Should You Offer A Rent-Deferral Option Due To The Coronavirus?

By Danielle Wirsansky on May 1, 2020

The Coronavirus has been a pandemic like none other, or that the world has experienced in a very long time. It has hit people hard where it hurts: emotionally, economically, medically, and financially. Unemployment has hit the roof, which has left many people financially strapped.

As a landlord, you may be wondering if and how your tenants are going to be able to pay their rent. It can be scary because, without that money, you will be left in a tight spot too. For many people, their job as a landlord is their job. It is not like you can afford to go without payment as well. Obviously, evicting people during a pandemic is not the best path for you or your tenants. So what alternative can you find when you have tenants who can’t pay their rent?

Many landlords are searching for a solution. The one many are landing on is to offer a rent-deferral option. According to Cire Magazine, rent deferment is when “the landlord can defer a portion of the tenant’s rent, but would require them to repay the rent deferred at a later time, either in a lump sum or by increasing subsequent payments.”

You may be wondering, should you offer a rent-deferral option due to the coronavirus? The short answer is yes. Read on to learn why the best option during this pandemic is to offer your tenants a rent-deferral option.

Creates Loyalty & Good Will

By offering your tenants a rent deferment, you will help to create loyalty and goodwill amongst those living at your properties. It is not as if your tenants do not want to pay their rent or were maliciously planning not to. They simply cannot pay. No one ever expects a disaster to strike, especially one that lasts as long as this pandemic has and will continue to. Nor do they expect to lose their jobs when they could be working—if only they could leave their apartments.

But with most states enforcing shutdowns of all non-essential businesses, the mass layoffs of employees by cash-strapped companies, state unemployment resources going haywire from the huge influx of new applicants, and the lack of businesses hiring new employees, your tenants may not have any control over their finances at present.

Rent is often the highest bill that a person has to pay per month. With this disaster, they simply may not be able to swing it. By being understanding of this situation and offering a rent deferment, you will create loyalty and goodwill among your tenants. What benefit does this give you?

The loyalty makes your tenant more likely to continue renting from your property, even after the pandemic ends. After you have been so understanding and treated them so well in their time of need, why wouldn’t they renew their lease? This gets you continued cash flow even after the current lease is up, when your tenant has gotten things back on track and can afford to pay. They will also most likely sing your praises to others, landing you potential new tenants in the future. A good and understanding landlord definitely helps a property’s reputation.

Deferring your tenants’ rent payments will also bring about goodwill. The benefit of goodwill? Your tenants are more likely to pay you back. Landlords that are strict, rude, or uncaring about the financial situation that the pandemic has put their tenants in create resentful tenants that will be reticent about giving their hard-earned and stretched dollar to someone who was callous towards them.

Deferred payments do not mean you will not get paid, just that your payment will come later, so do not alienate your tenants into refusing to pay and badmouthing you for your behavior. Loyalty and goodwill can sometimes go a long way.

Partial Payments

As just stated, deferred rent does not mean that your tenants get a free pass and you will never be paid. It just means that they will pay less until the crisis is averted or they can get back on their feet. You will still receive your full payment. And in the meantime, even a partial payment can be enough to help you get by so that you are not financially struggling too.

Photo by Florencia Potter from Pexels

Any payment is better than no payment, right? Spread the wealth and help everyone, you and your tenants included, make it to the finish line of this pandemic. Only you can decide what is right for you, but you definitely want to do the right thing for you and your tenants. Offering a rent-deferral option due to the coronavirus may not be ideal, but it may be the best thing you can do for the long run

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