It’s official: the Centers for Disease Control and Prevention (CDC) has ordered the extension of the rent and eviction moratorium until July 31, 2021.
The earlier guidelines suggested that it should end by June 30 this year. However, the threat of the Delta variant means that congregating in courts or hunting for homes is not yet safe. Homeowners and tenants may need to continue working from home or limit their movements to avoid getting sick.
Under the moratorium, landlords cannot immediately evict a tenant simply because they have failed to pay their rent, and this can be problematic for many owners of rented properties.
First, landlords still need to pay the bills. If renters cannot meet their monthly fees, owners of properties may also need to delay their repayments. In turn, late payments can potentially hurt their credit report and score.
Second, it is beginning to be a hot seller’s market. The moratorium may limit the ability of the landlord as to what they want to do with the house. Until such time the order is lifted, they cannot sell it or offer to someone who can pay the rent on time.
Third, the lifting of the moratorium doesn’t mean that the landlord will be able to collect now from their renters. Those who occupy their property may still be incapable of making the payments.
Moreover, it still not clear yet whether the moratorium will definitely end on July 31. Extension can still happen.
What can landlords then do so they can continue to thrive until the moratorium is over? Here are a few ideas:
1. Consider Refinancing
Homeowners saddled with huge home loans can consider mortgage refinancing to avoid the risk of foreclosures. What is refinancing? It is a process wherein a borrower takes up another loan to pay off the existing one in the hopes that they could take advantage of a much lower interest rate and more favorable payment terms.
In other words, with refinancing, a property owner may likely pay less amortization each month, which means more savings and lesser financial obligation to the lender.
The question is, can landlords, who may be using their home for business, apply for one? The answer is yes, even if the property in question is residential. Nevertheless, they may want to discuss their situation with the lender. They may require additional requirements or follow certain criteria for landlords who want to refinance.
2. Maximize the Equity of the Property
Equity is the difference between the home’s market value and the attached liens, such as a mortgage. Usually, homeowners who have already made considerable repayments on a home may have accumulated high equity already. They can use it to their advantage. One option is by applying for a home equity line of credit (HELOC).
Those familiar with the business line of credit may find HELOC to work the same way. The big difference is the source. Under HELOC, the homeowner can apply a line of credit using their equity.
The primary disadvantage of doing HELOC is the risk of losing the property, which now functions as collateral, in case the landlord fails to repay. However, as long as one is diligent in monitoring their expenses, HELOC is an amazing way to have quick funds when needed.
3. Check Out Government Assistance
Government relief programs can differ by state, but many still offer them. Those in Texas, for example, can consider the Rent Relief Program, which provides emergency funding for both landlords and renters. They can use the money to pay utilities, home energy expenses, and rent regardless of whether the bills are current or past due.
The program can extend assistance for three months, but the applicant may reapply for three more, depending on their circumstances.
California, meanwhile, plans to pay rent owed that goes back to April 2020 when lockdowns began and thousands of Americans lost their jobs. They can cover what they owed 100 percent until September.
Other programs may not grant any financial assistance but help Americans receive financial aid and other types of support that pertain to their rent. These include Stop Eviction in Texas, which provides legal resources to both renters and landlords.
Despite businesses opening and the economy trying to recover, many are still undergoing some tough times, landlords included. Knowing where to get the funds to cover expenses and other needs is essential to be able to follow the CDC order, avoid damaging the credit report, losing the property due to foreclosure proceedings, and being forced to evict someone because they cannot pay the rent now.