Are you struggling to get your tenants to pay rent on time? Millions of landlords are facing the same situation across the country.
As of January 2021, an estimated 18% of renters in the United States were behind on rent, with unpaid rent totaling an astounding $57.3 billion.
Unfortunately, it appears that some tenants are taking advantage of the eviction moratorium when they don’t truly qualify for protection under the CDC’s eviction moratorium. However, it doesn’t make much difference to you whether a renter is protected or not; if they’re not paying rent, you’re losing income.
When you’re not getting rental income, you have to pay your mortgage out of pocket. And if you don’t have an extra source of income, you may well fear your property could go into foreclosure.
To avoid that result and get some rental income instead, try these three strategies.
1. Remind tenants of their obligation to pay rent in any amount
Even though you can’t evict tenants who are experiencing financial hardship due to the COVID-19 pandemic, they are still legally obligated to pay rent in any amount possible. If a tenant is working only part time and can’t afford to pay rent in full, they remain obligated to pay whatever they can afford.
Some tenants don’t know about this obligation, so you might have to inform them. If you happen to have a property management company working for you, find out whether they’ve informed your tenants about that obligation to pay rent in any feasible amount.
If you’ve hired a reputable company, you can be confident that your tenants have been treated with respect during difficult communications. For example, Green Residential employs exceptional property managers in the greater Houston area. The company has a strong reputation among tenants and property owners because their team treats tenants with respect in all situations.
2. Rent sections of land to additional tenants
Although you’re not allowed to evict tenants who claim they’re not paying rent because of a COVID-19 hardship, you might be able to add another renter to the property. Check with a lawyer before trying this strategy, of course; state laws vary, and your lease agreement might not allow you to do this.
Do you have acreage? Start renting out sections of land
Perhaps you can’t evict your current tenant, but you might be able to find a new one if your property is large enough to accommodate two renters in separate areas.
This idea won’t work in a city because you can’t just prevail upon another renter to move into your current tenant’s home. If you have a property that is at least 5 acres, however, you might be able to rent a portion of the land to another tenant in a separate structure.
What is the potential for renting a section of land to someone with a trailer or a 5th wheel? Or, if it’s summer time, local ordinances may allow temporary tent camping.
Another option is to build a tiny home on a small trailer, park it on the other side of your property, and rent that structure to an additional tenant. Some tiny homes are treated as RVs, though, and most tiny homes and RVs are not legal to live in as permanent residences.
Before renting your land, consult an attorney. You don’t want to violate your current tenant’s rights. If your lease gives them access to the entire property, you may not be able to take on another tenant until your longtime tenant moves out.
If that’s the case, you could offer to forgive all unpaid rent if your current tenant agrees to enter into a new lease that specifies they have access only to a specific and limited portion of the land. This could free up the rest of your property to start generating income.
3. Amend the lease to allow subletting
As a last resort, ask your tenant if they know anyone who needs a place to live and has a stable income. Let your current renter know you’re willing to allow them to sublet a room to someone, provided the rent is paid directly to you.
In exchange, you would consider forgiving past due rent or allowing the tenant to adopt a pet without paying a deposit, or any other concession you believe might appeal to them.
Negotiating with your tenants isn’t a healthy habit to get into, but the moratorium is beyond your control and there’s no telling how many more extensions could be made to it.
Still can’t get your tenants to pay rent? Get creative
If all else fails, think outside the box. Work on generating income outside of your investment properties.
The situation is clearly not fair and you shouldn’t have to work harder just to pay your mortgage. But if you want to prevent your property from falling into foreclosure, creative solutions such as those above may be in order.
0 Comments