COVID-19 has been tough on all of us. Every American has been affected in one way or another – health-wise, financially, mentally, or emotionally. You might not be affected by the virus physically, but as an Austin landlord, it’s impacted your investments, cash flow, and livelihood. Knowing how to handle these current circumstances in a poised and practical manner will increase your odds of short- and long-term success.
8 Practical Tips for Staying Afloat
Depending on the type of rental properties you invest in, how leveraged you are, and the circumstances surrounding your tenants, you could find yourself at any point along a diverse spectrum:
[Survival Mode] [Just Fine]
For the purposes of this article, we’ll assume that you’re somewhere closer to the left side of the spectrum. And if that’s the case, you need some ideas, inspiration, and tactics to help keep you afloat.
At Green Residential, we work with hundreds of landlords on a daily basis – so our finger is firmly on the pulse of the industry. In light of this, here are a few suggestions we have for you:
1. Communicate, Communicate, Communicate
It’s commonly said that the three most important words in real estate are location, location, and location. And while this might be true, you could say that the three most important words in today’s market are communicate, communicate, and communicate.
There’s not a lot you can do about the virus, job market, and how the former impacts your tenant’s income, family situation, and anxiety levels. What you can do, though, is keep the lines of communication open so that they feel supported, heard, and understood.
Don’t wait for your tenants to contact you. Proactively place phone calls, send texts, and provide encouragement wherever possible. Not only is this the right thing to do, but it also cultivates goodwill and lessens the likelihood of friction and bitterness causing problems in your relationship with tenants.
2. Ask for Verification
Communication is important, but it’s also important to remember that you’re in a business relationship with your tenants. Don’t let your warmth and understanding cloud your financial decision making to the point that you set yourself up for failure.
As cold-hearted as it might seem, you should ask for some sort of verification if a tenant tells you they can’t pay rent. While they’re almost certainly telling the truth, you want to prevent situations where a tenant simply leverages the current circumstances to get out of paying rent.
3. Reach Out to Your Lender
Are your tenants unable to pay their rent? Have months of floating the mortgage out of your own pocket set you back? Don’t suffer silently. It’s imperative that you reach out to your lender and let them know what’s going on.
Lenders are aware of what’s going on. Many have programs in place where they’re pushing the pause button on payments. You won’t know if you have access to these programs unless you open up and ask.
4. Shift How You Work
Depending on social distancing requirements, you might need to shift how you work – especially when it comes to finding new renters for vacant properties. The traditional method of showing properties might not be a practical option.
“Instead of doing individual virtual walk-throughs, you can streamline the process,” Jessica Conflitti writes for Real Wealth Network. “Record a video on your phone as you walk through a rental property or unit. It’s also helpful to take pictures of amenities you wish to highlight. Then, post it online to both advertise the property and replace the need for in-person tours.”
Changing the way you do things shouldn’t be seen as bad. In fact, you might like some of the changes you make so much that you continue to use them once all of this has passed. (Because this too shall pass.)
5. Table All Non-Essential Spending
Any money problem has two levers that can be pulled. You can increase revenue or slash expenses. They both have a similar effect. But increasing revenue back to normal levels probably isn’t an option at the moment. So let’s focus on how you can slash expenses to minimize the gap between inflow and outflow.
For the time being, you need to table all non-essential spending. This might mean eliminating or reducing expenses like upgrades, non-essential maintenance, non-essential professional services, software subscription services you don’t need, etc. (You might be surprised by how much you can trim off your monthly budget!)
6. Stay On Top of Changing Requirements
We’re in a state of flux right now. Just when we think we’re starting to see things crystallize a bit, the pandemic takes a new turn. This has led to numerous changes in the form of new laws, regulations, rules, and requirements. Make sure you’re staying on top of them as they change so you don’t end up violating any rules that you’re supposed to be keeping.
7. Plan for the Future
This might be the first pandemic of our lifetime, but it probably won’t be the last. Let’s use this as a learning experience and start planning for the future. Take what you’re learning and turn it into a series of standard operating procedures (SOPs) and best practices. When something like this hits in the future, you’ll have a much better idea of how to respond to minimize damage.
8. Stay calm
The waters are choppy at the moment. Fear, stress, uncertainty, and anxiety are the orders of the day. And while nobody can be certain how all of this well end, there is hope on the other side. Let’s all take a deep breath. Inhale…exhale…inhale…exhale…and stay calm. You are not alone in this. There are millions of other people and thousands of other landlords going through the exact same situation you are. You got this!
Work With Green Residential
At Green Residential, we’re more than rent collectors, repair coordinators, or administrative assistants. Our aim is to strengthen our clients’ investments by reducing uncertainty and strengthening relationships with tenants. We take pride in adding value to Austin landlords, through good times, challenging times, and every time in between. Want to know more? We’d love to hear from you.