Who CARES About Getting a Good Tenant?
“…what we do in life… echoes in eternity.”
(Maximus (Russell Crowe) in Gladiator)
It’s been an unsettling time to be in the rental home game for the past year and a half.
Many people (including tenants) lost their jobs or had their incomes affected negatively. This made many tenants late on rent and on the verge of eviction. To stop this, politicians signed the CARES Act (which included an eviction moratorium) which has made it hard (and in some cases, illegal) to evict non-paying tenants. Without rent, landlords are forced to make payments themselves which has put them in a cash-crunch. It’s been a tough season for all involved.
No one likes evictions. Tenants, landlords, politicians, property managers- it’s failure on some level. But in the world we live in, someone has to pay and be paid for services to continue; we don’t live in utopia. So as eviction court cases pile up at the court house (evictions can be filed, just not judged and acted upon) and rent balances swell, what can be done at this point?
The CARES Act also has provided states with billions of dollars in rental assistance. This means that tenants can apply and get free rent and utility money. We’ve had tenants get up to 6 months in funds that was sent to us directly to cover past due and future rents. All the tenants needed to do was to call 211 in the Charlotte-area to be directed to the best resource based on their situation. It seems relatively simple, though with most massive programs, there were hiccups. But we’ve seen it work.
However, we also have tenants who choose not to avail themselves of these programs for whatever reason. They might not trust the government, are confused by the information asked for, or just don’t want to do the legwork needed to secure the assistance. The situation can seem hopeless and they may feel they might as well ride the process out as the media and politicians give messages that evictions will be blocked indefinitely. They might as well save (or spend) their money now and worry about their housing situation later when they are forced to.
Landlords do not want to be in a position hoping that third parties will “do the right thing” someday, while they are left holding things together on the back end.
Going forward, that has placed a greater premium on tenant screening. The bar keeps moving as we’ve never experienced a pandemic before which had whole industries in the economy largely shut down. This has affected credit scores, bad debt, and recorded evictions from normally reliable people. So what we see on paper (through credit, criminal, income, and landlord screenings) might not be indicative of future performance.
The important thing to remember is that whoever is placed into a rental house now is with you for the foreseeable future. When the eviction moratorium is lifted, there is going to be a huge backlog of cases. Getting an eviction tried and acted upon may take a really long time. Securing the right tenants takes on an added degree of importance because they will be with you for a while.
I’d proceed with placing new tenants very methodically. It might not be a good time to cut corners (“Half the security deposit? Sure, we’ll take that.”) or roll the dice on ambiguous applications for a quick tenant placement. A bad decision can last a long time and be very costly in this environment.
It is imperative to really CARE about getting a good tenant presently. Get all the information, take your time, and make an educated determination. It’s more important now than ever- tenant decisions made today can reverberate for a long time.
Happy Landlording!
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Lost in Translation: Landlords Are Not “Pants”
“OK… but do we rock?”
(Opus from “Bloom County” after reading his band’s confusing review in Rolling Stone)
I remember back when I was in college and I had the opportunity to be a student-athlete abroad in Merrie Olde England. I thought the new scenery shouldn’t be that hard to figure out being they spoke English over there. But I didn’t account for some of their slang that as a “Yankee” I wasn’t privy to.
I was on the American football team and we had a pretty mediocre record. In our defense, we only had about 20 guys, so most of us were playing offense, defense, and special teams. We had some good players so we were able to keep the score close for most games (and win some of them), but exhaustion would set in during the fourth quarter due to our lack of depth; this would sometimes doom us.
Very few fans (aka only our friends) showed up for these fake “football” games (aka not soccer). So I really didn’t know if anyone cared or thought we were any good. However, someone pointed out that an article had been written about the team, so I was anxious to read it (was I mentioned in it???). I was in the computer lab later that day and found it.
Now, I’m not sure if the writer was trying to appear impartial, but I had a hard time figuring out what his take on us was. And then I wasn’t sure if he even understood what he was watching, as he used some soccer references to describe the action. He listed some good things about us and then list some bad things, and then vice-versa. Finally, at the end of the article, he gave his summation. “All in all, the Staffordshire Stallions are pants.”
“Pants”?? What the heck does that mean? I was at a loss. Do we rock? That’s what I wanted to know.
So I nudged the guy beside me and asked him what “pants” meant. He looked at me for a second, noticed my American baseball cap, and had pity. He said, ‘It means rubbish, complete rubbish.” Ouch.
For us to have a .500 record and beat some much bigger schools with 60+ players on their sidelines, I wasn’t sure how fair his assessment was. Some of our 20 guys hadn’t really even played before and were pressed into action. The article really could have been about how well we were doing despite the odds being stacked against us every game (and then how some “American saviors” were making their mark…).
I bring up this story because it reminds me of negative press landlords are taking for being against the eviction moratorium (not legally being allowed to file for eviction for non-payment) imposed now during COVID-19. The plight of affected tenants has been well-documented and no one wants this economic devastation. But to make landlords the villains is ridiculous.
I “know a friend” who manages a property where the tenant has not made a rental payment in 2020. My friend’s client still needs to make a mortgage payment, insurance, and property taxes every month without any offsetting revenue coming in. He provides a service where an agreement was made to pay him for it, and he is not getting it. And he has nowhere to go for help.
I’m not sure if any of our property management clients are multi-millionaires who are immune if no rent comes in on their rental houses. I get calls and e-mails from concerned owners when a tenant is late in paying or a repair seems on the high side. Most need the rents to keep their real estate investments afloat. I don’t know of any that are sitting on their yacht in the Mediterranean who rarely need to check a bank account!
Some of the criticism probably comes from people who just don’t understand the real estate investment game. On the other hand, I also understand (during tough times especially) that eviction is dirty word and can appear heartless.
But this is a situation that has been lost in translation. Landlords are not “pants” for wanting to receive their rental payments for providing houses for people to live in and making repairs to keep them functional. It makes sense for them to have the option of legal recourse to go to if things are not working out. They rock for trying to keep their obligations up-to-date during tough times.
In summation, the COVID-19 economic situation is “pants”, not landlords (or the 1998-1999 Staffordshire Stallions, for that matter).
Happy Landlording!
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