The COVID-19 pandemic has had a profound impact on the US economy, and the rental housing industry is no exception. In 2020, the US economy experienced a severe contraction, resulting in job losses and reduced income. According to a report by the National Low-Income Housing Coalition, more than 10 million renters in the US are at risk of eviction. This is due to job losses and reduced income caused by the pandemic.
The pandemic-induced recession has created significant challenges for landlords and rental agents. These challenges have resulted in increased competition for renters and reduced rental rates. According to a report by Apartment List, the national median rent decreased by 1.4% in 2020. This was the first annual decline in rent prices since the Great Recession of 2008. Furthermore, rental markets in large cities such as San Francisco, New York, and Boston saw significant declines in rent prices. San Francisco, for example, experienced a 27% decline in rental rates.
In addition to reduced rental rates, landlords and rental agents also face challenges in retaining tenants during a recession. As more Americans face financial difficulties, many tenants are unable to pay rent on time. Additionally, they may be forced to move out of their rental homes. According to a survey by the National Multifamily Housing Council, as of January 2021, 19% of renters reported that they were behind on rent payments.
Overall, the recession has created a challenging environment for the rental housing industry in the US. Landlords and rental agents must be prepared to navigate through these challenging times. Here are a few helpful ways to do so.
Work to Retain Existing Tenants
One of the best ways to manage your rentals during a recession is to work on retaining your existing tenants. Offer them flexible payment plans, extended due dates, or even rent reductions if possible.
Being an awesome landlord is a big factor when it comes to retaining tenants. They may be great tenants to have around, but do they also like you as their landlord? Communication is key; be sure to keep an open dialogue with your tenants to understand their needs and how you can work together to find solutions. Take their feedback proactively.
Consider Other Ways to Use Your Rental
If you are struggling to find tenants or are experiencing high vacancy rates, consider other ways to use your rental property. Short-term rentals such as Airbnb or VRBO have become popular alternatives to traditional rentals. However, be sure to check your local zoning laws and regulations before making any changes.
Medium-term rental, renting to travel nurses, and renting it out as a film set are also good options to allow your property to generate income when demand for 12-month rentals is low.
Rental agents can put in the extra effort to market vacant properties. Publishing listing on platforms like Padleads can help fill in vacancies. Through Padleads, you can syndicate listings to high-traffic websites so more people can see them. More applicants mean higher chances of finding the right tenant.
Budget for Financial Hiccups With Tenants
A lot of people lose their jobs during a recession, and your tenants face the same risks. It is important to have a plan in place for financial hiccups with tenants. Set aside funds for potential vacancies or unpaid rent. Consider working with a property management company to handle the financial aspects of your rentals, including rent collection, lease renewals, and evictions if necessary.
Monitor Income and Expenses
Landlords and rental agents should monitor their income and expenses closely during this time of financial uncertainty. It’s essential to know how much money is coming in and going out to ensure the rental property is profitable. Landlords should keep track of all expenses related to the rental, such as repairs, maintenance, and advertising costs. It’s also essential to monitor rental rates in the area and adjust the rent accordingly.
Stay Informed on the Housing Market
During a recession, the housing market can be unpredictable. Landlords and rental agents must stay informed on the housing market trends in their area. Knowing the local housing market can help landlords set appropriate rental rates, make informed leasing decisions, and adjust their marketing strategies. Additionally, staying informed on housing laws and regulations can help landlords avoid legal issues and ensure they are complying with all applicable laws.
Managing rentals during a recession can be challenging, but with proper planning and preparation, landlords and rental agents can navigate through these challenging times. Retaining existing tenants, considering alternative uses for rental properties, budgeting for financial hiccups, monitoring income and expenses, and staying informed on the housing market are all critical steps in managing rentals during a recession. By following these tips, landlords and rental agents can ensure their rental properties remain profitable and provide safe, affordable housing for tenants during difficult times.