If you own investment property in San Antonio, it’s time to think about protecting your investment from the looming widespread housing crisis. Most people agree that a housing crisis is on the horizon, and it’s likely to begin as soon as the latest eviction moratorium extension lifts on June 30, 2021.
Yahoo recently named San Antonio, Texas one of the top 40 U.S. cities that’s most at risk of suffering a major housing crisis in the near future. This prediction was based on multiple data sources, including a study from GOBankingRates, which in turn rests on data from the U.S. Census Bureau.
The study in question looked at such factors as delinquent mortgages, vacancy rates, and foreclosures to assess which cities are likely to be hit the hardest.
Investors aren’t getting the same benefits as renters
Based on past extensions, it’s possible we’ll see yet another eviction extension. But that’s mainly good news for tenants and bad news for investors. The longer you go without rental income, the deeper in the hole you’ll go with your own mortgage.
If you can’t pay your mortgage and your property goes into foreclosure, you’ll lose all around. You could sell it and cut your losses now, but that may not be your ideal choice.
If you’re determined to ride out the economic situation, here’s how you can protect your investment from the looming housing crisis.
1. Know when it’s time to sell and act fast
As with any investment, it’s critical to know when it’s time to sell. Properties are no different. The only distinction is the intensity and level of threat to investors.
Normally, you just have to time the market right. Housing markets go up and down constantly, but usually you don’t stand to lose that much if you sell at a bad time.
When a housing crisis is on the horizon, the stakes are higher. The potential worst case is mass foreclosure; you could lose your entire investment. Currently, there’s no sign that the housing market is getting better.
If and when conditions indicate it’s time to sell, you mustn’t hesitate to put your San Antonio property on the market. Currently, housing demand is high and inventory low.
That may change in the near future as more investors choose to sell. Don’t wait until it’s too late to make your choice, and you probably shouldn’t try to hold out for top dollar.
2. Try to work with your tenants
If a housing crisis hits and millions of people get evicted from their homes, it’s not going to be pretty. Try to work with your tenants before things reach that point.
Communicate with them regularly to make sure you know where they stand. For example, you should talk about:
- Whether they can pay partial rent. If a tenant can pay even 25%, give them that option. If you can’t evict them, you don’t have any other choice. It’s better to generate partial income than none. Also, you could draw up a new lease with your tenant that allows them to pay that 25% for the next six months without the threat of eviction.
- Whether they have income or are living off savings. Your tenant may not be willing to tell you the details of their financial status, but it will help if you know where their rental income is coming from. That way you can prepare for a potential lack of rental income at some point if they aren’t employed.
- Bending the lease agreement to allow subletting. Your tenants may not be able to pay rent, but they might have a friend with income who needs a place to live. If your lease prohibits subletting, consider easing up on that restriction for the time being. If your tenants may sublet, you’ll get rental income.
Just make sure you require that anyone moving in is put on the lease and pays rent directly to you. You don’t want your tenant collecting the rent and holding onto that money.
There may not be much you can do for your tenants, but you’d be surprised by how readily people will cooperate when there’s something in it for them (such as a 75% discount on rent with no threat of eviction).
3. Help your tenants get rent relief
Texas just launched a new rent relief program to help people pay current, future, and past-due rent along with utility bills. Make sure your tenants know about this program. If they sign up and are approved, you’ll get paid directly.
Though you aren’t required to sign up for the program separately, which was a requirement of the last program, you will be contacted and you’ll need to agree to accept the rental payments from the agency that distributes the funds. If you refuse to accept the payments, the money will be given directly to your tenant … and they might not use it for rent.
Under the program, qualified tenants can receive coverage for:
- Up to 3 months of future expected rent
- Relief for past-due rent
- Up to 3 months of expected utility bills
- Relief for past-due utility bills
Once someone has received three months of future assistance, they can re-apply for three more months (if funds haven’t run out). Past-due rent will be covered dating back to March 13, 2020.
4. Start the eviction process the minute it’s legal
Nobody really wants to file an eviction lawsuit, but if a tenant can’t pay rent and you can’t pay your mortgage, eviction is the only way to protect your property. You can’t allow a tenant to live rent-free in your property for an indefinite amount of time. It’s an unfortunate scenario, but it’s the only realistic option.
5. Work with a property management company
If you’d rather not get involved in the day-to-day issues raised by being a landlord, hire a property management company.
Hand over your worries to Green Residential
Being a landlord is already stressful. It’s even more stressful when you have to manage tenants who can’t pay rent through no fault of their own.
If you don’t feel cut out for managing your property during these difficult times, contact us for a free property analysis. When you work with Green Residential, we’ll take excellent care of your San Antonio property and your tenants.
Contact us today to learn more about how we can help.