Consider Giving Your San Antonio Tenants a Rent Break

Why You Should Consider Giving Your San Antonio Tenants a Rent Break

Phil Puccio

Consider Giving Your San Antonio Tenants a Rent Break

Your investment income comes from rent money you collect from your tenants. Until your mortgage is paid off, you aren’t technically making a profit.

However, rent money is still monthly income you can spend on bills like your mortgage, insurance policies, property taxes, repairs, and renovations. If the COVID-19 pandemic is preventing you from getting rental income from your San Antonio tenants, you won’t be able to evict them anytime soon.

The CDC just extended the nationwide eviction moratorium to June 30 and it’s possible we might see another extension after that. The longer you go without rental income, the harder it will be to catch up later.

However, it looks like investors won’t have full control of their properties any time soon. Despite a Texas federal judge’s ruling that the eviction moratorium is unconstitutional and an infringement on property rights, it’s too risky to start evicting tenants with the CDC’s moratorium still in place.

Although the situation may seem bleak, you’re not stuck. You have several options, including offering your tenants a break on rent. If it sounds counterintuitive, read on to learn why giving renters a break could end up saving your investment property.

Partial rent could protect you from foreclosure

Everything depends on your individual circumstances, but it’s possible that accepting partial rent from a tenant might save you from foreclosure. If you can make it work, it’s better than having to apply for another loan.

Normally, you’d have better options. You could evict a non-paying tenant and fill the vacancy with someone who can and will pay the rent. That’s no longer available. Under the eviction moratorium, your only alternative is to accept whatever your tenants are willing to give you, even if it’s nothing.

Right now, your tenants are practically in control of your income. If they can’t pay rent, you have no recourse. If they can pay rent and choose not to, you have no recourse. The only thing you can do to generate a little rental income is to offer people a discount.

When your options are no rental income or partial rental income, you’d be wise to choose the latter if your tenants can pay something. Keep in mind that many tenants might be able to afford the rent and are simply choosing not to pay it because they know they cannot be evicted.

How to get your San Antonio tenants to pay partial rent

You’ll need some smooth conversation skills, an even temper, and great communication to persuade your tenants to pay partial rent. Here are three tips that should help.

1. Ask with genuine concern for the tenants

If you haven’t had a conversation with your tenants about the current situation, maybe it’s time for it. It’s going to be a difficult chat, so approach it with care.

First, ask your tenants if they can pay rent, but are choosing not to. If they admit to this, ask them why.

Some people aren’t paying rent just to see how much they can get away with, others have genuine concerns. Some people are working less than part time, in low-paying jobs, because that’s all they could get.

When you have the conversation with your tenants, make it clear you’re coming from a place of concern for them as well as yourself, and let them know you want to help if at all possible. When the time is right, inform them you’re willing to cut their monthly rent down by 50% or more to accommodate their current situation.

As a side note, you might provide your tenants with local resources aimed at helping San Antonio residents understand their rights and get help through various assistance programs. Be sure to tell them about the new Texas Rent Relief program and encourage them to apply.

If they don’t want to apply, you can apply on their behalf and receive some rental assistance for unpaid rent.

2. Offer incentives for partial rent payments

You’re basically free to offer tenants anything you find reasonable to get them to contribute partial rent. Here are some potential  incentives:

  • They can have a pet without paying a pet deposit.
  • You’ll extend their lease.
  • They can paint the inside of the house.
  • They can start a home-based business if it was formerly rejected or barred.
  • You’ll pay for their local parking pass, if applicable.
  • You’ll provide them with quarters for laundry each week.
  • You’ll cover their Internet bill for the next two months.
  • You’ll pay for landscaping and yard work for the next two months.

Remind your tenant that only COVID-19-related evictions are banned. Any other lease violations could result in a legal eviction. Some tenants may not budge even when they’re offered incentives, but it’s worth a try. You won’t know which way it will go until you talk to them.

3. Stack the deck in your tenant’s favor

Provided your tenant is able to pay partial rent, stack the deck in their favor if they need more convincing. One thing you can do is revise the lease so that the partial rent amount becomes the full rental price of the unit.

For example, if rent is normally $1,200 per month, amend the lease so the regular monthly rent becomes $500 per month (or whatever amount you and your tenant agree to).

If your tenant is holding out and not paying rent by intention, they’ll probably hold off through the entire eviction ban, including any future extensions. There will come a day when they’ll have to pay the piper or get evicted, however, so remind them of this.

Let them know if they faithfully pay the reduced amount of rent, as the lease is amended, they won’t be evicted when the ban ends. You’ll write it into the lease amendment. Face it, you’ll never collect all the past-due rent you’re owned, and evicting your tenant when the ban gets lifted is only going to cost you even more money.

So you’ll take a massive cut from what you should have received each month, but if your tenant isn’t currently paying rent, even partial rent will be an improvement in your fiscal situation. Getting even 25 to 50% of your usual rent could provide enough money to cover your mortgage payments and avoid going into foreclosure.

Need help managing your properties? Green Residential can help

If you feel like you’ve got too much on your plate, you’re certainly not alone. Thousands of investors across the country are facing the same problem. Hiring a property management company can ease the strain.

When you work with Green Residential, our team of experienced property managers will handle all your landlord duties, especially those difficult discussions with tenants about rent.

If you need help, contact us today to learn more. We’d love to help you maintain your properties and keep your tenants during this difficult time.

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