit. Waiting will only increase your debt.
5. Your tenant might not really need help
It’s unfortunate to think that some tenants don’t actually need help, but it’s true. There are plenty of people who have no problem asking for help or pretending they need help when they don’t.
It’s nearly impossible to tell who really needs help and who doesn’t, unless you’re talking with your tenants on a regular basis and you’re familiar with their life story. If you have any doubt about the legitimacy of your tenants’ request for help, err on the side of caution and just say no.
Stressed out from the pandemic? Let us help you manage your properties
The COVID-19 pandemic has been stressful for everyone, and it’s important to have help during these difficult times. If you don’t already have a property manager, Green Residential can help.
Our property management team can help you manage your investment properties and support you where you need it most. We can cover everything from tenant screening and rent collection to maintenance and evictions.