The COVID-19 health crisis hasn't just sickened Americans across the country; it's also cut their income and rendered millions unemployed. As such, many folks are struggling to keep up with their housing payments -- and all of their bills, for that matter. In fact, a large number of mortgage lenders are letting homeowners put their loans in forbearance, where they pause payments temporarily. As such, renters who are out of work are asking for the same courtesy from their landlords.
For large property management companies, it's a reasonable request. Granting leeway to three or four renters in a building with 80 units should not, in theory, result in a major financial strain. But not every rental situation involves a mammoth management company with dozens, or even hundreds, of units under its control.
In 2015, nearly half of all rental units nationwide were owned by individuals -- mom and pop landlords who rely on rental income to pay their own bills. And these are the people who may end up struggling the most in the coming weeks or months if their tenants can't pay up.
Landlords need income, too
Just as regular homeowners are eligible for mortgage relief during the ongoing crisis, so too are mom and pop landlords who can't afford the monthly loan payments on their rental properties without a steady stream of rental income. But for some landlords, that rental income is also what puts food on the table. And while these landlords would, ideally, have access to emergency cash reserves for situations where a tenant bails on rent, not everyone does.
Still, mom and pop landlords may have some options, and tapping their home equity is one of them. Those who need access to immediate cash to cover near-term bills can apply for either a home equity loan or line of credit. The latter option offers more flexibility, and it may be a more suitable choice in a situation that's unpredictable and fluid.
Furthermore, while mom and pop landlords should do everything in their power to work with tenants who can't pay because of the COVID-19 crisis, they can also try negotiating on their own behalf. A tenant who can't fork over his or her usual $1,000 monthly rent may be able to come up with $300. That's something. Landlords can also ask tenants due a stimulus check to put some of that money toward their rent, if possible. Eligible recipients could see as much as a $1,200 lump sum payment in April or May.
Finally, landlords should realize that any rent they're not paid immediately isn't being forgiven indefinitely -- it's just being deferred, so eventually, it should come through. But that may be little consolation when the bills start to pile up.