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what's up everybody it's official we have a tenant who left because of the pandemic and now we're gonna go look at the house and yeah i'm wearing a luigi shirt and that's just what we're gonna have to deal with i rented this socal four-bedroom two-bath house to an amazing tenant back in january just before the pandemic well this tenant was self-employed and today he's gone in this video i'm going to cover three things while explaining what happened with the old tenant and the house by the way this is also good for both landlords and tenants because if you're a tenant well you might want to try to make one of these options work for you we're going to cover one how to deal with tenants not paying rent how to rent during a pandemic and number three how to deal with non-responsive tenants number one how to deal with tenants not paying rent this is the hard thing and that's what we had to deal with on this house you have three options when a tenant isn't paying rent number one the best choice this is sparkling water okay see look zero calories number one the best choice find support for the tenants make sure the tenant has all possible housing assistance and here's what happened with this house so here's basically the gist of what ended up happening the tenant was self-employed the pandemic hit and around april the tenant said hey starting may 1st i can't make my payments anymore i barely got my money together for april 1st and i can't make payments anymore as of may 1st the tenant at the time had no idea that the 600 per week boost would apply to self-employed individuals so we worked with the tenant to get him on unemployment in california and he got it to take advantage of the retroactive boost and he got retroactive pay he got the 600 per week well guess what happened you know over the last couple months there was so much uncertainty for his business and the possible continuation or not continuation of the boost that he decided i can't live in california anymore i'm moving so he broke his lease and is now moving to idaho so obviously in this case we worked with the tenant on getting them on the 600 boost that they weren't aware of in april but keep this in mind localities throughout the country are offering a lot of rental assistance programs for example los angeles has one and many different other counties have these sort of rental assistance groups that are willing to help tenants get through this pandemic so i personally suggest as a landlord or as a tenant familiarizing yourself with all of these options it doesn't only have to be the government that supports us and honestly i think we've all found that the government sucks at being there right when we need them the best case scenario is that of course both landlord and tenant walk away from the situation all caught up on payments and so that brings up option number two because there aren't always going to be local housing assistance programs and there's not always going to be a boost so you might be in a situation where the next best option is negotiating with a tenant or a landlord so whether you're a landlord or tenant this is a really good one to pay attention to what i usually recommend is trying to see if there is an amount that both landlord and tenant are willing to pay so for example i wrote down some numbers here keep this in mind as well if you're a great tenant your landlord wants to keep you right so here's an example let's say your rent was two thousand dollars per month and uh you know the tenant or you whatever can't afford to pay two thousand dollars per month anymore well sometimes a landlord and tenant might strike a deal where okay how about this the tenant signs a three-year lease extension great tenant let's do a three-year lease agreement with the landlord and let's do this let's do 1800 per month for the next 12 months that's a 10 rent reduction then a 100 rent reduction for every month for the next 12 months and then back to 2 000 per month for the next 12 months thereafter now obviously you could do a variation based on this uh you know some people look and they say hey okay well i can't even afford 1800 okay well can you do 1700 for the next 12 months and then the full 2000 or can you do 16 then 2 2000 than 2100 right something like this where you're basically trying to stretch out the rental contract term and try to take as little of a loss as possible for both sides right something a tenant can afford and that the landlord's willing to accept uh and maybe there's even hope for catching up on these payments the best thing to do is stretch out the time though the worst case scenario is trying to say all right you know 10 and six months into a 12-month lease contract hey all of a sudden now you're six months behind your last six months you owe it all at the end tenant might just leave that that's not good it's better to keep somebody who's already a good tenant in the property as long as there's a way you can work out how to make the payment so chopping it up by extending the lease term it's not a terrible idea i just signed a three-year lease i wouldn't be opposed to even doing a four-year lease with the tenant just something where we stretch it out and we make it make sense for both parties so in the example i just gave with 2 000 as original rent but then going down to 1800 for 12 months then 1900 for 12 months and then back to 2000 or some variation of that works out to basically a rental discount for the tenant of two thousand four hundred dollars year one twelve hundred dollars a year too and zero dollars rent three or year three that means the landlord is actually taking a loss of three thousand six hundred dollars for a three year period which averaged out works out to losing about a hundred dollars per month that sounds like a lot however the reality is people are taking much bigger losses because if tenants and landlords don't work together everybody ends up getting screwed it doesn't help to have a tenant just throw up their hands and say that's it i'm just not paying anything i'd rather have a new rental agreement where yeah maybe i'm taking less rent but i don't have to deal with the re-rental i don't have to deal with the re-rental fees i don't have to face a potential eviction i don't have to face repairing a property during the pandemic and then i don't have to hit the rental market during a pandemic these are all problems some landlords are even trying to write in waivers of tenants having the right to claim protection under eviction bans if the landlord gives the tenant a rent break so it's something that i don't know if that would ever hold up obviously that's an attorney question but some people are trying to do that like hey here's an addendum that says you're getting a rent reduction because you're agreeing that because of the pandemic you can now make these new payments but now you waive your right to say hey well i can't make my rent payments anymore because of the pandemic i no idea if any of that stuff's going to hold up but again i'd rather have a longer-term contract and not have to deal with the property for a few years and just look everybody's hurting right now just share the responsibility i don't mind sharing responsibility with my tenants obviously i don't want to pay everything i don't want my tenants not to pay and that's why i'd rather work with my tenants and that's exactly what we've done this was especially important because in april we had a really horrible rental market in april it was like impossible to rent a property now we'll talk about strategies for renting a property in a very difficult market but you want to weigh this out as well as a tenant and a landlord while you're negotiating as a tenant you got to ask yourself are there other rental properties available if you're in a really competitive space as a tenant you probably want to make things good with your current landlord if there are tons of rentals available well then you have the other uh the upper hand essentially because the landlord's gonna look and go okay what's my competition ah crap i got a three bedroom two bath well they're like 20 other ones available that's a bad day we had that issue in april we don't have that issue anymore now if a property comes up for rent we can rent a property almost instantly in fact take a look at the footage from this property it's almost in mint condition and that's because this tenant ended up breaking their lease and that brings up option number three when a tenant breaks the lease the tenant is technically responsible for putting the property not into the original condition as to when they rented it but into a now rentable condition that actually means the tenant becomes responsible for things like paint which ordinarily the landlord would be responsible for so a tenant breaking a lease can be great if the landlord has a strong rental market right now in southern california there is a very strong rental market i put a property up for rent i get applications like crazy so as a landlord i'm less inclined to negotiate now than i was in april because i could easily find other tenants obviously unless they stop paying which we'll talk about that in just a moment when a tenant breaks a lease though they are also responsible for covering re-rental fees and cleaning up the property to get it rent ready and showing the property all these things can actually be helpful for transitioning to a new tenant he broke his lease and is now moving to idaho uh he left the property in amazing condition i'm really really jazzed i mean everything's beautiful the the flooring's in great shape the paint is in great shape the windows are in great shape and this is normal when a tenant breaks their lease we do a walk through with them prior to them uh officially leaving and we give them a quick little overview like hey you'll get your full deposit back if you just do this this this and this he literally did everything i mean look at this this is spotless this entire property is just spotless but anyway it's just so sad to see that a tenant has to basically leave the state that they're in because their business basically got cancelled by the pandemic and these these are normal hard-working people who want to be working but they can't because of the pandemic whatever type of work he was in is not something that's possible for him to do now all right well now let's talk about the elephant in the room how do you actually rent a property during a pandemic well here's the thing when it comes to renting a property during the pandemic you have to know your rental market it's kind of just like in the earlier option where i say hey what how hard do you want to negotiate well what's happening in the market in april for example i had to take a property that was renting for two thousand seven hundred seventy five dollars a tenant got it had a military relocation it was a va tenant great they they're allowed to break their lease tenant leaves and we have to re-rent the property in april well we had to put the property up for 2495 that was about a 10 discount just to find a highly qualified tenant now obviously during the pandemic the most valuable tenants are tenants who have jobs with steady income and so jobs without steady income are going to be things like retail and hospitality now keep in mind you can't discriminate against source of income but you can qualify stability of income and if a tenant can't prove stability of income then generally remember i'm a dude on youtube i'm not an attorney generally you don't have to rent to somebody if they can't prove they have stable income now this sucks for all the tenants who don't have a stable income right now all the tenants who are relying on unemployment but they're not getting it because they're getting ripped off by a stupid lousy lame congress that we have that's horrible but if you have to put a property up for rent obviously right now you gotta find jobs and careers that are going to be okay internet entrepreneurs nurses doctors you know any kind of essential service police fire military pretty much anything except for retail and hospitality and that's really bad now if you can find retail and hospitality tenants who can prove to you that they have stable income well then you have to rent to them as long as they qualify otherwise right you can't tell somebody well i'm not renting to you because you work for a hotel but meanwhile they have stable income if they have stable income like that qualifies anyway obviously confirm all of this with your real estate attorney uh but as a tenant this is also really good to know overall though i recommend for landlords and tenants look the easiest way for a tenant to rent a property and the best tenant for a landlord to pick is both y'all follow a minimum criteria a minimum credit score minimum job and asset requirements minimum identity verification a good tenant should be able to provide all of these things and a good landlord will ask for verification of all of these things well alright today is july 31st and the last tenant left us this morning and uh it is now 6 32 pm and uh here's the uh the new tenant so uh things uh things are actually moving faster again in the rental market uh the the rental market in april sucked and i put the bell i got my belt on i promise you but the mics here the rental market was so bad in april we had to discount properties around 15 percent to get properties rented rents are back up now but uh this next wave uh this eviction crisis we might be facing without an unemployment boost is going to be a problem because realistically this tenant even though the first tenant we had here you know they they ended up paying they kept the place clean like everything was good they cleaned up before they left you know knock on wood i don't know if i even got wood in this thing but uh you know that could have gone bad they could have just said hey we're stopping paying rent because the covid we're not leaving evict us and we would have probably had to go six or seven months without uh without basically collecting rent which then you think like okay well kevin you could just take mortgage forbearance you know if the tenant's not paying rent just take mortgage forbearance sure but as a real estate investor i can't take mortgage forbearance because if i take mortgage forbearance i can't buy real estate anymore i can't do my job i can't i can't invest in real estate anymore uh so i can't take mortgage forbearance like i would literally have to eat every penny that a tenant would not be paying me right now uh which uh which sucks and i just imagine like these here see these like apartment buildings and all this this stuff has got to be i would not be surprised if they just have to take mortgage forbearance on each of these properties because they probably have 30 attendance just like you know not even not even talking to the landlords anymore just like well eviction ban all right i guess i don't have to pay uh so i mean i i mean counting my blessings here knock on wood but holy smokes like uh the the unemployment boost saved us on this deal uh and you know the expiration of this boost is going to be bad for a lot of america if we don't get this solved and we get some kind of boost past best case scenario though it's obviously just really important to try to keep properties occupied during this crazy pandemic that we're in in case you need more help and i'm going to go into another problem that comes up here in a moment but in case you need more help lauren and i do have a complethose are both linked down below if you buy the investing course which everybody loves when they join it there's so much information in there when you buy the investing course you'll actually get a bundle coupon after you check out for the investing course and you'll get a special code on the management course in case you wanted to bundle up but now let's talk about the eviction and forbearance problem here's the thing the eviction ban is a big problem because if a tenant stops paying rent completely a tenant stops communicating and or you know for whatever reason there's no getting a hold of a tenant there's really nothing a landlord can do but evict a tenant which is unfortunate because if there's an eviction ban and a tenant isn't communicating there's really not a lot that you can do so at this point it's critical if unless it's already gotten to this point it's critical before this point for a landlord and tenant to keep an open dialogue as much as possible because ultimately the tenant gets mega screwed it might seem like in the short term like oh wait a minute kevin no no the landlord's going to get mega screwed well probably not the landlord might get screwed in the short term but here's what happens when tenants break their contracts they still technically owe the money and if a landlord sues a tenant tenant doesn't show up to court and unless there's some miracle bailout from congress that back rent is going to become debt and that debt can become a collection or a judgment or both against the tenant which could affect the tenant's credit score now the tenant tries to go buy a car or buy a house or go rent a place it gets really hard for the tenant to do those things maybe they skip town or go to a completely different state but a lot of times collections can follow people across the country so uh this is really bad for tenants and again it's really bad for landlords in the short term too because landlords have to suck up all the payments which again keeping that open dialogue so so so important but in this kind of situation a landlord might be basically backed into a corner where they have to take mortgage forbearance and as a real estate investor this can kind of suck because it means you can't buy or refinance real estate anymore until you've made your payments again for three months so this is where tenants are really going to have an upper hand against investors so as an investor and as a tenant really really important keep that open dialogue throughout the entire phase somebody's got the upper hand over somebody but ultimately and i feel terrible about this but ultimately it's almost always the tenant who gets shafted because the tenant either gets hung with all the debt in in a lawsuit or a judgment or you know the tenant has to keep paying even if they're unemployed and they're not getting enough benefits and support from the state and that sucks and so this is why i encourage whenever you can as a landlord or a tenant try to negotiate something that's just win-win for everyone even if that means a short-term discount and a little bit of a higher payment later that's great if you have to have a broken lease well then analyze your rental market to see what you're actually up against and who has the upper hand in the negotiation both sides can do this and ultimately if a tenant is not responding well that's the worst situation to be in you'd have to take mortgage forbearance as a landlord just to be able to survive that period but again it's really bad for the tenant because that could come back to haunt the tenant now best case scenario congress comes in and actually gets off their butts and does something but for right now we can't guarantee that that's happening so here's kinda exactly what's going on in the real estate world right now and the three main situations you might be in regarding tenants not paying rent and when you're up against forbearance you also have those initial three options that we talked about for how to negotiate with the tenant getting them that rental assistance if possible negotiating a better payment structure where maybe rent is lower now but then ticks up over time maybe the landlord ends up taking a loss over the three years but extending that term is such an easy way to keep properties occupied especially in a competitive rental market and then of course there's always the option of breaking a lease so these are really the options that come up in a scenario like this these are and have been my responses i'm fortunate that right now all tenants are paying we haven't had any evictions i've never had an eviction knock on wood that stays that way uh and uh you know we will do whatever we can to help everybody out fortunately again right now the rental market's very strong here but do your best everybody to try to help each other out because it's a crazy time out there right now and it's tough for landlords and it's tough for tenants and a lot of it is just not fair s down below the course as well i keep updating all these courses so i really appreciate you all and folks we'll see you next time you
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