Create a Multifamily real estate stabilization plan.
Landlords and tenants have both been affected by COVID 19. The best way to stabilize cash flow is to have a plan to work with tenants collaboratively. I know multiple owners who take the command and control approach to property management. During prosperous times, this may work; however, with so many people on edge and with tenants worried about losing their homes and businesses, this type of attitude will not work. Landlords must have a plan to work through the issues. If you become delinquent in your mortgage payment, having a plan can show your lender that you are taking an active roll in working through tenant issues.
There is so much speculation as to what's going to happen with multifamily and commercial real estate occupancy. In Oregon, the moratorium on evictions is ending September 30th. Congress is not coming back until September to decide what type of relief package will be created for the American people. As I understand it, implementation of new programs takes quite some time. The question is, what is the effect a gap for receiving the extra unemployment benefits is going to have on the multifamily commercial industry. If tenants stop paying rent, property owners who purchased apartments with low margins may have a problem.
There are multiple options you can discuss with tenants, from rent reduction to rent deferral. It is also important to remember that some businesses, unfortunately, will not survive if some of the rent is not forgiven. I know of multiple instances in which deposits have been used to help pay down rent. Another interesting option is something called "loan conversion". Loan conversion Takes the abated rent and creates a loan payable overtime, A promissory note is created that is cross defaulted with the lease.
One other option is to lower your loan payments. My team is helping many owners find commercial and multifamily loans above a million dollars that significantly lower their payments, financing fees included. A reduction in interest rates occurs at higher rates. ABR Commercial has no limit on loan amounts and can help with multifamily, commercial, construction, and HM Loans.