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  • Are you reducing rent for your tenants?

    Of course I'm not going to evict anyone due to loss of income during these unprecedented times. And I'm willing to cut back rent on a case by case basis. But my wife wants to preemptively just lop of 25% off the rent for all 4 tenants regardless if they need it or not. Her thought is that if the tenants have more money, they can spend more money which helps out local economy, blah blah blah. I think doing this would still cover PITI, maybe 95%. As the tightwad of the family, I'm not super open to this idea. But because she's the wife, it's happening. Thoughts? Am I an arsehole or are you on my side and thinking WTF?

  • #2
    Originally posted by burritos View Post
    But my wife wants to preemptively just lop of 25% off the rent for all 4 tenants regardless if they need it or not. Her thought is that if the tenants have more money, they can spend more money which helps out local economy, blah blah blah.
    My question to that would be how come you guys can't be the ones to spend that 25% to help out the local economy? If they really need the money then I doubt that money is going to go to non-essential spending. If anything, they'd probably be more likely to save the money.

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    • #3
      Rentals need to be run as a business not a charity, otherwise you will be taken advantage and end up losing money. Have you seen groceries advertising they'll drop prices by 25%? Many governors have put a moratorium on evictions. Do you see them telling groceries their customers can shop for food for free? We are trying to work out payment plans for the tenants that have lost jobs but you can't give them free housing and stay in business.

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      • #4
        Only have one property (classic accidental long distance landlord situation), but no, we haven't done any discounts. If they asked to pay May's rent late, I'd gladly waive any late fees as a sign of good faith. But at the end of the day, I'm not getting any breaks on my mortgage, insurance, taxes, etc.

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        • #5
          Commercial tenants. For those who have expressed a need, I've allowed for forbearance of part or all of the monthly rent without enforcing a late fee, starting April 1, 2020. Still unsure for how long I will do this. Others have paid rent in full and on time.

          RE is a business, bailout is not your responsibility. Now it can be argued if you have to reduce rent to protect the RE income from vacancy that would of course be your responsibility. That is not what you're describing at least not yet.

          I have not reduced rent but our rent is already relatively attractive for the area. If your rent is relatively high you could consider cutting to prevent vacancy, again in the interest of your RE business. I agree eviction is a bad idea in this environment especially given I suspect finding a new tenant in the middle of all this may be difficult, and the legal system may also be tied up to urgent cases only or unsympathetic to eviction requests in a pandemic.

          Probably best to monitor your market because having a tenant is better than not if the rent ultimately does need modification to prevent vacancy. It will probably be difficult to replace a tenant in this environment especially if rental rates start dropping in your local market and you don't budge.

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          • #6
            Originally posted by CordMcNally View Post

            My question to that would be how come you guys can't be the ones to spend that 25% to help out the local economy? If they really need the money then I doubt that money is going to go to non-essential spending. If anything, they'd probably be more likely to save the money.
            We are. There's only so much food you can throw away before it starts feeling evil.

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            • #7
              Originally posted by EntrepreneurMD View Post
              Commercial tenants. For those who have expressed a need, I've allowed for forbearance of part or all of the monthly rent without enforcing a late fee, starting April 1, 2020. Still unsure for how long I will do this. Others have paid rent in full and on time.

              RE is a business, bailout is not your responsibility. Now it can be argued if you have to reduce rent to protect the RE income from vacancy that would of course be your responsibility. That is not what you're describing at least not yet.

              I have not reduced rent but our rent is already relatively attractive for the area. If your rent is relatively high you could consider cutting to prevent vacancy, again in the interest of your RE business. I agree eviction is a bad idea in this environment especially given I suspect finding a new tenant in the middle of all this may be difficult, and the legal system may also be tied up to urgent cases only or unsympathetic to eviction requests in a pandemic.

              Probably best to monitor your market because having a tenant is better than not if the rent ultimately does need modification to prevent vacancy. It will probably be difficult to replace a tenant in this environment especially if rental rates start dropping in your local market and you don't budge.
              It's a MCOLA area next to a HCOLA area, so we get a lot of spillover premium. Before the pandemic we could get it rented out in a few weeks at asking price that my PM would set.

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              • #8
                Originally posted by burritos View Post
                Of course I'm not going to evict anyone due to loss of income during these unprecedented times.
                not that you could even if you tried right now i thought? another fun part of being a landlord i guess....

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                • #9
                  Originally posted by burritos View Post
                  Of course I'm not going to evict anyone due to loss of income during these unprecedented times. And I'm willing to cut back rent on a case by case basis. But my wife wants to preemptively just lop of 25% off the rent for all 4 tenants regardless if they need it or not. Her thought is that if the tenants have more money, they can spend more money which helps out local economy, blah blah blah. I think doing this would still cover PITI, maybe 95%. As the tightwad of the family, I'm not super open to this idea. But because she's the wife, it's happening. Thoughts? Am I an arsehole or are you on my side and thinking WTF?
                  That makes no sense at all. So you would cut the rent 25% even if the tenants were two ER doctors who are working?

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                  • #10
                    Originally posted by burritos View Post

                    We are. There's only so much food you can throw away before it starts feeling evil.
                    Why would you throw away food right now? Just buy it and donate it to the food bank (or just give the $ directly to the food bank)

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                    • #11
                      For commercial tenants with service based small businesses who are taking a hit right now, yes. Still cash flow +. Do not regard it as charity but as taking care of our customers and prevention of vacancy.
                      For residential tenants will make adjustments on a case by case basis but have not needed to do anything different....just have a few and they work in “essential” industries.

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                      • #12
                        Originally posted by Anne View Post

                        Why would you throw away food right now? Just buy it and donate it to the food bank (or just give the $ directly to the food bank)
                        We've been ordering out a lot. We've had tons of leftovers. Been trying to support the restaurants.

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                        • #13
                          In business, it’s important to keep adequate records. If you don’t wish to deduct charitable contributions, cash works just fine. She can write you a check and simply cash it. If you want, give it all to one tenant, or to the food bank, or maybe a patient that is trying to pay a high deductible for a kid that got sick. It takes work to find folks that need it the most. You as the devoted husband are will to pound the streets to hand out cash she doesn’t need. A 25% across the board discount is a short cut. You are above that. When the cash is gone, ask if she wants to give away more. You role is to keep her happy. Eventually she will stop writing checks and making you hit the streets.
                          Your honor is intact, wtf is wrong with that?

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                          • #14
                            We have not reduced rents for any of our residential tenants. We just kept quiet and all of the tenants are fully paid up.

                            Our market niche is the upper middle market in a HCOL area, with units renting around $5k/month. Our tenants are all white collar professionals. I would assume many are working from home. Some have contacted us, anxious in these uncertain times, wanting to make sure we are willing to extend their leases for another year when they come up for renewal this summer. Typically some of our tenants rent as a transition to trying out the schools and the community. They then end up buying homes, but this year that would be tough to do given the difficulties with shopping for a house and the severe lack of inventory for sale.

                            I am not sure what we would do with a tenant who could not pay rent, perhaps most likely temporarily reduce rent and then set up some kind of payment plan looking forward. I would not forgive any rent out of generosity, only if there were to be a tenant default. If someone was short term unemployed, we would try to work things out. If someone was long term unemployed or permanently working for less income, their best move would likely be to move somewhere much cheaper than their current expensive rental. We always try to communicate well and work together for mutual benefit with any of our tenants.

                            I also think it is crazy that so many people live without an emergency fund. Of course, that is easy to say when you have a high income, but when we were poor we always lived below our means. We always had extra money in the bank. We shared living space with others, we spent half of what we could have spent on rent, living in a shaky neighborhood. We bought hand me down furniture from thrift stores. We even picked up some furniture from the curb. We did whatever we needed to, despite being poor, to have a reserve fund. I don't get it that so many people are so financially irresponsible. Maybe that sounds crass coming from a rich dude. But part of the reason I am where I am today is because of the sacrifices I made along the way. When I worked as a waiter, a bartender, a lawnmower, and as a janitor in a factory, part of the money I made along the way was always saved or invested.

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                            • #15
                              I haven't and don't plan to reduce rents. One is struggling so I accepted a partial payment for April which will be spread out over next 6 months, no interest, no late fee. I will do something similar next month if needed. They have been good tenants and even if I was able to evict I would not do it now but they will eventually need to pay or move on. It isn't fair to my other tenants if I give some a discount. I didn't come from an affluent background, spouse and I were legit poor for decades and didn't spend what we didn't have so I also don't understand why so many to live beyond their means.

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