Managing properties under a normal economy is challenging enough. Managing properties during a financial crisis adds a new level of uncertainty to the mix. In fact, owning investment property during a financial crisis will force you to rethink your strategies, at least temporarily.
The current financial crisis is tied to the COVID-19 pandemic
The world has seen several major financial crises, but the current coronavirus pandemic is about to take an exceptional toll on the housing market. While millions of unemployed tenants are struggling to pay rent, landlords are also struggling to pay their mortgages. Property owners who rely on rental payments for income are in the same situation as their tenants.
If you own rental property, here are several tips for managing your properties and tenants during a financial crisis.
Hire a property management company
If you’re still managing the day-to-day of your landlord duties, it’s time to hand it off to the pros. Investors who employ property management services have the advantage during a financial crisis. They don’t need to manage the daily grind of being a landlord, which makes property management hands-off.
Landlord duties are tedious. If you’re a serious investor, you don’t have time for tedium. You need to focus all of your time and energy on tasks that increase your ROI. You don’t need to be doing things like calling in repairs and chasing late rent. Or worse, filing evictions with the court.
Not looking forward to serving evictions?
Although a financial crisis isn’t new, the current crisis presents new challenges for investors. Many will have no choice but to evict some or all of their tenants to keep themselves afloat. People who have nowhere to go will inevitably end up homeless. That’s a tough situation all around.
The U.S. enacted a moratorium on evictions that will last until January 31, 2021, but that won’t help renters get caught up with missed rent. When the moratorium is over, all past-due rent will become due in full. At that point, you’ll need to decide to evict tenants for unpaid rent or continue allowing them to live rent-free.
Handling evictions is perhaps the strongest way a property management company will support you during a financial crisis. The last thing you want to deal with is an eviction, let alone several at once. Depending on how many properties you own and how many units you rent, you could potentially need to file hundreds of evictions at once. When you have a property management company working for you, they’ll handle it all.
Offer resources and help
While you’re definitely not obligated to take care of your tenants, gather a little compassion and try to see if you can help in some way. Ask struggling tenants if they’re able to pay partial rent. Some tenants might be withholding full rent because they don’t believe you’ll be open to working out a deal.
If you mail out any kind of notice to your tenants, include a list of resources that might be applicable to their situation. For instance, there might be local rent relief programs or state-wide programs they may not know about.
Stay in communication with your tenants
Communicating with tenants is critical during a financial crisis. Tenants who can’t make the rent are probably not at fault for losing their jobs, so remember to treat them with respect and understanding rather than anger and frustration.
Staying in communication with your tenants can greatly reduce the stress and frustration caused by a financial crisis. When tenants are more relaxed and don’t feel threatened by their landlord, they’re more likely to be easy going and cooperative. A relaxed tenant might even come up with partial rent when they previously thought they couldn’t afford to pay anything. That’s the power of positive communication.