As the world continues to struggle with the COVID-19 pandemic and the United States extends its ongoing battle with the novel coronavirus into Fall 2020, many landlords are wondering what exactly is going on. It can be hard to apply the common sense and basic analytics real estate investors have used for decades to the present day’s contradictory numbers. In the same breath, an investor can say that only one in three tenants paid their rents in April (ApartmentList.com, June 2020) and median listing prices on single-family residential housing have steadily risen throughout the economic lock-downs (Realtor.com, May 2020). One may also note that buyer demand for homes bounced back as early as the end of March 2020 (Redfin, June 2020) and that residents everywhere, be they homeowners or renters, are increasingly interested in single-family residential assets over multifamily communities (Forbes, June 2020). Of course, investors cannot leave out that presently unemployment numbers remain in the double digits (U.S. Bureau of Labor Statistics, June 2020) and the entire nation is waiting to see if the country can safely get its children back to school this fall.
Yes, it is certainly a confusing, uncertain time. However, that does not mean real estate investors should abandon all hope – especially not if said investor happens to have a single-family rental portfolio. In fact, according to SVN/SFRhub Advisors,
“Single-family rentals may be one of the few asset classes to see demand growth following the pandemic.”
That means real estate investors must double-check property management processes right now so they can best serve residents while optimizing returns during the latter half of 2020 and long past 2021.
Here are five changes rental owners cannot afford to miss making with property management in order to be prepared for the fallout from COVID-19:
- Know residents’ rights.
Rental owners will be subject to a variety of guidelines based on the types of assets they own and the states in which those assets are located. This means investors and property management companies must be aware of all legal rights for tenants whether they are in arrears on rent or not. There are many renter-aid packages being proposed, debated, and passed through state and national legislatures right now, so it will be important to stay abreast of all regulations and new legislation.
- Know your rights.
Renters have rights, but so do rental owners. Different states have different rules on how to handle delinquency, eviction, coronavirus-related moratoria, and even basic repairs and maintenance. Property management companies must stay on top of the changes to protect investor interests and their own.
- Understand how “safe and habitable” has changed.
In some types of rentals, the guidelines for keeping certain tenants in “safe and habitable” residences may have changed. Property management companies and investors alike must be aware of these potential changes.
- Be prepared to protect employee and contractor health as well as that of residents.
The best property management companies will not ask employees or contractors to sacrifice safety and well being for the sake of residents, but they also will not require residents to live in unsafe or unsanitary conditions. Your property management company should have clearly defined and stated rules about what types of maintenance and repairs are truly “emergency” or “mandatory” and what types may be deferred (and under what circumstances). This should be communicated not only to you but to your residents as well.
- Understand where “the buck stops” and why.
In today’s pandemic economy, many businesses find themselves in the unenviable position of being unable to do their jobs (like collecting rents, in the case of property management companies and collecting mortgage payments in the case of mortgage servicing companies) but also unable to assist clients in resolving issues associated with non-collection due to foreclosure and eviction moratoria enacted at all levels of government. Some economists speculate this will create massive financial hardship and chaos at the highest echelons of the American financial system due to agreements that can no longer be honored between investors and said companies. In property management, you and your property management company must have a clear discussion about how rent will or will not be collected and how evictions will or will not be enacted. Once you know your options, you must establish clearly what financial fallout will ensue and how you will work as a team to ameliorate the damage. Depending on the terms of your agreement with the company, you may be more or less liable for certain financial angles of property management in a pandemic economy.
A Great Property Management Company Works with You & For You
The best property management companies feel more like partners in your real estate investments than simply service providers, and that is the type of relationship you need to seek out and cultivate for your rental properties in these uncertain times. You should be able to have a dialogue with your property management company about these issues and figure out the best way to move forward together. If your property manager is unwilling to have these discussions, then they may be unable to help you navigate the coronavirus economy.