Challenges Facing Landlords and Property Managers Going Into Q4
2020 has been a challenging year for many industries – to put it mildly. Property management is an essential industry that had to make sweeping changes and adjustments at the pandemic's onset. In addition to changes in daily operations, many property managers had to manage the reality of lost rental income when tenants became suddenly unemployed and were unable to pay their rent in full, or at all. While rent collection is an evergreen issue for property managers, industry players face five additional challenges as they enter the 4th quarter of 2020.
Common property management challenges are different this year.
Collecting rent is more complicated
Even an experienced management team that vets every tenant to ensure they have strong enough credit scores and meet employment requirements can run into problems collecting rent. Pandemic or not, tenants can fall behind, have unexpected expenses, or lose their jobs – and the pandemic heightened the occurrence of each of these situations.
Solution: Payment plans and various assistance programs remain vital to helping tenants continue to pay rent. The best case involves finding a good middle ground, so both tenants and landlords can work together. When possible, deferring rent can help tenants in the short term, and make it possible for property managers to avoid a costly and unpleasant eviction process.
Government regulation adds a daily burden
2020 has brought increased government regulation to real estate operations. While the real estate leasing industry is no stranger to government oversight, lockdowns slowed activity to a crawl for a while, and new requirements for cleaning protocols, masks, online showings have hit property managers hard. Add eviction moratoriums in many states now extended through September, and the reinstatement of payment requirements for federally backed loans. What happens next with rental and mortgage payments is anybody's guess.
Solution: This challenge will be an ongoing one. As long pandemic restrictions remain in place, the economy continues to suffer, and unemployment remains at record highs, property managers will need to be proactive to stay on top of changing regulations and take advantage of any available programs that help them, and their tenants stay on track.
Maintenance is more costly
There could be a whole book written about new maintenance burdens imposed by COVID-19. With significantly more time and cost allocated to maintenance and general cleaning, many management companies have had to reassess their budgets. Property managers have had a hard time hiring maintenance staff they can count on to show up to do what has become a more difficult job. Plus, it's been a struggle to purchase enough cleaning supplies and other materials to get maintenance projects done. Many major retailers have a 3-5 week waiting list (if not longer) to deliver replacement appliances. Some cleaning supplies, like spray cleaners and cleaning wipes, have been on backorder for months.
Solution: Partnerships with local maintenance companies with a significant stockpile of supplies and the desire for more work could help property managers stay on top of cleaning and getting projects completed.
Communication is more challenging
Remember when you could pick up the phone or text someone, and they would respond promptly or within a day? Good times. Property management companies have had to scramble to gather as much additional contact information as possible to reach tenants and still have a hard time doing so. People are going through tough times, not just financially but emotionally. Layoffs, reduced hours, and general anxiety have caused many people to become withdrawn and depressed. This pandemic-induced problem causes many delays and hindrances to communication.
Solution: Make a specific effort to reach out to all of your tenants in various ways: snail mail, calls, texts, email, and even social media. Do your best to make some form of live contact with people. Present your business in a professional but approachable way, and do what you can to understand what's going on with people and improve communication right now. Yes, you are not social workers, but many property managers have experience helping tenants navigate community services and assistance programs; this is no different, just a bigger challenge. So many people are experiencing hard times.
Hiring and retaining quality staff is difficult
You may think that preserving jobs for your employees during this time is an accomplishment, and it is. But keeping your staff productive and satisfied during this time can be a big challenge. You may have had to ask employees to start working from home – for some of them; this hasn't been easy. You may have introduced new software for management and communication, and employees have had to learn to use new methods and devices to do their jobs and stay connected.
While online platforms and management tools have helped in many ways, you still need to assess your teams' skills and provide the necessary training so they can serve your tenants and owners responsively. And let's face it – not everyone can be productive at home. Some have limited space to work and must deal with family around all day; others may not have mastered self-motivation. The learning to adapt to these new workplace realities has been steep, and it's affected staff performance. In some cases, it's caused turnover as people burn out or start looking for a more systematized and organized company.
Solution: Proper staff training on tasks, software, and how the new office standard might look for them – plus providing them with the right equipment at home – can help you support strong people and make the most of their skills, so they are in a good position to thrive.
Increasing revenue remains a priority
Through all of this, property management companies are tasked with helping their clients increase revenue. If they succeed for their clients, they also improve their bottom lines. With a cash flow crunch everywhere, the revenue growth challenge will be one of the more difficult items on the list. Right now, it's extremely difficult, if not impossible, to evict non-paying tenants and replace them with people in a good position to pay rent regularly. It's also difficult to raise rents for current tenants. In the past, both of these actions would help grow revenue to cover increased maintenance bills. On the bright side, some management companies have found that working remotely has helped cut their own overhead. Their office utility bills have gone way down. Most companies, however, continue to lease office space.
Solution: Think big to determine how many clients you can take on during this season and max out your client list. Look for landlords who don't want to manage but are looking to maintain occupancy during this time. When regulations start to expire, and evictions are back on the docket, management companies will be able to take care of the genuinely troublesome tenants and replace them with those who have maintained steady employment during all the commotion. When the time is right to consider rent increases, stay on top of the actual current rent rates with tools like Rentometer. It can show you rents in your neighborhoods, and you can adjust your new rent amounts accordingly.
The rental landscape for 2020 has been complicated and unpredictable. Some areas have held their ground while parts of the country took massive hits. In some cases, people have been able to picot and find new employment, while others have successfully applied for assistance to help with job loss due to COVID. While the 4th quarter will hold many challenges, 2020 might still end up as a year of cooperation and compassion for the relationship between tenants and property management companies.
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