Covid-19 Real Estate: Survival for Mid Core Multi-Family Residential Property Owners
Let's talk about Covid-19 and real estate investments. While we know that everyone has been impacted by this virus, middle-core multifamily property owners will most likely be the first to experience the interruption of the business cycle. This is because most tenants of this asset class are tied to the service sector and are more likely to be living paycheck by paycheck. The service sector was hugely impacted by Covid-19, and real estate investments, when they're apartment buildings and multi-family units, are closely tied to those in the service sector.
Let's talk about how to weather the storm we're all facing with a few common-sense tips.
1. Communication is key. A direct and open line of communication with your tenants is a necessity. Contact them sooner rather than later to determine their ability to pay rent on the first of the month so that you may budget accordingly.
2. Practice Compassion. While everyone has situations and circumstances that are different, we're all in this together. Work with your tenants to come up with a solution for any rent payment challenges and keep your ears open for government relief offered to tenants.
3. Rent Deferment. During this troubling time, landlords have the ability to maintain their unsung hero status by stepping up to the plate and providing rent deferment to tenants caught in the economic crossfire. The fact of the matter is, whether you want to or not, the probability is high that you’ll have to defer rent payments, so why not get in front of it.
By taking the 1 or 2 rental payments that are missed and amortizing it over a year allows the tenants to make up the missed payments by agreeing to a modest rent increase.
The 2nd option which is preferable to many is to allow your tenants to pay what they can when they can. Be sure to keep accurate rental logs regardless of which option works best for you and your tenants.
Whichever option you choose, take a look at my rent deferment letter for inspiration on how to speak with tenants about their options.
4. Contact your national and local political representatives and request that Congress provide a mortgage forbearance for landlords. As of now, we landlords are still responsible for providing living space or commercial spaces consistent with our rent agreements. This means that we still must pay mortgage, utilities and more. Let's work with our political representatives to create a solution.
Here at Media Realty and as we try to maintain a healthy space for our families to remain safe during our stay-at-home, we find ourselves thinking about our connections in business and how we can all work together to get through this. Media Realty is here to share information and knowledge with you. Please contact us at any time with your questions.
We at Media Realty send our love and support during this difficult time. We hope and pray that life will return to a routine of normality soon. I’m sure as we come together to address all the issues of the pandemic, we will emerge stronger, wiser, and better as a result of this crisis.
We wish you and yours, health and safety as we navigate these trying times.
- Peter Dacko