The COVID-19 pandemic has severely impacted landlords and tenants alike. Within the space of a few weeks, millions have lost their jobs as the country went into lockdown. The knock-on effect on the property management industry was that renters were unable to pay full rent. Of course, federal stimulus packages have helped many people make ends meet. But collecting rent during COVID-19 remains a top priority for landlords.
The COVID-19 pandemic has impacted landlords in many other ways. Social distancing means that everyone must keep physical contact to a minimum. So, the traditional methods of collecting rent are no longer viable in a COVID-19 era. For example, landlords who collect rent checks must drive to the post office and then to the bank to deposit the checks.
What are the best ways to collect rent during the COVID-19 pandemic? What are the best alternatives to paper checks post-COVID-19?
How COVID-19 Pandemic Has Affected Rent Collection
According to housing statistics, over 43 million people in the U.S. rent their homes. That means there are more renters in the country than at any other time during the last 50 years. With record unemployment and workers on furlough (see here if you’re job-hunting), it’s a worrying time for landlords.
Some news reports say that over 20% of tenants couldn't pay July rent by the first week of August. However, by the end of the month, about 90% had paid their rent in full. However, most tenants who made late payments in August are expected to miss their next payment.
After the end of the CARES Act eviction moratorium in July, the future for tenants was grim. Then, at the start of September, a full ban on evictions through 2020 came into force. This ban means that landlords can't evict tenants for not paying rent due to the COVID-19 pandemic. However, renters still have to pay landlords all the rent they are due.
How Landlords Can Collect Rent During the COVID-19 Pandemic
Let’s look at three ways to keep up with rent collection, despite the challenges that the coronavirus is causing.
1. Communicate Proactively with Tenants
Landlords must be proactive when it comes to communicating with tenants during COVID-19. If a tenant is late with payments, reach out to them. Very often, renters are hesitant to contact landlords because of embarrassment or fear of getting an angry response.
One rent collection service found that tenants are more willing to share employment information if landlords contact them. Tenants are also more likely to pay rent when they feel that landlords respect and understand them. Remember that open communication is the first step to coming up with solutions.
2. Work out a Payment Plan with Tenants
Many tenants are unable to pay full rent due to the coronavirus. Coming up with a payment plan can help landlords collect rent during the current public health crisis. The Department of Housing and Urban Development (HUD) suggests that landlords show flexibility and work out custom payment plans for at-risk tenants.
Any payment plan should clearly state the amount due, when it’s due, and the consequences of not paying rent. Remember to commit to writing any rent payment plans . Also, communicate regularly with tenants who are having difficulty paying rent.
3. Use an online rent collection app
Because of COVID-19 restrictions, offering tenants a way to pay rent online is an excellent solution. Property management apps allow landlords to collect rent online, manage leases, communicate with tenants, and accept maintenance requests—all remotely. Also, rent collection apps make it easier to see a tenant’s payment status.
Tenants can also set up automatic scheduled payments or send partial rent payments. They can also pay rent by debit card, credit card, or eCheck.
Many studies show that tenants who pay rent online are more likely to pay rent on time than those who pay by check. In a post-COVID-19 world, paying rent online may become the ‘new norm.’
Collecting Rent During the COVID-19 Pandemic — In Conclusion
Landlords and tenants face challenging times due to the coronavirus. Landlords need to continue collecting rent during the pandemic—after all, rent payments are probably your primary income source.
Ways to collect rent during COVID-19 include communication proactively with tenants, working out payment plans, and using online property management apps.