Landlords should not be surprised to see their mailboxes empty of rent checks this April 1st. The current economy combined with new laws protecting tenants from eviction create the perfect storm for an empty mailbox. Property owners and landlords must be prepared.
Successful property investment is all about risk management. As a property owner and landlord, you should do everything in your power to increase the chances of not only retaining good tenants, but weathering this period of economic uncertainty.
There are a number of things that can and should be done immediately.
An insurance product which may protect commercial property owners and landlords is Commercial Rent Default Insurance. This type of insurance is designed to protect commercial landlords for loss of rent in the event a tenant defaults on their lease obligations. This type of coverage is designed to not only protect commercial landlord income, but to also to provide protection for any legal expenses which may develop. Another benefit is that if coverage is provided, it may allow some flexibility for tenants to remain in place. Commercial property owners and landlords should check with their insurance brokers to see if they already have this type of insurance policy, and if so, whether the policy provides protection.
Residential property owners and landlords may also want to check with their insurance broker to see if such coverage exists for them.
Having empty commercial business space, empty office space and vacant residential properties will be costly to property owners and landlords. When the economy picks up, business needs to get back to usual.
Accommodations should be made immediately for this revival. While tenants will most likely be in arrears in their rent obligations, landlords should act now to negotiate agreements with their tenants so both landlords and tenants can get back to business. It does no good to later go through the time and expense of evictions, especially for owners and landlords of large commercial properties.
Some items which can possibly be negotiated include joint efforts to assist tenants in obtaining small business association (SBA) loans or other disaster relief and/or providing future rent or other incentives to tenants. Retaining and maintaining landlord/tenant relationships and keeping occupancy rates high can and should be a win-win situation for property owners, landlords and tenants.