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Why you, as a landlord, should care about the CARES act

By now most of us have heard about the loans and grants available as part of the CARES Act. It has not been incredibly clear if, as landlords, we qualify.

So, I wanted to send you the information I have gathered from my inner circle of investors and friends. This is not me telling you if you qualify but rather arming you with some information I’ve been able to gather, giving you the tools to discover more should you so choose.

In the news: PPP and EIDL

On Tuesday, April 21, Congress passed an interim bill replenishing funds for the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), including EIDL Advances of up to $10,000. The bill was signed by the President on April 24th..

If you missed the opportunity to apply for both or either of these programs, this is your chance to apply. You can apply when for the EIDL through the SBA website when they open the portal again, which is likely to happen on Monday, April 27.

***This is not to be considered legal or tax advice, so please verify the fine print of these programs before applying and request assistance from a qualified professional.

More on the EIDL for landlords

As part of the EIDL, applicants may request an advance of up to $10,000 which is considered to be a grant. The amount of funding depends on the number of employees stated on the application, with a minimum of $1,000 per employee/owner. You can apply for the EIDL at sba.gov (not at a bank). Note: the SBA will pull credit for the SSN used in the application. It is unknown whether multiple applications will be processed for the same SSN.

“But I don’t have employees?”

Other investors have qualified for the EIDL by owning rental properties. Check with SBA as you may also qualify. For example, a husband and wife owning rental properties could qualify as two employees. Other single landlords have applied per entity and have received funding as the owner even without other employees.

Some investors are reporting that they submitted multiple EIDL applications and are receiving funds for all entities; others are receiving only one EIDL grant when multiple applications were submitted.

Watch for the SBA application to go live again on the SBA website. It is likely to happen this Sunday or Monday.

More on the PPP for landlords

The PPP loan application is made through a bank, and qualifying for it is at the bank’s discretion. Some banks are considering an owner draw on rental income payroll while other banks are not. You may need to ask a few different banks what their underwriting standards are. The banks are required to certify the SBA that the applicant meets the program guidelines.

For example, I have two friends who each applied for the PPP for their rental portfolios. Both maintain a company entity on a schedule C with individual property LLC’s on their Schedule E, both were approved for the program using an average of their owner draws from 2019 plus independent contractor payments .

Best banks to apply for the PPP

Where you apply makes a huge difference in your ability to get approved and receive funding. Investors in our community who applied at Chase are still waiting to hear back after making applications weeks ago. Whereas my application was approved in 26 hours at a local community bank.

Most banks are only accepting applications for existing customers, so if you do not already have an account with a local bank, it may benefit you to open an account and then apply.

We have received reports of investors applying at multiple banks (the application is the same no matter which bank you apply to) and then signing documents with the bank that issued approval first.

“How can I open a bank account when most banks are closed?”

Call the bank. They should be able to send you paperwork via email or an online portal. You may have to provide a copy of your driver’s license or mail-in wet signatures. One investor was told she could open a bank account 100% online.

Will localism become the new globalism?

No one knows how long stay-at-home orders will last, but what we are already seeing is that local banking relationships are making all the difference when it comes to receiving stimulus.

For years, I have been advising investors to build relationships with small well-funded local banks. Now, is the time to start if you have not already established those relationships.

It’s time to start playing offense instead of defense

I’ve been thinking about this a lot lately: how we can be leaders during this time of crisis and take advantage of the opportunities ahead? I have been spending a lot of time talking with my inner circle of business owners and rental property owners about this.

In fact, I get so much value from having this group of friends that I wanted to create a way for our investor community to benefit from this collective knowledge. The solution is the ROI Inner Circle, a small group of individuals intentionally focused on growth and taking action.

We’ll share more details next week on a few ways you can play offense right now. Use the information provided in this email to learn more about the loans or grants available to you. The best person to ask, “do I qualify?” is your local bank or tax specialist.

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About the Author

Jennifer Beadles

I’m Jennifer Beadles, and together with my family, we are living the day-to-day of a financially independent family thanks to our rental properties.

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