Owning real estate as an investment is often considered one of the best ways to build long-term wealth. While you can benefit from consistent rental income and price appreciation, there are still some challenging times that occur for property investors.
Real estate investors today are experiencing one of the most challenging times in modern history with the COVID-19 pandemic. To ensure that your real estate investment goes as well as possible, there is some advice that property investors should follow during this time.
Understand the Situation
One of the most important things that a landlord can do during the COVID outbreak is to understand the situation.
The COVID outbreak is one of the most significant economic stressors in a long time. In the course of a month, millions of people lost their jobs or had their income reduced dramatically. Due to this, a landlord needs to realize that this will impact their tenants’ abilities to pay their monthly rent. A landlord needs to be prepared for this and have a plan in place if a tenant is not able to make their rent payment.
Hire a Property Manager
Another piece of advice that you should follow during this time is to hire a property manager. While you may try and save costs by managing a building on your own, you could find this period of time will come with more challenges. Further, if you are located out of state, getting to the property could be a lot more difficult.
For investors, whether it’s West Palm Beach property management or similar services in other cities, it is important to consider hiring a manager to handle the day to day operations of your investment property.
Know the Law
While there are pretty clear laws in place that govern evictions and other penalties in a lot of areas, many of these laws have been frozen for the time being. It is important that you fully understand the new laws in your area, which could prevent you from taking action against tenants for the time being. If you purposely or inadvertently violate one of these laws, you could face serious consequences.
Change Rental Rates
While your first concern will be regarding the well-being of your current tenants, you need to realize that much of your rental demand in the future could have changed. With unemployment rates that have gone up more than ten percent in some cities, the asking rate for an apartment or other rental property will likely need to decline as well.
If you do have a unit that is available for rent, it is important that you offer a rate that is reasonable based on the new economic realities.
Speak with Lender and Vendors
While there is a lot of stress that will be placed on tenants and landlords, there are relief options available. A real estate investor could benefit by reaching out to the commercial mortgage lender to see if there are any relief programs available. Often times, you are able to have your principal and interest payments delayed for a few months. This could drastically improve your cash flow position.
Ultimately, real estate investors are not immune to the challenges that exist during this difficult time. If you are an investor, it could be hard to capture the same revenue you once did. Fortunately, there are some pieces of advice that could be followed to help you to improve your cash flow and management of your property.