- Real estate sales decreased by 18% during the pandemic but quickly recovered.
- Vacancies increased due to the financial hardship of renters, and remote working became popular.
- Eviction moratoriums created issues for landlords to enforce lease agreements.
- Virtual showings of properties and increased cleaning and maintenance costs are necessary.
- Strategies to keep the business afloat include investing in properties, lowering rents, exploring other revenue streams, and partnering with property managers.
The COVID-19 pandemic has caused widespread disruption in many industries, including real estate. Investors who own rental properties have seen both positive and negative effects. Here’s what you need to know about how the pandemic affected the real estate industry, how your properties are affected, and strategies to bounce back if needed.
Pandemic and The Real Estate Industry
Overall home sales decreased by 18% during the pandemic. However, it bounced back quickly. By the beginning of 2021, residential sales had jumped even higher than pre-pandemic sales. That said, some areas have fared better than others; for example, luxury homes and condos were more resilient to the market downturns that affected other types of homes in certain areas. Here are ways the pandemic might have affected your properties.
Increased Vacancies
With high unemployment rates and economic instability, many renters have been unable to pay rent or have had to move out due to financial hardship. This has resulted in an increase in vacancies, making it harder for landlords to fill units. Investors may need to lower their rent or offer incentives to attract new tenants.
Remote Work
As many companies have shifted to remote work, renters with office jobs have been leaving urban areas to move to more affordable suburban areas or even out of state. This has led to decreased demand for rental units in some areas. However, landlords can attract remote workers by offering high-speed internet and home office spaces.
Eviction Moratoriums
Many states have implemented eviction moratoriums to protect tenants who cannot pay rent due to financial hardship related to COVID-19. These moratoriums have made it difficult for landlords to enforce their lease agreements, resulting in a loss of income. Investors must know their state’s eviction policies and be prepared for longer rent collection cycles.
Remote Virtual Showings
To prevent the spread of the virus, many landlords are conducting virtual showings of their properties. This has made it easier for potential renters to view units without visiting the property. Investors can use this trend by creating high-quality virtual tours of their properties to attract renters from other areas.
Increased Cleaning and Maintenance Costs
Landlords have had to take extra precautions to keep their properties safe for tenants, such as increased cleaning and sanitation efforts. This has resulted in higher maintenance costs, including the need for personal protective equipment and other supplies. Investors need to factor these costs into their budgets to ensure they are still profitable.
Strategies to Keep Your Properties Afloat
Thankfully, there are ways you can keep your business afloat. Here are some of them:
Invest in New Properties
Investing in new properties is one of the best ways to stay ahead of the curve. Many areas have seen a decrease in home prices, making this an opportune time for acquiring more rental units and increasing your income potential. You can finance your expansion by getting a new mortgage. Contact your local mortgage companies to help you out. They can guide you through the process and get you the best rate.
Lower Rents
Rents are crucial for keeping your business afloat. To attract tenants, you can consider lowering your rent for some time or offering incentives such as specials on rent payments or discounted security deposits.
Explore Other Revenue Streams
To offset losses in rental income, investors should look into other revenue streams, such as subletting units and offering short-term rentals. You can also create additional amenities to make the property more attractive and generate more income from existing renters. This could include adding recreation centers or laundry facilities, among other things.
Partner With Property Managers
It might be good also to consider partnering with property managers in your area. Property managers provide many services, such as helping to find tenants, collecting rent, and handling maintenance issues. This can be a great way to free up time and focus on other aspects of your business.
Investors who own rental properties need to know how the pandemic affects their businesses and have strategies to keep them profitable during this difficult time. You can keep your business running in these uncertain times by taking advantage of new opportunities, researching state laws, staying current on the market, and exploring additional revenue streams.
