Landlords are trying to adjust to the "new normal" of COVID-19 and the financial impact of tenants who cannot pay rent due to lost work or sickness.
If you're a landlord, you must maintain your investments without sacrificing the well-being of your tenants, and may need to consider new business and financial strategies.
Here are some creative suggestions from real estate experts to help you during the pandemic.
Learn About Support Resources
Many new resources are available for those financially affected by the pandemic. If your tenants cannot pay rent due to loss of income, you, as their landlord, can help them connect with local support services.
Aaron Norris, VP of PropertyRadar, suggests contacting 211, a health and human services hotline for people in need.
"Housing ranked as the No. 1 need even before COVID," Norris says. "What some landlords don't know is that calling 211 for the county where a rental resides will open up a ton of resources, be it rental assistance or food stamps. Our local 211 has received over $30 million in funding via CARES Act funds, government grants, and donations."
Rob Carrillo, a real estate agent and property manager for Century 21 Haggerty in El Paso, Texas, has helped military renters in his area who are struggling to pay their rent during this crisis. He says that getting assistance for tenants should be a landlord's priority.
"Numerous organizations have been coming to the rescue, and we make it our duty to learn about them all and what their requirements are," he says. "Many just require an application and for the landlord to agree to forgo any immediate future evictions without at least 60 days' notice and a 10% discount on the monthly rent. While these funds are often capped at $1,000 per month, every bit helps."
For landlords who are struggling financially, Carrillo suggests refinancing to lower monthly mortgage payments.
"If we have a landlord that can refinance and bring those monthly mortgages down, we can then adjust rent prices," he says. "Every $100 that can be saved on the tenant's side can be the difference between staying afloat and going under. If we can discount the rent without affecting the landlord's bottom line, then it's a win-win. Bringing those rent prices down will also assist a vacant home hitting a barren market, making it much more competitive in the fight for qualified renters."
Offer Incentives to New and Existing Tenants
Attracting new tenants during a pandemic might seem overwhelming, but filling any vacant spots means more rent coming in, offsetting the lack of rent from tenants who are struggling.
Andy Kolodgie, co-owner of real estate investment company The House Guys, in Washington, D.C., suggests offering rental discounts as well as lease-signing bonuses such as gift cards to local restaurants.
"In terms of getting new tenants, it can be worth it to offer significant discounts," he says. "Getting a solid tenant in today at a discount is worth it financially compared to having a vacancy at the higher rent price for potentially months."
You can also offer rewards to existing tenants who are still able to pay their rent on time. Eugene Romberg, a real estate investor in the San Francisco Bay Area, suggests proactively lowering your rental rates.
"With a lower rent, it allows for tenants to have a breath of fresh air and to give them relief from any ongoing financial burdens they may have," he says. "If you slash your prices, they will be more willing to pay—and might be able to pay even faster than they could before. The lower the rent, the more attractive your place becomes, especially with those who are looking for housing."
His personal experience indicates that this is a winning, although out-of-the-box, strategy. "I have a few long-term rentals myself—and now that I have lowered my prices, I'm seeing more of my tenants pay, without hurting themselves in the long run," he says.
Pivot to Short-Term Rentals
For landlords used to renting with long-term leases, consider short-term leases—month to month or even weekly—in order to maintain occupancy during the pandemic.
Myles Daniel, founder and managing partner of Sell My House Fast Greenville in Greenville, S.C., says this could increase your odds of rent being paid.
"As a landlord, relying on one tenant is risky," he says. "However, when you have multiple tenants or a nightly guest via Airbnb, things seem to work themselves out. As it pertains to Airbnb, your occupancy rate could be 50%, and you'd likely be able to make ends meet."
Kevin Bazazzadeh, owner of Brilliant Day Homes in Houston, has seen an increase in short-term rentals in his area. "While it is great if you are in a vacation destination, if you aren't, you can still provide alternative lodging to hotels," he says. "By staying at a house versus a hotel, travelers can avoid a large amount of interaction with people who may potentially be sick."
Being a landlord during uncertain financial times can be stressful, but taking a step back, planning for your immediate needs, and considering creative solutions to address lost rent will help you strengthen your relationships with your tenants and improve their lives while paying your own bills and avoiding further financial hardship.