PROTECT YOUR RENTAL PROPERTY BUSINESS DURING THE COVID-19 CRISIS

For the past few years, most property managers have mostly been experiencing a strong demand in the rental business. With the current COVID-19 outbreak that’s happening today, a lot of investors are wondering if we’re in for another recession similar to what happened in the industry in 2008-2009. ProWay Property Management is here to provide insight over the impact of this pandemic on the rental housing business.

ARE WE ABOUT TO ENTER A RECESSION?

A lot of you may be concerned that, with the coronavirus’ effect on our economy, we may be entering another recession. The thing is, if we look into the recent strength in the rental housing market, bouncing back after suffering a loss from where we’re at now will be much easier than before.

According to experts, it’s expected that the decline in GDP (Gross Domestic Product) in the second quarter will be around 6%. If the outbreak is brought under control quickly, our economy is hopefully set to be stabilized around the third quarter to bounce back late 2020 or early 2021.

If history has taught us anything, there are a few takeaways we can learn from the past recession that can be applied today.

Don’t Panic!

Emotions can play a major part when it comes to pricing your rental property, especially in the event of a downturn. Aim to build your pricing strategy with a mix of logic and operational expertise. Do everything you can to protect your rent roll in such a way that will let you capitalize once the market improves. Without the right demand for rental properties, slashing rent prices will not help you much.

Lock-In Tenants For Longer Lease Terms

There were benefits in the previous recession when property managers and landlords pushed for longer lease terms. This effectively reduced churns, vacancies and tenant-turnovers.

Track Market Trends Closely

Knowing what’s happening around you in real time helps you make educated solutions for problems that may come. Tracking how other landlords are making price changes to rent allows you to make critical decisions. You may want to see what is, and is not working for other landlords in your area.

COMMON QUESTIONS BY LANDLORDS

What happens to our rent rolls in states that placed moratoriums on evictions?

Recently, the National Multifamily Housing Council (NMHC) endorsed a number of measures in response to the COVID-19 crisis. Among them is a 90-day moratorium on evictions. This means that landlords are not allowed to remove tenants who are late on rent. Our take on the matter is that there’s nothing more important than saving lives to help flatten the curve. Hopefully you’ve done smart tenant screening procedures, so you can see into the tenant’s actual willingness to pay rent, rather than ability to pay rent.

Would it be more effective to reduce rent price or offer new lease concessions?

It all boils down on how you perceive your current situation during this outbreak. If you believe that you’ll be able to bounce back relatively quickly, then applying concessions could be the right way to go. However, cutting down on the rent price would be a more realistic choice if you have doubts on pulling out.

What happens when the moratoriums end?

If we approach this realistically, some delinquent tenants will still be delinquent even after this outbreak cools off. The U.S. Department of Housing and Urban Development banned evictions on HUD-owned properties for 60 days. In fact, some activists have even been pushing measures to suspend rent altogether. The silver-lining here is that the NMHC added a short-term financial assistance measure to renters facing layoffs or lengthy periods without a paycheck. Without this resolution, there’s very little that property managers can do to recoup the lost revenue, unless they have deposit insurance programs in place.

LONG-TERM OUTLOOK

There will most likely be a strong rental demand for the next decade or so. It is still best to look into improved screening practices to ensure that tenants don’t just have the ability to pay rent, but the willingness to do so. This current Covid-19 crisis has taught us that landlords need to be prepared for all kinds of scenarios.

With everything that’s happening right now, there’s no shortage of unknowns that can happen during times of crisis. As we hope for the best-case scenario, and a quick recovery, it will always be ideal to partner with the right people to protect your rental property business. Our team from ProWay Property Management can help you lessen, and avoid any loss in your rental business, while being prepared to face any challenges that may come. To learn more about our services, contact us at (734) 744-5080 or you can reach out to us via email at .