These uncertain times have us all worried about our cash flow, and that worry may be elevated for those who own commercial and residential rental properties. A majority of our own agents, including myself, own investment properties to supplement our income and to build up our retirement funds, as we are self-employed. So how are we supposed to navigate through this when our renters are also dealing with uncertainty and a possible inability to make ends meet? How can we manage the lack of cash flow? How long can we sustain this? What help can you get during this time? I’ve put together a small resource for you to refer back to frequently to help with some of your questions. Here are five steps that can help you take back some control with your rental and lighten your stress load. Note that this is not to be taken as accounting or legal advice and before making any decisions you may want to run the potential benefits and consequences past designated legal, accounting and financial professionals.
1. The first thing is to have an open line of communication with your tenant. Getting through these next few months is going to be crucial for both of you and if your tenant is worried about how they are going to keep a roof over their heads during this crisis, you are going to get nowhere. Find out if they are still working, on reduced pay, going on EI, in self-isolation due to travel or showing symptoms. The more you know about the situation, the better you will be able to work out a game plan to keep your tenant in the rental while maintaining as much rental income as possible. Keep close records of your texts and emails and any written agreements.
2. Second, direct them to links to keep your tenants informed of what they may be eligible for to help with their loss of income at this time. Your student renters will have their student loans deferred effective March 30th to September 30th. Your renters that are forced to be home with no pay can apply for the Canadian Emergency Relief Benefit in April or may be eligible for Employment Insurance. Increased child tax benefits and income tax deferral are additional options your tenant can be saving up money right now to help pay their rent. Sent the link below to your tenant to help them navigate additional financial supports.
Support For Individuals From The Federal Government
3. Thirdly, these are things you can do to help with your cash flow at the moment in Saskatchewan. These are ever-changing with new announcements coming daily from the federal government. Please note that any deferral mentioned below does not relieve you of the obligation to make those payments in the future. A “deferral” is not “forgiveness” and thus make sure that the short term benefit doesn’t leave you in a worse position down the road:
a) Defer your mortgage. This would be a great time to talk to your financial lender if you think that you can no longer make your mortgage payments. Every lender is different, offering a variety of options out there like deferring your mortgage for a six month period, loan re-amortization, interest-only payments, and special payment programs. Consider this as a last resort option and become highly aware of the consequences if you decide to go this route. For those that are utilizing rentals as a long term investment vs. a monthly cash flow, this may not be as bad of a financial blow as you may think. Visit your lender’s website and follow the queues to email.
b) Defer your utilities. Whether your tenant is paying for the utilities or you are, the crown utility companies have put a six-month deferral program into place free of interest or late fees. Granted this will all have to get paid at some point, but this could offer some relief for the time being. Here are a few links to send your tenants or look into further yourself. These utility companies are also offering an equalized payment program to catch yourself up after the six months pass.
c) Delay property taxes. The city of Regina is also scheduled to send their property tax notices out at the end of May as scheduled but you will have until the end of September to have them paid up in full. You can also look into setting up a budget program or TIPPS with the city to create a structured monthly payment plan moving forward.
City of Regina Property Tax Information
4. Create a game plan and revisit it often with your tenant. There are a lot of options you can put into a place. You could work out a reduced rental rate for the next few months and create a re-payment plan to catch up in future months or until they start receiving supplemental help from the federal government. Or perhaps your rental has a spare bedroom that they could find a temporary roommate to help offset their rent. They may have friends or family that need to find a place with a significant cut in rent as well.
5. If your unit is currently vacant, now may be the time to complete a few things prior to getting back on the rental market:
- a fresh coat of paint
- update the curb appeal
- give it a good cleaning
- give it the 100% rental walk-through to ensure everything is in operating order
- take a moment to update and polish your rental posting information creating an effective hook to capture the right tenant
- you now have the time to take a moment to update your lease agreement that you drafted years ago
- take eye-catching photos/video for future rental postings (check out www.padstyler.com or www.boxbrownie.com to create a virtual staged unit for half the cost of staging it)
- keep diligent records of your fixed costs, what you will owe down the road, and what income you are expecting in the future months. If you haven’t been treating this as a business, it’s time to start now
These are going to be incredibly tough times for you and your renter. If you can develop a professional, yet compassionate relationship now, you may have a solid tenant to get you through these months to come. Try your best to stay focused, calm, and rational at this point and remember, that we are going to get through this. If you have any further questions about your investment property, don’t hesitate to reach out and I will try to connect you to the professionals to provide the best advice.