Although it’s been over two years, the coronavirus pandemic has made a huge negative impact on real estate investors. Thanks to the eviction moratoriums, many have struggled to collect rent and have either sold their properties or gone into foreclosure.
All of that aside, not all property investors are suffering. Many have found ways to make it through hard times, while still acquiring additional properties. If you’ve been struggling and are looking for tips to stay profitable during the pandemic, here are some ideas to get you started.
Work with a property manager
Having too much work is one of the main reasons landlords have been so overwhelmed during the pandemic. Being a landlord is already difficult, but dealing with late rent, no rent, and arguments with tenants can push anyone to their limits.
When you’re stressed out, you can’t think properly, and you’re more likely to make big mistakes. For instance, you might push a tenant too far in an argument and end up with retaliatory property damage.
The best way to take the pressure off is to hire a property manager. You can hire an individual person, but it’s smarter to hire a professional agency. An agency will have an entire team of experienced professionals who will be ready to handle anything.
For instance, Green Residential has a team of Houston Property managers who handle everything from repairs and inspections to tenant disputes and evictions.
Find a property management agency in your area and find out what services they can take off your plate.
Refinancing
Refinancing has always been a good way to lower your expenses, and that’s what many property investors have been doing. When you refinance a mortgage with a lower interest rate, you’ll pay less for the property in the long run. You might even be able to lower your monthly payments.
Even if you end up paying the same monthly amount, getting your property paid off as fast as possible will help you immensely. Did a tenant stop paying rent? In most areas, there are no more rent moratoriums and you can evict. If you can cover the mortgage until the eviction is over, you’ll be able to recover with a new tenant.
Cutting deals
Cutting a deal with a tenant doesn’t need to be a one-sided affair; it should benefit both parties. Some landlords are cutting tenants a deal on rent because they know it’s going to be hard to get another tenant who can pay the rent in full. In exchange, tenants are agreeing to perform work on the property or do other things for the landlord.
It’s not abnormal for tenants and landlords to enter into agreements that extend beyond the scope of their landlord-tenant relationship during hard times. For instance, the landlord might ask the tenant to show an empty unit next door or pick up their kids from school. Sometimes these types of exchanges become necessary in rough times and they can be helpful when both parties can support each other’s needs.
As long as you create contracts for new agreements and amend the lease according to the law, you shouldn’t have any problems. However, always talk to an attorney before entering into a new agreement with a tenant.
Selling “money pit” properties
Something else landlords have been doing lately is offloading their money pit properties. These are properties that take so much money to fix, repair, and maintain, they don’t show any signs of turning a profit in a reasonable amount of time.
At one time, these properties may have seemed recoverable, but not with the way the pandemic has affected the market.
Some money pits may have been bad investments to start with, but sometimes these properties are the result of unforeseen circumstances, like a tenant trashing the house beyond repair for being evicted. Without full rental income from other properties, some landlords can’t afford to perform extensive repairs and are just offloading.
Things will turn around eventually
Eventually, things will turn around, and the market will start to slowly build itself back up to where it once was. Although, for the time being, don’t hesitate to ditch properties that are generating more debt than income.
Finally, consider acquiring some new properties to attract good tenants who can pay the rent. A fresh start just might be the answer you’ve been searching for during these rough times.