Covid-19 Pandemic and your OKC Rental Property
I’ve never seen such a challenging time as a real estate investor and landlord in Oklahoma City. It’s like the earth is shifting under our feet. In this article, I hope to provide an update as to where we stand in regard to Oklahoma City rental properties as of late March 2020.
Rents May or May not get Paid
Like most other states, the first restrictions we saw as a result of the Covid-19 pandemic was a restriction against gatherings of greater than 250 people. Then it became 100. Then 50. Now it’s 10. To remain within these guidelines, the courts suspended small claims and eviction court. So until further notice, evictions throughout the state have been suspended.
And like most other cities, many businesses are closing. And people are losing their jobs. Our office has already received word from several tenants of job loss. Unemployment checks should start to come in for the unemployed, but that takes some time. And, our state unemployment office is completely swamped.
The bottom line is that I’m not really sure how much rent is going to get paid in April, May, and succeeding months. And if rent doesn’t get paid, we don’t have a way of evicting the tenants right now. The suspension of evictions is fairly well known because news outlets have been reporting it. Some tenants are going to take advantage of the situation knowing that legally they can’t be evicted for the time being.
Lenders Expected to be Lenient
Like you, I have rental properties. I also have loans against many of those properties. I use those rents to pay the mortgages. No rents, no mortgage payments!
So what is to happen to my real estate portfolio that I’ve spent more than 2 decades building up? I contacted two bankers with whom I have bank loans.
I expressed my concern about the situation. Concern about tenants who couldn’t or wouldn’t pay their rent due to the current situation.
What I learned is that lenders understand that we are all in the same boat. They told me to contact them if it looked like I’m going to have trouble making all my payments.
Not only that, one of them stated that a state banking regulator told them to be lenient on borrowers. Normally, if a loan is restructured to reduce or defer payments, the loan must be labeled as bad. The state banking regulator has waived that requirement for the time being.
Look, I’m not suggesting that you stiff your lender or play games. On the contrary, I’m suggesting that communicate with your lender. Let them know what’s going on.
So if you are getting pinched because your tenant(s) aren’t paying rent, more than likely your lender isn’t going to bring down the hammer.
Don’t panic Sell!
It’s natural to feel some anxiety over this situation. Let’s face it, the real estate world in Oklahoma City is a little upside down right now.
But now isn’t the time to panic sell. There is going to be some panic selling, and those sellers are likely to take a bath.
Hold out until we put this pandemic behind us. And we will put it behind us. When we do, you can decide if selling the property still makes sense.