Where the rental unit is part of a residential investment property, the
same should be assessed as business-to-consumer and consumer-
to-consumer for residential units in primary residences. What is
the consideration of the property provider versus the property user,
and how is this changing in response to the pandemic? What is each
party’s ability to pay in their current financial position?
Mortgage deferrals can be negotiated with your financial institution
to mitigate the effects of lost and deferred income. The Federal
Reserve has injected the banking system with resources to support
low-interest loans and to supplement deferred rental payments.
Take advantage of these resources in navigating the pandemic and
economic aftermath.
Some tenants may be using the outbreak as an excuse to not pay rent,
but the majority are suffering unprecedented stresses and financial
hardships. If you have a quality tenant who consistently pays on time
each month, you should strongly consider cutting them some slack
during this time. Quality tenants may become harder to find in the
coming months and years.
WHAT TO EXPECT GOING FORWARD
The impact of COVID-19 on rental income streams has pushed
some landlords to get out of the rental market, away from the added
stresses of collection during this time. Fortunately, growing investor
interest in the current real estate market has made it an ideal time to
offload an underperforming rental property.
Low interest rates make it an attractive time for investors with
the financial capacity to invest in rental properties. Both foreign
and domestic investors are expected to implement a buy-and-hold
strategy, selling the property in later years when the market regains
momentum.
Landlords that are unable to sustain stopped or deferred rental
payments for several months may consider mitigating losses by
making their property available for sale to investors that can see it
through a long-term economic recession.