Renting During the COVID-19 Era

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Every landlord I have spoken with in recent weeks is concerned about how much rent they are going to collect in April and May of this year. One shopping center owner told me that they expect to collect about 25%, while another had collected a miniscule 14% as of April 7. This is a great concern for landlords (both residential and commercial) since they have salaries, utilities and common area expenses to cover. Most landlords leverage their property with some form of loan or mortgage. When a renter does not pay, the landlord is left with expenses and reduced income. In today’s COVID-19 world, landlords are more worried than ever.

So, what is going on in the renter’s mind? Some renters may be taking advantage of the situation and hoping to skip a rent payment; I like to believe that most people are honest, and if they don’t pay rent, it is because they truly don’t have the cash to make the payment. Renters are faced with competing demands today. They understand that they should make their rent payment, but they also must put food on the table, home-school their children in some cases and, in many cases, do all this without a job or at least reduced family income. This is a scary place to be.

Renters are hearing advice on the radio and news that says they should pay for food first, skip the utility bill and, if there is some money left over, pay all or some of their rent. Most renters I spoke with said they don’t want to be behind on their rent, but they do not have enough cash to cover all their bills.

Landlords should consider each renter separately. For those who request rent deferral or abatement, landlords should request financial statements and proof of job loss (if that is the reason). They should also request a copy of two months’ bank statements to verify the financial need. Rent should not be abated in most cases but rather deferred and paid back over a 12-month period. Give the renter a two-month deferral then one month at a time after that for a total of six months. The hope is that the renter will continue to look for work and make most, if not all, of their rent due.

Landlords should also expect to have losses in the coming months. Not all renters will get their job back, and almost all who are not able to pay rent will also be behind on other bills, such as car notes, credit cards, utilities, etc.

Since we are in the midst of a 60-day moratorium on evictions per the Department of Housing and Urban Development, it is recommended that landlords play nice with their delinquent renters in hopes of being the first on the list when the renter has cash again.

Renters who have financial concerns should do the following immediately in order to put themselves in the best financial position possible for the future:

Create a New Monthly Budget

Consider all essential and discretionary expenses, and create a revised monthly budget. Discretionary spending, such as movies and dining out, have been eliminated in most states due to shelter-in-place orders. Other discretionary expenses, to the extent possible, should be eliminated.


Communicate immediately with your landlord if you plan to or have a need to defer a rent payment. Be prepared to provide supporting documents. Notify your landlord even if you plan on paying this month’s rent but have concerns about coming months.

Plan to Repay

If you receive rent deferral, immediately put together a schedule of how you will pay that rent back. Start to put dollars aside today, if possible. If you can make partial payments, do so. Your landlord can use the cash flow today and you will reduce your debt in the future.

Eliminate Retirement Contributions

Eliminate contributions to retirement and education plans, but do not spend the money. Put those dollars in a separate savings account and leave them alone. If at some point you are truly out of funds, this will be one place you can turn. If you do not use these dollars and your financial situation improves, you can make a lump sum contribution to any of these plans before the end of 2020.

In this COVID-19 era, emotions are running strong. Do not let emotions make your financial decisions. If you are a landlord, look at the long-term picture, work with your renters, and be patient. If you are a renter, beaggressive in meeting your obligations as much as possible. If you are able to defer rent, put together a plan of how you will pay it back.

If we can all work together, be honest and be fair, we will get through this and, hopefully, never have to look back.

Anna A. Behnam, APMA is the managing director and lead advisor at Behnam & Associates of Ameriprise Financial and a 20-plus year industry veteran. For more information, visit ameripriseadvisors.com/anna.a.behnam.