Free Rent

[TravelTime]

This is interesting. Our Chamber of Commerce sent out a letter to encourage property owners to provide free rent to tenants. I know my landlord would never agree.

 

[Ken555]

The only way this would work is if banks also froze mortgages.


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[TravelTime]

The only way this would work is if banks also froze mortgages.


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Yes, I agree. The town is assuming that property owners have a big profit margin on rent and can afford to waive rent for at least a month. I am not sure that one month of free rent will keep someone in business. If they are struggling and business is shut down due to Shelter in Place, they are likely to go bankrupt. In that case, though, the property owner will get zero rent anyway. Our town has a lot of retail businesses so the Shelter in Place is having a quick negative impact.

 

[Ken555]

Yes, I agree. The town is assuming that property owners have a big profit margin on rent and can afford to waive rent for at least a month. I am not sure that one month of free rent will keep someone in business. If they are struggling and business is shut down due to Shelter in Place, they are likely to go bankrupt. In that case, though, the property owner will get zero rent anyway. Our town has a lot of retail businesses so the Shelter in Place is having a quick negative impact.

You are not alone. This is happening everywhere...


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[Sandi Bo]

Every situation is so different. As a retiree, our income hasn't changed. I have house we rent. They are retirees, too. So, I am assuming their income hasn't changed either. Feeling "luckier" than the rest and not planning to change anything, but maybe now I'll reach out a see if there is a need on their part. The house is in Panama City where rents went up 50% after Hurricane Michael. We didn't up the rent then and we fixed the house immediately, it was always inhabitable. And on the renters side of this, they paid the rent, and they did go without power and water for a couple weeks.

On the other hand my son lost his job in February and I'm hoping his landlord gives him a break. We will help him, if he needs it (he keeps saying he's okay, doesn't even want some toilet paper).

I hope my logic is fair and will reassess as we go on.

 

[Timeshare Von]

We have an in-house tenant who pays rent. We have discussed and will continue to collect rent as long as he's working. If he ends up laid off, we will not charge him rent throughout the economic shutdown. Fortunate for him (so long as he's being careful with social distancing & personal hygiene) . . . he's a local/regional truck driver and he's seemingly had more work over the past two weeks than the past two months.

Maybe because he's a single guy and not feeling the pressure to do a self-imposed shelter in place, he's the only driver willing to work right now.

 

[presley]

No one can get evicted here if they don't pay for 2 months. My daughter asked her landlord if she could get out of her lease early since she lost all of her jobs. He told her that the grocery stores are hiring and she should apply there. She told him that even if she worked full time at the grocery store, she wouldn't have enough money to pay the $1250./month rent. She said he looked totally lost and told her to send a detailed email about all the jobs lost, any money she's borrowed, etc and they would take it on a case by case basis. I told her to take the credit ding on breaking the lease since it's a pandemic and a credit ding is the least of her worries. Then, it was announced that she can't be evicted for 2 months anyway.

My other daughter is slated to move in a week or two. Has already signed a lease on the new place. If we are locked down, I told her to just get an attorney to get her out of her new lease and the current landlord can't throw her out. Also told her to just move in here for a couple weeks, but I don't know if that will be allowed if there's a lockdown. All new territory here.

 

[turkel]

I have a renter in my house down south. She is very young and just got laid off. She immediately contacted me that she might have to move. I told her not to worry and we would see how it goes. I don’t need the $500 she pays me BUT I don’t want to teach her life is a free lunch either. I also don’t want her to dig a hole of debt she can’t recover from debating how to best handle this situation.

Spouse and I will not be financially impacted due to the virus (except all the losses in our retirement accounts) our jobs are “essential “ I worry about my son and all those people who will be impacted only time will tell how bad this gets for some.

 

[JohnPaul]

We are retired and own a triplex and live in one unit. Our incoming rent is an important piece of our income. Fortunately our tenants (who are working from home) don’t seem worried about their jobs.

 

[geekette]

Fortunate for him (so long as he's being careful with social distancing & personal hygiene) . . . he's a local/regional truck driver and he's seemingly had more work over the past two weeks than the past two months.

Maybe because he's a single guy and not feeling the pressure to do a self-imposed shelter in place, he's the only driver willing to work right now.

Yes, my brother is a trucker and getting options to change to different routes for more pay and no-touch freight.

Truckers move America's goods, critical services.

 

[geekette]

Also told her to just move in here for a couple weeks, but I don't know if that will be allowed if there's a lockdown. All new territory here.

It's family, the biggest best exception ever.

 

[T-Dot-Traveller]

....I am not sure that one month of free rent will keep someone in business. If they are struggling and business is shut down due to Shelter in Place, they are likely to go bankrupt. In that case, though, the property owner will get zero rent anyway. ....

There is
1) undercapitalized
2) cash flow challenged
3) insolvent or similar .
4 ) bankrupt

bankrupt is a colloquial term as well as a legal term . The legal term in the USA can refer to both
chapter 11 - reorganization / chapter 7 - liquidation - etc.

***********

Hi TravelTime - I know that you as a business owner understand the differences

Business’s around the world will be cash flow challenged - and have to negotiate with their suppliers
(“ I will pay you $5000 today on a 45 day old bill / if you ship $8000 of new product” - while that sounds dodgy -
it could make sense to a supplier who has paid for inventory in their warehouse - but also has aging bills )

some may become temporarily insolvent due to the drop in incoming cash flow - but recover
either through negotiation or through a court filing .

Since so many businesses are in the same boat - communication is very important / so too will prior
examples of good will and respect.

 

[isisdave]

If anyone KNEW how long the business interruption was going to last, landlords might be able to offer a free-rent month. But if he has a mortgage, it's likely he can't afford much more than that.

But if the interruption continues, there's no point in throwing out the current tenant ... he won't be renting that space until the business situation encourages someone new. The tenant-in-place can recover more quickly, as he doesn't have to do any tenant improvements, and in fact might be able to stumble along for a few months.

As they say, my crystal ball is in the shop. I'd say the best you might do is negotiate. Maybe half-rent for two months, some of it payable "later." See what kind of debt the tenant is willing to take on to try to continue. And of course it depends on the kind of business ... a restaurant that can do take-out and delivery is one thing, a "non-essential" one not permitted to open is another.