March 31, 2020
Of utmost importance, we hope you and your family members are in good health. These are perilous times for everyone, so please review the entire email as we want to communicate with you exactly what we are all facing. We have attached this letter as well.
We have team members with 15, 20 or more years of property management experience. None of us have ever encountered this type of situation. We are in unprecedented times regarding tenant rent payments. We have been receiving multiple calls/emails per hour from tenants concerned they will not be able to make payments or simply cannot (and honestly some stating they won’t) make the payment. Note, for those of you outside Central Florida, as of 11:00pm, on Thursday, March 26, Orange County residents are in a ‘stay at home order’ for 2 weeks. Non-essential businesses are now closed. Update: As of Thursday, April 2, all residents of the State of Florida are in a ‘stay at home order’ for 30 days.
We have already communicated with many of you regarding the concern of your tenant at your property or properties. Some of the communication from tenants include:
- “My hours were cut, I don’t think I can pay on time, can you waive the late fees?”
- “I can’t pay now, but I am trying to get a loan and can hopefully pay by the 18th of the month.”
- “We can pay April’s rent, not sure how we will pay May’s rent.”
- “I can’t pay the full month’s rent, but I can part of the rent, will you accept that?”
- “I lost my job, we can’t pay the rent.”
Will your tenant pay April’s rent? We are not 100% sure at this time. We would recommend setting monies aside to ensure you have the funds to cover April’s mortgage payment. Hopefully there will be good news. No property management office has a playbook for this kind of situation. We have dealt with many hurricanes but not a pandemic where the unemployment rate will go from about 3% to 20+% in a matter of weeks. Staying ahead of the curve our office anticipated this communication from tenants and prepared both verbal and written responses weeks ago. The responses prepared are both understanding and helpful in nature with the approach being that the rent still needs to be paid.
So the first hat we are wearing is the tenant's grief counselor. We must be their sounding board on the phone as many are quite emotional and want to vent about their situation. We are then reviewing with them and encouraging them to take advantage of the many opportunities that are out there right now, to obtain a full/part time job or to collect unemployment. Providing links like this: Click here.
After asking the tenant(s) to fill out employment applications we are asking them to immediately contact their county as many of the local counties are providing some assistance. Then we ask the tenant, while reaching out to the county, to please review these many other funding opportunities our office put together. Basically, “This is not a time to be embarrassed tenant, this is the time to act. So act now.”
The following are just some of the ideas we have already passed on to tenants (we have many more depending on the situation) and we are asking each tenant to select at least 3 or 4 and immediately apply for those options:
- First, if the tenant did lose their job, contact the county immediately as some counties are assisting with rent payments (not all local counties are assisting at least at this moment).
- Locate another job or a part-time job (there are companies hiring right now due to the demand: hospitals, grocery stores, Amazon, and many others). But apply now before that job is taken by someone else.
- Delay paying other bills so the rent can be paid. Ask a bank or credit card to delay the payment or request the account be at zero interest for a time period.
- Inform them that others have created GoFundMe accounts which have helped as well as ask friends and/or their sphere of influence to assist them.
- Obtain a loan through a company/organization like: sofi.com, disasterloan.sba.gov/ela
- Ask a parent, uncle, sister or other family member to assist them.
You are our client. To best help you right now we have to be tenant-centric, which means…. Our #1 goal right now is to stabilize your property or properties that you have under our care and to collect April’s rent, and likely future months if this pandemic continues. To some, it might sound harsh that tenants must pay the rent. Our view of this is: Visa, MasterCard or their loan with General Motors might allow a 90 or 180 day zero interest package, but Visa will require their money at some point, so will GM. A property manager's job is to do everything possible to maintain revenue and keep expenses down and to problem solve - that is under normal circumstances. Our view is that this is more important than ever. When the tenant pays rent, we make money, you make money, we then spend money, you then spend money. By everyone doing their part this will keep the US/World economy going.
Let’s be honest, this is an uphill battle right now. Some of the possible scenarios are as follows:
- Payment plan: Pay $X now and $Y by the 15th or the 23rd, etc.
- Payment Plan / Defer a percentage to future months - Pay X% now and pay $Y in upcoming months
- Defer the entire month (which could extend the lease one month)
- Agree to extract monies from the Security Deposit
- Forgive an entire month
- If the Tenant absolutely cannot or will not pay, ask the tenant to vacate
If this is the situation at your property / one of your properties occurs, we will review with you on an individual, case by case basis.
We are going to need to implement some emergency updates to our agreement. We have never done this in the many years of managing properties, but we must implement an annual fee of $149 ($199 for Canadian Landlords due to IRS filings performed yearly on behalf of these landlords)(not a monthly fee) - this fee will be charged to each property’s account on May 8, disbursed from May’s rent. Please note if we are not able to collect April’s rent in full in the next 45 days, this fee will not be charged.
- First we will be waiving late fees for at least this April and this May to ensure those fees do not stand in the way of collecting rent. This will give us an additional negotiating tool with tenants. So no late fees will be charged by our office.
- Other fees like month to month fees may need to be waived in order to receive the full rent. Whatever it takes to collect the rent.
- We are literally spending 75-80% of our day handling the above tenant communication right now with some team members working long additional hours.
- On a daily basis we are now re-qualifying many current tenants similar to the original application process when they applied to be the tenant at your property. By reviewing this information it will help make a determination if the tenant is in a situation where they will indeed need assistance/discount. This includes requesting recent pay stubs, recent bank statements, tax returns, a letter from their employer regarding a layoff, reduced hours, termination, etc. on company letterhead. We will be completing a complete background check on each property where the tenant says they do not have the rent / need assistance.
- We have spoken to our legal counsel who has prepared numerous lease amendment documents to accommodate the numerous uncommon scenarios that will result in modifying a tenant’s lease.
- We will then be reviewing each of these situations with you, our clients.
We have heard from some of our clients regarding the pandemic and how it is affecting real estate.. Some of you are ok with waiving a month’s worth of rent. That might be ok for some owners, but for most owners, and we understand, you need the rent monies each month. We want all of our clients to receive rent monies.
Those properties with leases expiring in the upcoming months.
Under normal circumstances we would be presenting you with our recommendations as it pertains to the lease renewal and rental amount associated with the market. However, at this time, as we navigate through the coronavirus pandemic, we believe our advice should be adjusted (hopefully only temporarily). In the rental climate we are in right now, an on time paying tenant with a strong job is like gold. We feel it is in your best interest to keep the tenant in place at their current rental price and keep rental monies coming in on your property. These are always reviewed individually, but during this time period, they will be put through an additional more extensive review of the tenant’s current job situation.
A property manager will review maintenance requests when reported by a tenant as normal. Important/urgent ones will go through and vendors will handle as normal. But we are cognizant of non-urgent nature maintenance issues. We will review these non-emergency work orders and may not put them through at this time for two reasons:
- For the protection of vendors, so they keep social distancing.
- Also to do our best in assisting you in keeping your expenses down as future rent payments may be in jeopardy.
Finally….we are here for you.
We have over 100 years of experience in our office and now is the time where all of that experience will be so very useful, taking those other experiences in life and in business and applying them to this situation. And if nothing else, we will be working around the clock and doing everything possible to ensure your success. Together, we will get through this. Please bear with us as we need to focus on rent collection and those many difficult phone calls. For all of us, life will be changing during the coming days, weeks and potentially the coming months. Please understand, we do need to control the amount of communication that our office is receiving and disbursing. For important questions, please contact us. Otherwise, please assist us by allowing us to continue working on the most dire situations first as we are handling items on a priority basis right now. Our energy and focus is assisting tenants and owners whose April is in serious jeopardy. If we have not reached out to you yet, we have either not heard from the tenant regarding a potential payment issue or we feel at this time your rent will be likely coming in.
God bless the USA (and the world) and we, like you, hope every day this is over soon. Stay strong.