The Supreme Court struck down the CDC’s eviction ban weeks ago, but in some areas, eviction moratoriums still stand. For landlords located in these markets (and for those who can’t wait out a months-long eviction process), the government’s Emergency Rental Assistance program is meant to ease the pain, offering funds to cover unpaid rents and even utilities to non-paying tenants.
Unfortunately, the program has been incredibly slow to move. According to July Treasury Department data, a mere $5.2 billion in ERA funds have been used. That’s just over 10% of the total $46.5 billion available.
Though it’s certainly an improvement over previous months, for struggling landlords, it’s hardly a saving grace. To speed up the process, the Treasury Department even issued guidance for municipalities, asking them to rely on self-attestation of hardship and household income and to estimate past-due balances rather than fully document them. It’s unclear if this has helped accelerate the program (August’s ERA data has yet to be released), but according to an analysis of Census surveys, a whopping 6.1 million households are still behind on the rent.
If you’re one of the many landlords with tenants in this boat -- and ERA funds have yet to come through, you’ll need a strategy to bridge the gap. Here are your options:
1. Work out a payment plan
This is often the best path forward. Sit down and figure out the bare minimum you need from your tenant to stay afloat, and approach them about working out a payment plan while they await assistance.
You might also be able to spread their back-payments out over an extended period of time, getting installments every two to three weeks or so. You can even set it up to coincide with their paycheck schedule.
2. Offer payment alternatives
Think about getting set up with alternative payment providers, like Zelle, Apple Pay, PayPal, or Square. These give the tenant options to pay how and when they can. With Square, they can even use credit cards to stay current. Just keep in mind the fees that may come with this.
3. Find ways to cut your expenses
Do what you can to reduce your overhead during this time. That might mean filing for forbearance on your mortgage (or mortgages), working remotely (instead of renting office space), or pulling back on marketing for the time being.
4. Think about a cash-for-keys approach
Sometimes, cutting your losses is just the only way out. If this feels like the case for you, consider offering cash for keys. You’ll pay the tenant a lump sum, and in exchange, they hand over the keys and move out immediately.
As long as the home is in good condition, you should be able to rent it out and recoup some of that money quickly. Make sure to be super careful in vetting potential tenants, though. (You don’t want to repeat this all over again.)
Depending on where your rental properties are located, evicting non-paying tenants may be an option. Your best bet is to check with your local housing authority to see what protections are in place. Then, if evictions are allowed, get in touch with a local attorney ASAP.
Just remember: Evictions are a time-consuming, tedious process, and they also come with many fees. You’re typically better off exploring other options if at all possible.
The bottom line
ERA funds have been slow to reach landlords. If you’re struggling due to unpaid rents, consider one of the above strategies to stay afloat. You might also want to speak to a financial planner, as they may be able to help you devise other strategies to bridge the gap.