There is a lot of uncertainty in our world today. With the outbreak and rapid spread of Coronavirus, the entire world economy has all but shut down.
Due to the shelter-in-place order in California, the real estate sales market has basically ground to a halt. Sellers are pulling their properties off the market or changing them to a hold status. Open houses are prohibited, making it very difficult for buyers to view properties they are interested in.
Some of the worst case projections indicate that the next few months could show a massive correction to the real estate market. So even if you hold off and wait to sell your home when everything calms down, it could be worth significantly less than it was at the very beginning of the year.
But what about homes for rent? What kind of impact has all this had on rental properties and landlords?
One thing will never change: people will always need a place to live. Whether they own the home they live in or rent it, the need for housing will not change.
California is also still in a housing crisis with a demand for housing still outpacing supply. Coronavirus hasn’t affected that at all.
As a full service real estate company with a substantial property management division, we deal a lot with rentals and what we are seeing is a slight slowing in activity but homes still renting in a matter of a few weeks. This is true even considering the shelter-in-place order and decreased ability to show homes. This is logical; people are much more likely to rent a home “sight unseen” than buy one.
If you have a vacant home right now, whether you were considering selling or renting it before everything happened, you are probably pretty stressed and wondering what to do. Selling may seem to be the worst option given the unknowns (and inability to even make the transaction happen) so renting may look more appealing.
Renting your home during an economic downturn does present higher risk, but there is no reason why you can’t be just as successful in securing stable, long term tenants during this time than times of greater economic stability.
If you are hesitant about renting your home during these unprecedented times, here are 9 ways you can still be a successful landlord and mitigate your risk as much as possible.
1. Be Competitive
More and more homeowners will likely start making the decision to rent instead of sell. That means there will be an influx of homes for rent, giving prospective renters more options. If you are trying to get the highest possible rent without offering the best condition property, you are going to have a tough time getting it rented in this market.
You can be competitive on both price and condition. Having a home priced slightly below market and in excellent condition is vital to successfully renting out your home during this pandemic.
2. Advertise Online
This goes without saying and is something you were probably already doing before Coronavirus, but advertising your home online will ensure the greatest amount of exposure and highest chance of attracting qualified tenants.
People aren’t out driving around so the old methods of placing a for-rent sign or relying on word of mouth probably won’t work. You can utilize tons of different sites that tenants are still visiting while stuck at home. Better yet, use a syndication tool that posts to a multitude of different sites with one click!
You can take excellent photos with your smartphone and just a little bit of editing can make them look professional. No need to hire a real estate photographer, which allows you to further limit your interaction with other people.
There are certain risks in advertising online, such as being the victim of a scam. Make sure you understand the dangers of marketing your property online and follow these basic tips to avoid them!
3. Have a Video or Virtual Walkthrough
Most Californians are home right now, unable to physically go to work. Even though they are stuck at home, they may still be in a situation where an upcoming move is inevitable. If they can’t go out and look at homes, they are going to be most attracted to the ones they can really get a good feel for through a video walkthrough or virtual tour.
Most rental listings have a handful of poorly lit photos and no video. You can easily make your listing standout with a quick 2-4 minute walkthrough showing off your house and taking about all its great features!
4. Utilize a Self-Showing System
You are limited in your ability to show properties. In fact, many landlords and property management companies have stopped showing properties altogether so they can maintain social distancing.
A self-showing system allows a prospective renter to use a digital lockbox to access the property on their own, without you or your agent being present. That way everyone can avoid interacting with each other but prospective renters can still visit your home to see if it’s a good fit for them.
You should check on your home every few days to make sure the doors are locked and lights are off. Just make sure to schedule your drop-bys when you don’t have a renter checking it out.
5. Have a Robust Tenant Screening System
This is the most important thing that you need to have during this time. Employees are being laid off in record numbers. Unemployment filings are at an all-time high. That means there are going to be a decent amount of people interested in renting your home that unfortunately don’t have the income necessary. The documentation that they have may not even reflect that yet.
Screening and qualifying tenants is always the most important thing you can do for yourself as a landlord, and this is true now more than ever. You don’t want to move a tenant in right now, just to find out that they lost their source of income and your very first rent payment will be delayed.
You can’t just take applicants at their word. You need to verify, verify, verify. Make sure your most recent landlord verifications are legitimate and your applicant didn’t just move out due to an inability to pay rent. Make sure the paystubs and bank statements they submit aren’t forged or doctored. You may even want to do another income verification before you sign the lease once you have verified everything, just to make sure nothing has changed from when you originally approved them to when they want to move in.
The fact is, there are still plenty of tenants with solid jobs that haven’t been affected by the Coronavirus that will want to rent your home. You just need to make sure you are successfully able to identify those tenants and that all of your verifications are done correctly, and in compliance with Fair Housing!
6. Utilize Digital Signatures for Leases
You aren’t going to be able to meet in person to sign leases so having a way to send leases to tenants digitally for signature is very important. There are several property management softwares and other signature softwares that will allow for this. If you are limited in your ability to remotely execute a lease, you aren’t going to be able to rent out your home during this time.
Electronic leases also make things much easier to track. It is important that the tenant consents to sign electronically so that the signatures will be valid if the status of the lease is ever called into question.
7. Have a Way to Collect Payments Online
This will not only make your life easier, it will remove the excuse of “I’m quarantined at home so I can’t get the rent check to you.” It will also help protect your health so you don’t have to interact face to face with a tenant in order to collect rent.
You can also collect security deposits via electronic methods, although ACH transfers should not be used. Just like you collect security deposits and first month’s rent via certified funds in a normal situation, you should also collect funds in a certified fashion electronically. This can easily be accomplished with a wire transfer.
Once your tenant is moved in, having a method of collecting rent on an ongoing basis will make both of your lives much easier and will allow you to continue to distance yourself during this time of shelter-in-place.
8. Work with Tech-Savvy Vendors
This isn’t the time to be working with a vendor that needs to meet with you face to face before doing work or insists on a paper work order or receiving a check in person when the work is completed.
Tenants understand that non-emergency work is basically on hold right now, but what if you have a plumbing, HVAC or electrical issue that affects the habitability of your home? You're going to want to have reliable vendors that you can issue electronic work orders to so you can protect your asset and take care of any emergency needs your tenants have.
9. Have a Plan in Case Your Tenant’s Ability to Pay is Affected
Even if you do everything you can to verify your tenant’s ability to pay rent before they move in, the future is still uncertain and there is a possibility your tenant’s ability to continue paying could be affected.
You need to have a plan in place, whether it be waiving late fees, working out a payment plan or deferring rent. This is a completely different topic, but if you don’t have a plan you may find yourself in an unthinkable situation with your own bills due and no rent income for the foreseeable future.
You should also have a reserve, typically of 6 months rent, if you are going to rent out your home. Having a buffer is important as a backup in case all of your planning and still puts you in a decreased income situation.
Summing it Up
This is still an excellent time to be a landlord. If your property is vacant, you are likely in a better situation that someone whose property is currently occupied by income impacted tenants. With a vacant property, you can do the hard work to screen applicants to ensure the tenant you place in your home is in a good financial state and has the ability to pay going forward.
You may be wondering what qualifies us to write this article during this time. As a company managing over 800 homes in the Inland Empire and High Desert, we have hyper-local data on what the rental market looks like right now. And guess what? It still looks good! All of this advice is what we always follow and especially so now during this pandemic. If you want to be a successful landlord without having to actually do all of the things listed above, contact us today to learn how we can take your property off your plate so you can focus on everything else you undoubtedly have going on right now.