Jared Husmann / April 8, 2020
5 Things Apartment Owners Can Do During COVID-19 & What to Expect Afterwards
The COVID-19 pandemic can easily make us feel uncertain about what’s to come. If you’re investing in multifamily properties, you’re probably wondering about the outlook for your investments and the future of the multifamily rental market.
If you’re nervous about your payments and investments, chances are your tenants are nervous too. Think of ways to serve your tenants, and focus on the difference between amenities and services. The best way to get through this pandemic is to make decisions based on empathy and caution. We have some ideas for what you can do for your rental properties and tenants during the outbreak, and we’ll discuss what to expect once the coronavirus crisis is over.
1. Make Sure All Staff Members are Taking Precautions
The most important precaution relates to you and your employees. While self-isolation guidelines are in place, it’s important to limit your contact with other people. If your office staff is able to work from home, this is the safest option right now and will still provide your tenants with a resource to handle their needs. If possible, limit in-unit maintenance projects to emergency requests only. Maintenance staff should wash their hands frequently and wear protective gloves and masks when entering units.
While social interaction is limited, look for projects that maintenance staff could do alone. This might be a good time to focus on outdoor tasks like landscaping or building exterior projects.
2. Acknowledge Residents’ Fears
Coronavirus has been spreading quickly, and it’s impacting many areas of life and work. Some people are falling ill, and other people are taking on more care and responsibilities at home. Some people, like restaurant workers and event planning staff, are currently unemployed. Other people, like healthcare and essential service workers, are putting their lives at risk to take care of others. Each individual tenant has a different experience, and apartment management needs to be considerate of residents’ situations. A little bit of sensitivity and empathy can go a long way.
3. Be Flexible With Rent Payments
This virus and ensuing social distancing measures have caused many people to become suddenly unemployed. Individuals facing layoffs or pay cuts may struggle to make rent payments on time. In order to support these tenants, consider allowing extensions or rent reduction during the next few months. Your flexibility shows you care, and your residents will appreciate it.
This type of flexibility highlights the difference between amenities and services. Flexible payment options are a service your tenants won’t soon forget. When it comes time to renew their lease, they may choose to stay because they know management is compassionate, empathetic and willing to adjust processes to maximize quality of life.
Waiving payments or accepting late rent checks may impact your ability to pay bills, too. Some lenders are making allowances during this time for property owners who need extensions on mortgage payments. Common understanding is helpful as we all continue to adjust to a new normal.
4. Refinance Your Mortgage to Lower Rates
Average interest rates are very low right now, and many homeowners and multifamily property owners will find it beneficial to refinance. The virus will impact the spring leasing market, and occupancy rates may be unpredictable. Taking advantage of low interest rates will enable you to save money and build up a cushion for the uncertain months ahead.
5. Be Prepared for Ups and Downs
With the current state of the stock market, there’s a very good chance COVID-19 will cause an economic recession. However, we’re also seeing evidence of markets bouncing back after the coronavirus threat passes. This appears to be happening in China, where social isolation guidelines are lifting and industries are returning to normal operations. A recession sounds scary, but it may bring unique opportunities. It helps to be prepared and to strategize a plan for the future.
Are Rental Properties A Good Investment During Coronavirus?
While we’re in the midst of the COVID-19 outbreak, it’s hard to say for sure what the future of the apartment industry will be. While predictions of market outcomes will become clearer in the coming weeks or months, we have some insights about what might happen to multifamily rentals after coronavirus.
Many higher-priced properties have experienced price drops during the coronavirus outbreak. Across the commercial real estate industry, prices are very low. Investors are being understandably cautious at this time. If you’re willing to take on risk, you could find several multifamily properties available for very competitive prices.
Multifamily industry changes will be different depending on the type of rental. Class B properties are likely to thrive, while class A and class C apartments will suffer more. Some people living in luxury class A apartments will choose to move to slightly smaller, less expensive units in order to save money during a recession. Renters in class C apartments are the most vulnerable population during and after the coronavirus outbreak. Many class C tenants may struggle to make rent payments due to unemployment and other concerns.
Another big projected outcome of the coronavirus is that we expect to see individuals renting longer. Many Millennials are already foregoing homeownership in favor of renting, and the uncertain economy may cause even more individuals to wait before investing in real estate. In the past few weeks, we have seen many buyers back out of home purchases before closing, and we expect to see this hesitancy and caution continue in the coming months.
As apartment living seems like a more prudent choice for many would-be homeowners, investing in multifamily properties may be a good option for anyone interested in commercial real estate.
Investing in Multifamily Properties During Uncertainty
Are rental properties a good investment right now? With an imminent recession, many buyers are being cautious about investments. However, lower property prices may make investing in multifamily properties a lucrative option for buyers willing to take a risk for potential profit. Reach out to us if you want recommendations about specific properties, and check out our current listings if you’re ready to jump in on your next real estate investment.
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