Troubled Times Demand Flexibility, New Approaches
Throughout the years, we have all heard that manufactured housing communities are “recession proof,” only to be reminded every 6 to 10 years that they are not. We are now about to see yet another, hopefully short-lived, setback in our industry that is likely to cut deeply into our most recent recovery. Lenders, including chattel, local banks, CMBS, Freddie and Fannie, will need to consider concessions to borrowers to help ward off the blood we all saw and most experienced in and around 2008-09.
As COVID-19 continues to make its way through our country and more businesses are shuttered, our residents will be facing some difficult decisions based on which creditors get paid and when. Here are some practical initiatives we recommend and have implemented in our communities, focused on helping move operations forward during this trying time.
Incentivize On-Time Payments
Develop a raffle giveaway program. For all residents that turn their rent during the grace period (until the 5th of the month), they will be entered to win a prize, like a $250 VISA gift card. The key here is to ensure that after you pick a winner (or winners, depending on the size of the community) the community is informed and knows you followed through. Fair Housing Disclosure: make sure that you have a randomized way of doing this that you can prove.
Forgive/ Extend Late Fees
Extend the rent grace period to the 15th of April (and most likely May/June). The purpose of this is to show residents that you are willing to work with them - across the board. This does not mean that collection efforts should be halted until the 15th. We are encouraging our managers to start collection efforts early and follow-up on them often - aiming for firm plan to pay dates and to help our residents plan their finances accordingly. There will be residents who lose their income sources. We are working with these individuals as best we can and awaiting further information from local, state and federal authorities on how this is to be handled. It is important not to draw any hard and fast rules about payment/evictions during a pandemic, as our own guidelines could be changed at any time until this is over.
Communication has never been more important. We have been mailing out weekly notices to our residents, providing them with continual updates, including financial relief information and resources, while reiterating all of our contact information (e-mail, text and phone) and that we are available to them 24-7. We will continue to communicate with our residents as we receive pertinent updates from the state and local officials.
During this uncertain time, it is imperative to be mindful of how best to move business operations and management forward while maintaining a level head and a sympathetic ear.