Understandably, Florida property investors have a number of questions regarding rent collection and the ability to deal with their tenants. Below is the letter we recently sent to our owners. The guidance reflects our understanding of the situation at the time of writing as a property management company in Orlando. It does not constitute legal advice. For updates please check with your local court system and seek the advice of a local real estate attorney if you have questions about your landlord rights during this time.
Dear investors: you will know, Orlando’s economy is ruled largely by tourism and with all of the theme parks closed until further notice, many of our tenants have found themselves unemployed. Many have no hope of another paycheck until June/July (assuming they get their old jobs back). This presents a new and historic challenge for us as an Orlando property management company when it comes to rent collection. We are still in the process of pulling in rents for the month of April and this has pre-occupied us over the last two weeks.
I want to try and answer some of the questions that I think you may have:
Did my tenant pay rent?
The quickest way to see how much rent has been collected to date will be to examine your monthly statement. This will show you where we stand at the time of reconciliation. If you have received less than the full amount, there may or may not be plans for a second installment, and we will try to connect with you in due course.
If you’re seeing a full rent payment, congrats. This may mean that your tenant still has a job, but equally it may mean that they found sufficient funds for this month (we locked down mid-pay period), but they may still struggle in the months ahead.
If your tenant has paid zero rent, these are the cases we are focussed on. Such cases present a significant challenge but our focus remains to collect rent where possible. We are asking for proof of work status where possible and also asking what sources they have been contacting for assistance.
What about the stimulus checks?
Soon, hopefully. No sign of anything at the time of writing – and we expect some tenants will opt for putting food on the table before paying rent. With that said, we will be asking for that money – and we have also directed tenants to various places that they may seek assistance, such as unemployment, charitable assistance etc. Unfortunately, many of these systems have also become overwhelmed and there’s no telling when the assistance might actually arrive.
So what are my choices?
Broadly speaking, you have 4 options:
1. Forgive (permanently forfeit) rent for a specific period (say, one month to start);
2. Split rent for a specified period of time (say, 50/50 or 70/30 etc.);
3. Demand full rent and arrange an extended payment plan (understand that some tenants will never catch up or follow through with their agreements once they become more than 2-3 months delinquent even where the agreement is in writing.)
4. Terminate lease if requested (or non-renew if lease expires). Some tenants may ask to have their leases terminated as the months go on. We can help accomplish this, however expect the property to remain empty for a period of time in this climate should that occur. Some experts believe a tenanted property may be a better bet than leaving it empty. The choice will be yours.
These are the main options and success will depend largely on tenant’s willingness and ability to comply. We will be working with each tenant on an individual basis to come up with the option that we think will produce the best result.
Can we evict?
Not at the time of writing. The courts are all closed and in any case, there has been a moratorium on most evictions. If you have a government backed loan, you may still be unable to evict even once the courts reopen. (If you have such a loan and haven’t already let us know, please do.) There may be an ability to send some tenants to collections where we feel they are taking advantage of the situation – and we will be taking appropriate action where we suspect foul play. In cases were leases expire, we will consider going month-to-month where possible giving us more time to assess the tenant’s ability to perform.
Should we sell?
This might seem like a good idea, however as you might imagine, relatively few people are buying or selling at the moment. Most are in a “wait and see” holding pattern.
What’s going to happen to the housing market now?
Every market is different but I think we are all expecting home prices to drop in the short term, but time will tell. Some think we have a huge crash coming, others feel that If we come out of this relatively unscathed in a month or two, then recovery could be quick. I’m not an economist and we will have a better idea how this will pan out for the Orlando housing market as time goes on.
Where does that leave us?
We are all in a unique situation for the time being, unable to influence events except through conversation and skilled negotiation. We have no teeth to enforce rent payments, however we are pressuring for rent as we normally would in the belief that something is better than nothing.
So what’s next?
As we move forward with our process, we will reach out to those of you who are experiencing problems to collect your thoughts. Please be patient with us if we seem slower than usual to respond, but we are having to create new legal documents and consult widely within several industries to navigate this new ground. Organizing different payment strategies for different tenants is going to be a challenge but rest assured that we continue to have your best interests at heart. Always.
Stay safe, stay engaged, there will soon be light at the end of the tunnel~!