Landlords are getting creative in order to collect their rental payments during the COVID-19 crisis, according to a report in Forbes.com. Even though the pandemic has sent unemployment skyrocketing, landlords are getting by thanks to flexible payment terms and other incentives to help their tenants pay the rent.
Ellie Perlman’s company Blue Lake Capital LLC has 2,000 rental units across the country, and she recently shared with Forbes.com how her company has been able to collect more than 96% of rents during April and May. Meanwhile, the portion of property owners successfully collecting rent nationwide sits at around 69%.
According to Perlman, during March the company offered “early-bird discounts” to renters who paid quickly. They discounted rents by $50 if residents coughed up the money for April’s rent by March 30, and $100 if they paid May’s rent in the same months. Around 20% of its tenants took advantage of the offer, Perlman said.
Another firm, Blue Lake Capital LLC, offered flexible payment plans to tenants. For example, if a resident paid $600 of the $1,000 in rent owed, with four months left on their lease, then Blue Lake would increase the amount owed by $100 per month for those last four months.
Blue Lake also allowed residents who became unemployed during the crisis have been allowed to use their security deposits to pay the rent. That does carry some risks though, as Perlman explained: “The challenge is that you also can’t expose yourself to an unnecessary risk of releasing the security deposit,” she said. “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, they also tried to incentivize renters by sending Walmart gift cards to every tenant who had been 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.”