Best Landlord Strategies to Get Through an Eviction MoratoriumSep 17, 2021
There's that situation where you got to be careful because you don't want that tenant, the renter, milking the system a little bit. You don't want them milking the system and not paying rent when they're very, very capable.
Well, and many of them tried to do that. Right. I remember our property management team telling us it first I think it was probably 5% of the rental portfolio would just say, Well, I don't have to pay my rent. And that was never the intent of any of the moratoriums, it was no if you were if you're sick, and you can't go to work, because you've got COVID, or you got laid off, because you're the front desk manager at the Marriott, which just tanked and had to lay you off, then, just like many government programs, its effects were different than its intent.
I want to read a paragraph from the story real quick because this would be extremely frustrating... If you just built new inventory...
"Congress has approved nearly $50 billion to help people pay back rent and avoid eviction. But while in some states and counties that's been working well, in many others, the help hasn't reached the vast majority of renters who need it." - NPR
Because of the way that works, Congress approves the 50 billion. It's sitting there and they allocate that to these different local governments and states who then have to implement it. I bet your jaws are gonna hit the floor that some of the states implemented that better than others. Are you super shocked? Yeah. Right. So what if you're a landlord if you've got some tenants not paying rent? You know, the money is there from the federal government.
In fact, you're paying taxes so that the money is there, but your local government is incompetent and you can't get any of that rental assistance? That's absolutely infuriating. At that point, you're saying, well, then I want to kick these people out. I can't get any of the rental assistance that I know is there. And I mean, that would drive me nuts. I was helping a client before we got on the podcast this morning. He owns a fourplex in Texas, that we developed as a masterplan build for rent community that we did there. And he has two tenants that haven't paid rent in about six weeks. Right? And well, he's gonna be okay. He's understandably annoyed.
Oh, he's fine. He can carry the property for a while.. He's got reserves... working capital set aside, but these tenants haven't paid. So the property manager wisely has a system set up and they refer people over to the Texas Rental Assistance Program. But it's backed up.
They're not really cranking out rent fast, but they are doing it. So your property managers have to be acquainted with these programs that allow for assistance because if somebody legitimately can't pay it, you want to dip into that 50 billion, but you got to distinguish between them and the professional tenant, right? That tenant knows how long they can go without paying rent.
I know our management company did a really good job at trying to get ahead of this as well. And letting people understand that, again, as you'd mentioned earlier, this isn't something that you just don't have to pay your rent, you do have to pay your rent. So they worked out plans with people to pay back some of their rent at a later date. But let them all know, hey, you're still on the hook for all of this rent through the end of your lease. This isn't forgiven debt, but have worked payment plans and stuff with those people.
That's helped to get out ahead of it, rather than just waiting a couple of months and saying, Oh, I haven't received checks for three or four months, chatting with those people and seeing what the real issue is. So again, we don't have the professional. Yeah, versus the person that really does need the help.
When you're looking at buying an investment property, with what's come out, and what we're talking about today, having a good property manager that's going to do the background checks, the credit checks the rental history and understand, what this tenant looks like before they actually sign a contract for that investor or that property. I think that's huge.
Then also understanding the market that you're going into as well. And that's the word we've been talking about. Is it landlord-friendly?