Epic Real Estate Investing - How To Collect Rents During a Pandemic | 988

Episode Date: April 14, 2020

This week, Mercedes, the Turnkey Girl shares 5 steps that she and her Cash Flow Savvy clients took to collect their rents during the pandemic while keeping it compassionately and rightfully. Tune in and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. So you want to be a real estate investor, but you don't want to do the work. If there were only a way where someone else could do it for you, now there is. Tune in here each and every Tuesday on the Epic Real Estate Investing show for Turnkey Tuesdays with your host, Mercedes-Torres. Hello and welcome, welcome to Turnkey Tuesdays brought to you by Epic Real Estate Investing. My name is Mercedes Torres, your turnkey girl, and I help busy professionals acquire passive income through real estate investing so they don't have to work so hard and maybe even retire sooner.

So this show shares tips and real life, real estate experiences so that you two can create passive income in your world. That said, if this is your first time here, glad you may be. it, make yourself at home. If this is not your first time here, welcome back. So let's talk about the deal of the week. There is no secret about what's going on in the world. We are in the midst of a pandemic. We're in quarantine. At least most of us are. I know 13 states do not have a state mandate to stay at home, but for the most part, the rest of the nation has some kind of stay at home orders, but believe it or not, business is still happening. As for me, I just closed a deal last week

that we added to our portfolio. I just put another deal under contract that has seller financing in place. Again, that is for my portfolio. And I still have people in. our queue still closing business. And that's not to say that we are still doing the deal of the week. So this last week, our awesome deal of the week went to Walter and D.D. of Spokine, Washington. They purchased a two-bedroom, one bath, 1,200 square foot single-family residents in St. Louis, Missouri. Now they paid $79,999 for this property that rents for $825 per month. Now, this property sold with a tenant in place. There was a 12-monthly signed last month, so they have 11 months to go.

And this property is producing a 9.04 ROI, cash on cash return for both Walter and D.D.D. So congratulations on this dynamic rental that you guys picked up. I think you're going to be really, really happy. And by the way, I don't think your tenant is moving any time soon because they purposely chose this property because they wanted their daughter to go to the local school that was in the area. So I think you're going to have a good four-year run considering they are in their freshman year. So again, congratulations to Walter. in Dede of Washington.

Now, moving on, I've said earlier, we are in the midst of a pandemic, and you've probably heard a ton of times that we're living unprecedented times. And indeed, we are. I have never experienced anything like this. In fact, many of us in our lifetimes have never experienced anything like this. Many of us have stay-at-home orders to stay in your home and only leave for essentials, like to go to the market or to go to the doctor, but you're being urged to stay home. And as a result of that, businesses are shutting down.

I mean, restaurants in the city of Los Angeles have completely shut down due to the social distancing that is transpiring as we speak. And, for example, in Las Vegas, Nevada, the entire strip has shut down, resulting in mad layoffs. And ultimately, people are freaking out. I mean, not only in Las Vegas or Los Angeles or New York, I mean, all over the country. And people are freaking out to the point that they are not paying their rent. So I decided to not only create a podcast about what I personally did to bring the rent in for my personal portfolio, but what we have done for all of our clients that have purchased properties through cash flow savvy.

And, you know, I decided to do something a little bit different because, I mean, I saw the writing on the wall. Now, I say every week that I don't have a crystal ball and I don't, but I feel like everything happened overnight. And for me, it was very similar to what happened during the mortgage banking crash in 2007. Now, that's not to say that this is apples for apples. Back there, we were dealing with the mortgage banking industry crash. So it was just a crash in the financial market. It wasn't a health pandemic.

But for those of us that were completely entrenched in the world of real estate and mortgage banking and real estate agents and brokers, I mean, we were severely affected because, I mean, banks shut down entirely. What seemed like overnight. And I was living that. I was working for a bank. I was in the subprime mortgage industry. And I was directly affected. Now, I had shared time and time again that I had moved up the corporate ladder when I was working for corporate America for this bank. So I had started at the bottom, drawing docs, and I kept moving up, and I learned how to do every aspect of the mortgage banking industry.

And towards the very end, I was a loan account manager, and then I became a sales representative. Now, when this whole thing went down in 2007, I was in sales. So I was one of the last people to be let go. But needless to say, I saw it unfold right before my eyes in like 60 days. And I felt with this pandemic, this was happening. I was watching it unfold. And I was kind of stuck to the news because I'm always, that's just my personality. I'm always kind of seen what's going on in the world of financing and in the world of health.

because I'm indirectly entrenched in that with my sister being a director of a hospital. So I got wind of that, and I just kind of saw it coming. So right in the middle of March, I decided to be proactive. And I started seeing that my friend's industries started to shut down in the restaurant world, in the healthcare world, in the beauty industry. And I decided to step in. So I personally reached out in late March to all of our tenants, and I was very clear that I had to create a plan for rents no matter what. So I am going to share with you the five steps that I did for not only my own personal portfolio, but for all of our clients.

And I urge you to do the same. Because these five steps are not only to collect rents during a pandemic, but it's to be very proactive to collect rents during difficult financial times. I mean, a financial crisis, if you will. Okay. So whether your property is being managed by a property manager or whether you are self-managing your property, I want you to be, step number one, be pro. active. Now, have a financial plan in place for every one of your properties, whether it's one

property, whether it's four properties, whether it is a portfolio of 83 properties, have a plan in place. Most of you have mortgages on your properties. And for the ones that own properties free and clear, well, you depend on that rent to pay whatever it is that you have going on in your life. So step number one, be proactive, have a financial plan in place. That is step number one. And when I mean proactive, not only having that financial plan in place, because it's all about the numbers. It's when you're proactive, have a plan about what that proactiveness is about. So one tenant can be completely different from another tenant. But either way, when you reach out to that tenant or when you have that conversation,

have that financial plan in place. And when you reach out, I mean, have compassion, have empathy as to what is going on in the world or during the financial crisis and relate to your tenant. You know, say to your tenant specifically during this pandemic, the world is going through this together. You are not alone. Let them know that together you are going to get through this. Those words of comfort coming from you, the owner or the property manager, is going to make a world of difference to your tenant. It's going to let them know that you're human and that you are going to this pandemic as well. Let them know that you're not a huge fortune.

500 company. You own one to 580 properties. Whatever it is, let them know that you're human, that there's a human element to this whole ordeal and that you are reaching out to them because you care. It will go so far. Step number two, make it very clear that they must pay rent no matter what. But if they've experienced a furlough or a layoff or a cut in hours or a cut in pay, say, I'm willing to work with you because a lack of rent is just not acceptable. It could affect you financially. It has a trickling effect. So let's work on this together and ask for proof. It's perfectly okay to ask your tenant for the letter that they receive from their employer for the furlough or for the layoff or for the pay cut. It is perfectly acceptable if you're going to alter the original agreement that was set in place when your tenant signed that lease.

Now, tenants may be privy to the eviction moratorium transpiring across the nation. And hopefully, and I do mean hopefully, they don't take advantage of it. And I get it. You know, they may want to take advantage of it. But if you ask for proof, you are putting the burden of proof on them. And you can say, I need proof because I need to present that. to my bank. Now, many tenants don't even know you have a mortgage. And if you do have that personal relationship with them, it would be an easier conversation that if it goes through property

management. But property management indeed can say, you do have to prove to us that there is a financial distress in your world for us to make arrangements to the original agreement. perfectly acceptable. Number three, provide payment options. If they have been laid off, if they have been furloughed, or if they are working half of the time because their employer can't afford to pay them, be flexible, accept credit card payments, accept Venmo payments, or break it down to a bi-monthly payment.

So rather than all the rent being, due on the first of the month, say you can break it up into payments on the first and on the 15th. And if you have to set up automatic payments of some sort, offer to waive the fee, offer to waive the processing fee for Venmo or for PayPal, or offer to waive the late fee. Now, I am not a fan of installment payments, as a matter of fact. I hate them. But during this financial crisis and during these circumstances, let me tell you, I'd rather get a partial payment than no payment at all. So as long as your tenant is willing to work with you, you need to be

flexible during these times and you work with them. Trust me, it will get you so much farther if you work with them than if you just say, no, your rent is due on the first of the month. Okay. Number four, offer rental assistant programs or unemployment. Suggest providing them with support and documentation for a local rental assisting program offered by the church, or perhaps offered by Section 8, if you will. Or if they've lost their job and they're not too keen or savvy about unemployment or veteran programs in the area, send them links, offer additional support than you normally would during these times. And if it means that you have to send somebody to walk them through the process, then that's

what you need to do. Because at the end of the day, if you want to get through this together, you need to provide as much support as possible during these uncertain times. And trust me, these times are just as uncertain for you. you as it is for them. But if you provide this extra support, it will provide a lot more ease and clarity for both of you. And number five, check in on them and most importantly, keep track track of the payment arrangements that were made. Don't just make the arrangements and walk away. Now, I get it. it is going to be so much more work on your end.

And that totally sucks. I get it. Trust me with my portfolio, it is so much more work for us. But like I said, I'd rather go through this work, work with them, and collect half of the payment than to collect no payment at all. And mind you, this is temporary. This is absolutely temporary. because at the end of the day, the eviction moratorium is going to go away.

It will. And like I said, it's better to collect half of the rent than no rent at all. I'll have to say with what I created, this whole plan that I started doing a month ago, I've collected 92% of my rental income. 92%. Now, of that 92% I had to make arrangements with 20%. 23% of them, 23% of them because they've been laid off or they've been furloughed or because their hours have been cut in half. But I'm still working on that 6%.

But in the grand scheme of things, my friends, I have collected 92% rent. And that is a really big deal. Now, I've got that 2% that, well, they could have been considered problem cases to begin with. and that's the reality of being a landlord. But I can't be troubled with that. You know, they actually are doing me a favor. Because if they're not willing to talk to us at this moment, when we are willing to work with them,

it could potentially mean that they're a professional tenant, and I just don't have time for that. Because eventually, I will get rid of them. I'm going to focus on those people that are willing to stick it out with me. I am willing to stick it out with them. Now, I will still check on them several times a week. I will still send them emails. We will still follow up with them.

But I'm going to focus on those individuals that are really going to try to stay the course with us. Because those are the ones that are going to make a difference not only with me and in, you know, my personal situation with my portfolio and with yours. but these are the people that are going to make a difference in our society. Remember, we are going to get past this. We are going to get the world back to an original state eventually. And we wanted to get back to a healthy state. So let's focus on those individuals that are truly contributing to making a positive change in our world. Here's what I know from past experience. This too shall pass and together we will be stronger.

So let's be good humans. Let's help one another during this total unprecedented times. And let's be strong together. That's it for this week, my friend. If you need additional support, Don't hesitate to reach out to me or our team. We are here for you. Go to cashflow savvy.com. Reach out to us and we will connect with you if you need us. Until next week, be good humans and have an epic week. Have you been searching for a lender that is knowledgeable experience and will actually

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Go to Rich Lending Group.com. Click on the Get Started tab and tell them I sent you, will you? You will get individualized financial and lending education with epic love. is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.