During these unprecedented times, Virginia Landlords are urged to work with tenants who are unable to pay, to develop a reasonable repayment plan including waiver of late fees — and to update their practices to follow CDC and Virginia Department of Health guidelines, and seek relief with federal stimulus funds.
The RealWealth Network published an article with tips for landlords and property owners facing financial challenges because of tenants impacted by COVID-19 who are unable to pay their rent. Below is a summary, and you can check out the full article on RealWealthNetwork.com.
Tip #1: Look Up Your Local Regulations
Virginia’s Governor Ralph Northam recently announced a number of state and federal protections for renters impacted by COVID-19, including the suspension of new evictions.
Tip #2: Communicate With Your Tenants
It’s likely that many of your tenants will be in touch to let you know they won’t be able to pay rent. Stay in touch with these tenants and work with them to set up payment plans in line with local laws.
Tip #3: Ask for Verification
Make sure your tenants are truly unable to pay the rent. Those who have not had their income impacted by COVID-19 should continue to make payments on time. Tenants should understand that a rent freeze does not equal rent forgiveness, and skipped payments will need to be made up. From a legal perspective, take care to treat all of your tenants equally in this situation.
Tip #4: Ask Tenants to Pay Something
Encourage tenants to pay what they can, even if only a partial payment. When they have income again, you'll be able to prorate out the amount they owe over 6-12 months and add it to their normal monthly rent payment.
Tip #5: Set Up a Payment Plan
If a tenant says they can’t pay their rent this month, and their verification checks out, work with them on a payment plan.
Tip #6: Contact Your Lender
If you're concerned that you won't be able to make enough income due to lost rents, and could default on your mortgage payments, reach out to your lender. Tell them exactly how much rent you’ve lost per property, with a breakdown of your monthly expenses, and let them know how much you’re able to pay every month. They may be willing to lower your monthly payments or provide a low-interest loan to cover the difference. For any property owners that rent to tenants, temporary relief is available for if you default on the loan on your property. There is a 30-day extension on the foreclosure proceeding. You must show written proof within 90 days of the Governor’s declaration of state of emergency end date.
Tip #7: Ask About a Government Loan
If your lender won’t work with you, see if you can qualify for a government loan. For example, SBA Economic Injury Disaster Loans (EIDL) are available for rental property owners in all U.S. states and territories. The loans offer up to $2 million in assistance with 30-year terms and a rate of 3.75%. No payments are required the first year, and there's no prepayment penalty. Funds must be used for working capital needs.
Tip #8: To Fill Vacancies, Go Virtual
Filling vacancies during the season of social distancing is a challenge. Many landlords are doing live virtual tours of their vacant units to get around the problem.