As developments on the Coronavirus eviction moratorium continue to unfold, so do concerns of landlords impacted by the economic fallout of the COVID-19 pandemic. It is important for rental homeowners to understand what is covered under the eviction ban so they can take the right action when it comes to dealing with their renters.
At least 27 states, including California and Washington, have instituted statewide eviction bans over nonpayment of rent by tenants affected by COVID-19. Under this ban, landlords cannot evict tenants who are in default due to financial difficulties caused by the Coronavirus crisis.
Proof of impact
Tenants who are unable to pay rent need to provide proper documentation that shows their financial difficulties are caused by the impacts of the Coronavirus emergency situation. Those who can show proof of hardship can potentially benefit from government relief efforts and deferred rent payments. Landlords whose tenants ask for deferred payment must ask them to present such documentation.
Recovering rent due
While renters are protected from eviction during the Coronavirus crisis, they still have to pay the rent due in time. According to the California Eviction Moratorium, renters are encouraged to explain their circumstances to their landlord and discuss how much of the rent they are able or not able to pay. They are also urged to pay as much as they can. It is therefore beneficial for both landlords and tenants to be clear about their expectations on each other, especially with regards to the agreements on deferred payment.
Extended tax payments
The filing and paying of federal income taxes have been extended to July 15, 2020. While landlords can still hold onto some money and cover urgent expenses, they must ensure they have the resources to cover their taxes before payment is due. They can also write off some rental property operating expenses such as maintenance costs and property management fees. More information can be found on the official IRS website.
Government aid
The US government passed the Coronavirus Aid, Relief, and Economic Security or CARES Act in March to provide over $2 trillion economic relief package to the American people in the wake of the pandemic.
Through the CARES Act, landlords with federally-backed mortgage loans who are experiencing financial difficulties due to the Coronavirus crisis may request a forbearance on their obligations for up to 90 days. The Department of Housing and Urban Development also announced last March 20 a 60-day moratorium on foreclosures covering all such mortgages.
With forbearance, multifamily property owners are spared from accrued interest or fees when they pause their mortgage payments due to hardship. This would be a big help for landlords who are not receiving rent from tenants who may have gotten sick or have lost their business or their jobs because of the virus.
Exploring mortgage options
Many property owners depend on their rental income to make their own payments for mortgage, property taxes, and other costs of homeownership. Hence, it poses many problems for them when their renters fail to pay rent.
Homeowners whose mortgages are not federally-backed can talk to their lending bank or financial institution to request for deferred mortgage payments or extended payment due date. They can also inquire at their state or local government offices for any relief that may be available to help tide them over.
Crucial landlord concerns
Apart from the eviction ban and other restrictions heaped on rental property owners during the Coronavirus pandemic, there is also an acute concern about the viability of their real estate investments.
Given the shelter-in-place orders, many landlords are concerned about finding tenants, conducting showings, and collecting rent, to name a few. Those in short term rentals may also face the same dilemma as they shift to long-term because of massive cancelations by short-term travelers who are compelled to stay put. It is to the landlords’ best interest to have their rental homes managed by a reliable property management firm that will continue to work with them even during difficult times like these.
PropTech companies, such as Onerent’s contactless rentals process, have leveled up their digital services to continue serving the rental needs of both landlords and tenants despite restrictions in people’s mobility. Contactless rentals can allow landlords to sign-up and lease their properties even as they observe shelter-in-place orders. Renters can also do everything online—from viewing listings, Virtual Tours, applications, lease signing, rent payment, even maintenance requests.
It would be anyone’s guess when the Coronavirus crisis dies down. With millions of people losing jobs and many countries locking down to stem the spread of the virus, it’s even harder to predict when the economy would get back on its feet. But housing is a basic need that people cannot do without, so home rentals will remain in business despite difficult situations like a pandemic.
Choosing the right property manager resilient in any environment would then be the most crucial decision any real estate investor can make at this time of crisis, as it will spell the fate of their investment now and in the long-term.
As the moratorium’s coverage and span vary by state or city, landlords need to get the latest updates from their respective local governments. Other than that, here are some key points they can keep in mind.
Obligation to pay rent remains
While California has authorized its local governments to pause evictions until the end of May, it does not excuse all renters from their obligation to pay rent. The eviction ban applies only to tenants who have lost their jobs, have become ill, or are caring for loved ones afflicted with the virus. Meanwhile, renters who are not affected are still obligated to pay their rent.
This article has been contributed by our friends at Onerent.