Landlords Get Creative to Maximize Rent Collections
NEW YORK – The COVID-19 pandemic has sent unemployment skyrocketing, but many landlords are finding ways to keep collecting rent payments. Some offer flexible payback terms, gift cards or other incentives to try to get tenants to pay rent and avoid forbearance if they’re able to.
For tenants that still have some amount of income, these landlords are making “pay the rent” a higher priority if residents are making difficult financial decisions.
Ellie Perlman’s company Blue Lake Capital LLC has 2,000 rental units across the country, and she recently told Forbes.com how her company has been able to collect more than 96% of rents during April and May, while the portion of property owners successfully collecting rent nationwide hovers around 69%.
Perlman said that they offered early-bird discounts to those who paid rent during March – a $50 discount if residents paid for April rent by March 30 and $100 for paying May’s rent during March. About 20% of their tenants took advantage of the discount.
Blue Lake Capital also offered tenants flexible payment plans. Perlman shared one scenario as an example: If a resident paid $600 of their $1,000 rent and had four months left on the lease, then Blue Lake Capital would increase the tenant’s rent by $100 per month for the remaining four months of their lease.
They also allowed residents who became unemployed during the pandemic to use their security deposits to pay rent, but Perlman said that carries some risks. “The challenge is that you also can’t expose yourself to an unnecessary risk of releasing the security deposit,” she wrote. “To mitigate that risk, allow residents to sign up for security deposit insurance, which basically replaces the one-time security deposit with monthly payments of $5 to $10.”
In some cases, Perlman also tried to incentivize renters by sending Walmart gift cards to every tenant who impacted by the coronavirus.
“Not only did we feel that was our way to give back, but we were also hoping that our residents would feel more inclined to pay rents when they became in a better position to do so,” she wrote. “It worked – kindness still goes a long way.”
Source: “Seven Proven Tactics to Maximize Rent Collections During a Crisis,” Forbes.com (May 18, 2020)
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