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The spread of the coronavirus has disrupted virtually every aspect of our businesses and personal lives. These are unprecedented times that very few people were prepared for. Business can't continue as usual for most people right now, so we all need to adapt and move forward the best we can.
As an owner of commercial real estate, your business depends on the success of your tenants' businesses. Simply hoping they all get through it and that the rent checks will continue to arrive as usual is likely overly optimistic and may make the situation worse down the road. It's best to get ahead of it by talking to your tenants now and establishing open communication throughout these unpredictable times.
Their safety is your top concern
A business may have signed the lease, but when it comes down to it, your tenants are people. Let them know you care about their safety as somebody you're doing business with as well as fellow citizens who are all fighting to get through the same thing.
Make sure they're keeping themselves and their staff safe before anything else. Your tenant is unlikely to stay in business if they're all hospitalized. Besides, now is a time to work together as human beings and look out for one another.
Make sure they're following rules and guidelines
Some states are requiring nonessential businesses to completely close down. Many have restrictions on restaurants and places where people gather. Unfortunately, this is hurting some businesses so badly that they're breaking these rules.
Your income is dependent on their business as well as the entire community. Even though this pandemic may be hurting their business, it's important that everyone works together for the good of our communities so we can all get back to normal as quickly as possible. Any business that's not following the rules and guidelines right now is slowing down the process of getting all businesses back open.
Let them know you care about their business
Assure them that you care about their business. You understand that what's good for them is good for you. If they are applying for an SBA Disaster Relief Loan, work with them to get them whatever information they need as quickly as possible.
Express your willingness to work with them
Some of your tenants are going to have a really hard time paying their rent right now. Especially if they're a business that has been forced to temporarily shut down. If you're willing to work with them to help them get through this tough time, you should work out the details of that as soon as you can.
It's likely in your best interest to work with them the best you can, since it's not going to do either of you any good if you have to evict them -- especially in a time when it will be difficult to find new tenants. However, you can't put yourself out either. It's not going to do your tenants any good if you lose your property over this. You'll have to try to find something that will allow you both to get through this and come out whole on the other side.
Have an open conversation with them about what you can both afford to do. One option could be to defer some of their rent for a period of time. If you can both afford for them to pay 50% of their normal rent now, then six months from now they can add an extra 25% to their rent for the next 12 months.
If you can afford it, you could even offer to defer all of their rent for the next three months, then they can pay the balance off over six or 12 months.
Whatever you're able to work out, it's important that you and your tenants are able to stay in business through this.
The bottom line
More than anything, you want to open up communication with your tenants. Tenants who get behind on rent can suddenly become hard to reach. By starting discussions with them now, you will have a better idea of what to expect as far as their lease payments as well as the overall health of their business. If they know your intention is to work with them through this, it will be a lot less stressful for both of you.
Unfair Advantages: How Real Estate Became a Billionaire Factory
You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.
But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.
To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.