Here are six solutions that are potentially beneficial for you and your tenant as you recover from the COVID-19 pandemic. When implementing these strategies, it is crucial to be proactive before more legislation or ordinances are implemented. The best defense is a good offense when it comes to collecting rent, so go on the offense and try to work things through with your tenant before further barriers are added.
Extend Your Lease Period
One thing you can leverage through this period if you have an excellent renter, and you can see that their financial situation is a temporary one is to use this opportunity to give some short-term relief in exchange for a lease extension. If your tenant is currently renting on a month to month basis, you could move to a six month or year-long lease period. The longer you extend somebody in a property, the better return you receive on your cost of bringing them in.
Offer Alternative Payment Methods or Payment Schedules
Offering alternative payment methods or payment schedules is often a perfect solution for tenants. Today, 72% of landlords are still collecting rent by money order or check, and while that does work, it is becoming much harder for landlords and tenants trying to keep their distance. A rent collection platform like PayRent enables you to collect directly from banks through ACH transfers and allow your tenants to pay rent with a credit card.
While paying rent with a credit card is not always the best option for your renters because there are fees that just can’t be avoided associated with them, it still provides added tenant flexibility. PayRent does allow landlords to pass those fees onto the tenants to not encroach on your ability to collect the amount that you expect for rent. Nonetheless, allowing a tenant to float a few months of rent on a credit card or two, really can provide some relief and the chance to recover.
Another strategy that PayRent facilitates is setting up weekly payment schedules. It is much more convenient to set up weekly payments online than to collect a weekly check. Set up a payment schedule with your tenants, and then sit back as they log in to their account weekly and make their payments online in real-time.
Renegotiate tenant improvement commitments or allowances
Another idea is to revisit tenant improvements that you have made commitments to or allowances that you may have given to tenants. All of these things are open to negotiation. You may be able to offer some rent relief in exchange for some relief around some of the improvements or commitments that you have made regarding the property.
Amortize Deferred rent over the term of the lease
Currently, there are several ordinances that set or limit your tenant’s payback period depending upon the city that you’re in. It can range from 6 to 18 months. This is one of those situations where you want to be proactive and solidify agreements now before legislation further limits your ability to collect owed rent in a timely manner.
Remove or Adjust Security Deposits
Remember that move-in costs are generally high to protect you, the landlord in the case of unpaid rent or property damage. Allow those funds to fulfill their intended purpose. To help recoup some of the capital from lost rent, you can dig into your tenants’ security deposits.
Remove or renegotiate lease-to-own Provisions.
For landlords who are holding lease-to-own contacts, eliminating those is a possibility in exchange for rent relief. Another option is to potentially increase the purchase price or build the lost rent into the future purchase price with an interest rate associated.